Currency Central Holdings Inc – @ www.currencycentralinc.com 3/11/2022 — For years we have heard about a “One World Currency” and many thought the idea absurd.  But now we are seeing the mechanics of how markets might be forced into a ‘New Monetary Union’ even if it’s not exactly as some have envisioned.  If we strip politics and opinions from current events the US has managed to ‘soft default’ on its depository obligations – an event well noted by foreigners that the US relies on to invest in the economy as well as buying Treasuries, and pricing oil in US Digital Dollars.  We are watching the controlled demolition of the US Dollar – Join us at Currency Central as we manage this transformation process.  Here are snippets from the leading analysis of the situation.

From Zero Hedge:

More than a week ago, when looking at the latest price dynamics in the commodity sector in general and oil in particular, where Russian-produced oil was suddenly toxic and could not find a willing buyer anywhere in the Western world despite record discounts while non-Russian oil hit the highest price since 2008, we summarized this dynamic as “Russian oil bidless, non-Russian oil offerless”

One day later, one of Wall Street’s most respected voices, Credit Suisse repo guru (formerly the NY Fed’s most erudite expert on market plumbing) Zoltan Pozsar took this analogy and extended it into a lengthy explanation of why the disconnect in the commodity world between “Russian” commodities (and as a reminder Russia is one of the world’s biggest exporters of raw commodities) and “non-Russian” commodities has set the stage for a “classic liquidity crisis” as the world suddenly finds itself locked out of trillions in commodities that serve as collateral in subsequent monetary transformations which are critical in keeping the existing financial system well-oiled (so to speak) and whose absence could lead to unprecedented shocks across virtually all asset classes (that is a rough summary, for a much more detailed explanation see here).  But while that particular note was absorbed by Wall Street relatively painlessly – after all Pozsar is best known for peering behind the dark corners of Wall Street’s complexities and serving as one of the most accurate predictors of both known and unknown unknowns – his latest note has sparked a shockwave not only across the financial realm but also the political.  Why? Because in it he writes that what we are witnessing in the geopolitical, the commodity, and the financial arenas is nothing short of a new financial and monetary system: a Bretton Woods III.

However, while many have been predicting the birth of a new monetary system in the past decade, it is the nuances of Zoltan’s vision of the monetary future that is especially troubling: as he puts it “we are witnessing the birth of Bretton Woods III  a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West.”

For those who have missed our recent posts revealing Pozsar’s recent post-Ukraine war views (here and here), a brief summary from the man himself:

A crisis is unfolding. A crisis of commodities. Commodities are collateral, and collateral is money, and this crisis is about the rising allure of outside money over inside money. Bretton Woods II was built on inside money, and its foundations crumbled a week ago when the G7 seized Russia’s FX reserves.  The beautiful paradox of linear rates (the stuff you trade and I write about) is that you need to think linear to find relative value most of the time, but you have to think non-linear to recognize and survive regime shifts.

In other words, we are now seeing “a regime shift unfold in funding markets currently (which, as always, will pass), and a sea change in inflation dynamics and FX reserve management practices.”  For those pressed for time, what Zoltan is effectively saying is that the legacy, Western monetary system based on fiat currencies (and a US dollar reserve) is about to end in an inflationary supernova, and will be replaced with a metallic monetary system, one using commodity-based currencies as a payment method (however, not quite a gold standard), and one where China and the yuan will become the world’s most important sovereign and currency, respectively.

Incidentally, this is something we predicted back in April 2009, so you can see why so many were shocked to hear one of the most respected people on Wall Street echoing this shocking prediction.

* * *

At this point, we urge those pressed for time or those familiar with Pozsar’s “commodity as collateral” view to jump to the conclusion where the punchline is, as what follows next is a trek through Zoltan’s (at times confusing) stream of consciousness. For everyone else, please read on.

Pozsar starts off by advising readers of his two highest “convictions” at this moment: one deals with a topic he is very well versed in, and one in which as he admits, he is an amateur. Both are fascinating:

We have two convictions today. First, June FRA-OIS spreads can widen more, to at least 50 bps, both due to funding premiums driven by commodity prices and the market taking out Fed hikes. Second, it’s a good time to get long shipping freight rates. Yes, freight rates, which, at the current juncture are linked to geo-monetary dynamics.

Ok, FRA-OIS we get: as the liquidity crisis gets worse, FRA-OIS will spike as it always does when there is a shortage of liquidity or collateral (we have the latter, we will soon have the former). But why freight rates?  Well, according to the former NY Fed staffer, freight rates “are the price of balance sheet for commodity RV traders (the commodity trading houses) and for sovereigns that can take the risk of moving and storing subprime, sanctioned commodities.”

Assuming there is indeed a “bid for cash”, who is driving said bid? In other words, whose bid is driving term funding premia in this environment where lenders are less willing to lend cash for longer tenors? Accorsing to Pozsar, the answer goes back to the bidless/offerless commodity divergence noted at the top: it’s the commodities world that is suddenly starved for liquidity, for three reasons.

• First, non-Russian commodities are more expensive due to the sanctions-driven supply shock that basically took Russian commodities offline. If you are a (leveraged) commodities trader, you need to borrow more from banks to buy commodities to move and sell them.
• Second, if you are long non-Russian commodities and short the related futures, you are likely having margin calls that need to be funded (just ask Tsingshan Holding Group and its biggest nickel short counterparty, JPMorgan). According to Pozsar, right now everyone in the commodities world is experiencing a perfect storm as correlations suddenly shot to 1, which is never a good thing. But that’s precisely what happens when the West sanctions the single-largest commodity producer of the world, which sells virtually everything. As a result, the Hungarian warns that “what we are seeing at the 50-year anniversary of the 1973 OPEC supply shock is something similar but substantially worse  the 2022 Russia supply shock, which isn’t driven by the supplier  but the consumer.” In other words, it is the eagerness of western commodity merchants to self-sanction so they do not offend the delicate sensitivities of an entire generation of snowflakes by doing trade with Russia, that will lead to the biggest financial crisis in modern history, far worse than Lehman ever was.
• Third, if you are short Russian commodities and long the related futures, then you are likely having margin calls too that also need to be funded like above.

Shifting to the immediate implications from these three points, Pozsar notes that tes, the aggressor in the geopolitical arena – Russia – is being punished by sanctions, as Putin’s economy is about to suffer a historic collapse, but as Zoltan warns sanctions-driven commodity price moves threaten financial stability in the West, to wit  “Is there enough collateral for margin? Is there enough credit for margin? What happens to commodities futures exchanges if players fail? Are CCPs bulletproof?”

(see “The Oil-Drenched Black Swan: The Financialization of Oil“)

the value of US financial assets is more than 6x greater than the value of US GDP.

Think this is sustainable in a world where financial linkages and repo chains are suddenly broken? Think again.

Going back to Pozsar’s take, he warns that the higher non-Russian commodity prices get (or as we put it, the more “offerless” they become) and the lower Russian commodity prices fall (or the more “bidless” they turn), the wider FRA-OIS will get, and if you want to express all this in the credit space, look at what CDS spreads on some bigger commodity traders have done in the past few weeks.

As Zoltan says next, regular readers of his publication are aware of Perry Mehrling, who happens to be his “Keynes” and father of the money view. As Perry Mehrling taught Pozsar, money has four prices:

1. Par – which is the price of different types of money and which means that cash, deposits, and money fund shares should always trade 1:1.
2. Interest -which is the price of future money and which refers to OIS and spreads around OIS across all possible money market segments.
3. Exchange rate -the price of foreign money, i.e. U.S. dollars vs. the rest.
4. Price level -which is the price of commodities (all of the Russian, non-Russian stuff) and, via commodities, the price of everything else.

Pozsar next asks readers to recall his previous note, when he looked at the parallels between the currently unfolding crisis and the crises of 1997, 1998, 2008, and 2020, and the conclusions that he drew from the review of these crises: these were that every crisis occurs at the intersection of funding and collateral markets and that, in the presently unfolding crisis, commodities are collateral, and more precisely, that Russian commodities are like subprime collateral and all other stuff is prime (or, as we put it even before Pozsar, bidless and offerless).

So going back to the four prices of money and how they link up with these themes:

1. Par -this is what broke in 2008 when money funds broke the buck and funding markets froze from fearing subprime mortgage collateral.
2. Interest -this is what broke in 2020 when bond RV trades crashed as the drawdown of credit lines pulled funding away from good collateral.
3. Exchange rate -this is what broke in 1997 when collateral (FX reserves) went missing and U.S. dollar funding staged a sudden stop in Asia.
4. Price level -this is what’s in play as we speak&

Here Pozsar notes ominously that “if you see the pattern I see, you should be concerned.”

Why? Because until now, commodities used to trade at tight spreads without dislocations based on provenance. There was one global market across all commodities that the large commodities traders arbitraged, much like a bond RV hedge funds arbitrage the cash-futures basis. Mortgages were like that too before 2008  public or private, prime or subprime, they all traded at par… until they didt.

Well, just like money markets and mortgages after Lehman collapsed, commodities no longer trade at par.

Going back to the point we first made on March 3, there are Russian commodities that are collapsing in price and there are non-Russian commodities that are rallying, a rally which is due to the 2022 Russia supply shock which, once again, is driven by present and future sanctions-related stigma.

In other words, it’s a buyers’ strike, not a seller’s strike: Russian commodities today are like subprime CDOs were in 2008. Conversely, non-Russian commodities are like U.S. Treasury securities were back in 2008. One collapsing in price, and the other one surging in price, with margin calls on both regardless of which side you are on, and as a result, the ‘commodities basis’ is soaring, while commodity correlations are also at 1, which, Zoltan stresses, “is never a good thing.”

Going back to his previous observations from 1997, 2008, and 2020 crises, we also learned that every crisis is about the core vs. the periphery (large New York banks refusing to roll U.S. dollar funding in Southeast Asia in 1997; secured funding against subprime collateral to SIVs, Bear Stearns, and Lehman Brothers in 2008; and secured funding against good collateral to RV hedge funds during 2020). And from these crises, we also learned that someone, somehow must always provide a backstop or as Perry Mehrling would say, an ‘outside spread’ (the IMF in Southeast Asia in 1997 in exchange for Washington consensus-type structural reforms; the Fed backstopping the shadow banking system with a range of facilities in 2008 in exchange for Basel III; and the again Fed backstopping RV funds with QE and the SRF in March 2020, in exchange for we don’t yet know what, but history says there will be a price).

This brings us back to today’s ‘the present’ and shipping freight rates.  If Pozsar is right, and if this is a crisis of commodities, 2008 of sorts thematically, if not in terms of size or severity- who will provide the backstop?  Well, this is where Pozsar really crosses over into tinfoil hat territory (i.e., agrees with this website), because he sees just only one entity that can backstop the world against the escalating crisis: the PBoC!

Conclusion

Having laid out the unique nature of the “commodity-as-collateral” crisis that is sweeping the globe, has sent the price of oil soaring, the price of stocks tumbling, and halted the price of nickel until the LME finds a way to bail out a Chinese tycoon without angering Beijing, and why, unlike typical “financial” crises the Fed is powerless to assist in what is a “hard-commodity” crisis, Pozsar next moves to the punchline of his argument – that we are shifting from a western-dominated, or financialized monetary world, to an eastern-dominated, or commoditized monetary world.

According to Zoltan, at the heart of the problem is that Western central banks cannot close the gaping commodities basis because their respective sovereigns are the ones driving the sanctions. They will have to deal with the inflationary impacts of the commodities basis and try to cool them with rate hikes (which will send economies spiraling into recession, and stock markets simply spiraling), “but they will not be able to provide the outside spreads and won’t be able to provide balance sheet to close Russia-non-Russia spreads.”

And commodity traders won’t be able to either. Consider Glencore, whose CDS we show above has spiked sharply higher, and which rose from the ashes of Marc Rich + Co, and with Switzerland along with the sanctions, otherwise neutral Swiss-based commodity traders will think twice about arbitraging the spreads.

But one entity can step in: the Chinese central bank.

The PBoC can as it banks for a sovereign who can dance to its own tune, according to Zoltan who notes that to make things more complicated, China is probably thinking deep and hard about the value of the “inside money” claims (or those claims which are dependent on counterparties recognizing them, as opposed to gold which is standalone, “outside money”) in its FX reserves, now that the G7 seized Russia’s.

As such, the PBoC has two ‘geo-strategic’ = ‘geo-financial’ options:

1. Sell Treasuries to fund the leasing and filling of vessels to clean up subprime Russian commodities. That would hurt long-term Treasury yields and stabilize the commodities basis and would give the PBoC control over inflation in China, while the West would suffer commodity shortages, a recession, and higher yields. Needless to say, “that can’t be good for long-term Treasury yields” as Pozsar notes (at least until the Fed launches mega QE).
2. The PBoC’s second option is to do its own version of QE – printing renminbi to buy Russian commodities. If so, that’s the death of the Petrodollar and birth of what Pozsar calls the Eurorenminbi market, and China’s first real step to break the hegemony of the Eurodollar market. That is also inflationary for the West and means less demand for long-term Treasuries. That also isn’t good for long-term Treasury yields either.

So going back to the beginning, Pozsar’s idea of going long shipping freight rates is simple: the price the PBoC will be paying to lease ships to fill them up with Russian commodities can in theory rise as much as the collapse in the price of Russian commodities: a lot. Renting boats is like renting a balance sheet at a dealer to fund inventory, according to the Credit Suisse strategist, and if China does not have enough storage capacity on the mainland, “it will store Russian commodities on vessels floating on the seas, encumbering not balance sheet (the PBoC is funding all this by printing money) but shipping capacity, which, for the rest of the world, will also be inflationary.” Even more inflation.

At this point Zoltan takes a slight detour to mock all those politicians and pundits who believe that the West can easily crush Russia’s economy and society without any material consequences, writing that “if you believe that the West can craft sanctions that maximize pain for Russia while minimizing financial stability risks and price stability risks in the West, you could also believe in unicorns.” Or, as he also puts it, “what G-SIBs are for financial stability Glencore is for price stability.”

In this instance, unlike in 2008, price instability of commodities (via surging and collapsing prices) feeds financial instability: Pozsar notes that “margin calls may trigger the failure of some smaller commodity traders and maybe even some CCPs “the commodity exchanges” which is remarkable because he wrote all of this before we learned that the LME itself may be at risk unless it figures out a way to bail out Tsingshan Holding (and make JPMorgan whole).

And while the Fed and other central banks will be able to provide liquidity backstops, which will send stocks and cryptos soaring briefly higher, those will be Band-Aid solutions because in this case, the real problem is not liquidity per se.

The real problem, according to one of the smartest people on Wall Street who was never consulted before politicians decided to exclude Russia and its commodity exports from the rest of the Western world, is that in this case “liquidity is just a manifestation of a larger problem, which is the Russian-non-Russian commodities basis, which only China will be able to close.”

We will let you read Zoltan’s concluding tour de force without interjecting because it is pure financial poetry in action:

Do you see what I see?

Do you see inflation in the West written all over this like I do?

This crisis is not like anything we have seen since President Nixon took the U.S. dollar off gold in 1971 – the end of the era of commodity-based money.

When this crisis (and war) is over, the U.S. dollar should be much weaker and, on the flipside, the renminbi much stronger, backed by a basket of commodities.  From the Bretton Woods era backed by gold bullion, to Bretton Woods II backed by inside money (Treasuries with un-hedgeable confiscation risks), to Bretton Woods III backed by outside money (gold bullion and other commodities).

Yes, the “tinfoil hat” theory we first presented over a decade ago… just through the writing of the man who helped the Fed survive the 2008 financial crisis with his unprecedented insights into how the financial plumbing of the financial system was clogged up. As for how to trade it:

After this war is over, ‘money’ will never be the same again and Bitcoin (if it still exists then) will probably benefit from all this.

All we would add here is that besides a “call option” on future money via bitcoin – which may or may not exist – one should also hedge with the one asset that will certainly benefit from all this – the same asset that has always benefited from human crises over the past three thousand years: gold.

For the entire well-detailed Zero Hedge analysis please sign up for Zero Hedge Premium: Zoltan’s latest note is available to pro subscribers.

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From Bitcoin Magazine:

The Russian-Ukrainian war will create a new world financial order from which Bitcoin is set to benefit, according to Credit Suisse.

Zoltan Pozsar, global head of short-term interest rate strategy at the giant investment bank, wrote in a Monday report that Western sanctions on Russia are likely to cause a paradigm shift in the way the world organizes money and reserves, a “Bretton Woods III” kind of scenario.

“From the Bretton Woods era backed by gold bullion to Bretton Woods II backed by inside money, to Bretton Woods III backed by outside money,” the strategist wrote.

Pozsar argues that the fall of Bretton Woods II ensued last week as G7 countries decided to seize Russia’s foreign exchange (FX) reserves, leading to a rise of outside money – reserves kept as commodities – over inside money – reserves kept as liabilities of global financial institutions.

“We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West,” the report states.

Russia, a surplus agent in the financial system, can now no longer make use of the hefty FX reserves it accumulated through its commodity exports over the decades to defend its falling ruble or aid its local economy. Moreover, Russia’s ability to export its commodities has been severely hurt due to the “buyer’s strike” in the West.

“What we are seeing at the 50-year anniversary of the 1973 OPEC supply shock is something similar but substantially worse – the 2022 Russia supply shock, which isn’t driven by the supplier but the consumer,” the strategist wrote. “The aggressor in the geopolitical arena is being punished by sanctions, and sanctions-driven commodity price moves threaten financial stability in the West.”

Pozsar argues that while Western central banks cannot close spreads between Russian and non-Russian commodity prices as sanctions lead them in opposite directions, the People’s Bank of China can “as it banks for a sovereign who can dance to its own tune.”

“If you believe that the West can craft sanctions that maximize pain for Russia while minimizing financial stability risks and price stability risks in the West, you could also believe in unicorns,” Pozsar wrote.

As outside money keeps trumping inside money, this crisis will likely emerge and end differently than all others ever since Nixon broke off the gold standard in 1971 – which marked the end of the era of commodity-based money.

“When this crisis (and war) is over, the U.S. dollar should be much weaker and, on the flip side, the renminbi much stronger, backed by a basket of commodities,” Pozsar wrote. “After this war is over, ‘money’ will never be the same again…and Bitcoin (if it still exists then) will probably benefit from all this.”

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From Forbes:

Bitcoin and cryptocurrency prices are on a tear this week.

The bitcoin price rocketed up past $40,000, gaining 11.7% from its lowest March point. Other major cryptos also rose but trailed in bitcoin’s wake. Ethereum’s price rose 7.7%, BNB 4.8%, Cardano 2.4%, XRP 2.7%, and Solana 3.3% over the week

Cryptos jumped after Biden signed the long-awaited (and dreaded) executive order, which came out more pro-crypto than expected. The directive calls on federal agencies to coordinate crypto oversight, but it didn’t lay out any specific regulations.

In fact, policymakers appear to recognize digital assets’ role in monetary innovation. As Coindesk reported: “one part of the order will direct the Treasury Department to create a report on the “future of money,” including how the current financial system might not meet consumer needs.”

Biden’s crypto agenda seems to back the bold claim of Zoltan Pozsar, global head of short-term interest rate strategy at the giant investment bank Credit Suisse that “we are witnessing the birth of Bretton Woods III – a new world (monetary) order.”

And that bitcoin may largely benefit from it.

Now the basis of this system, which has operated for the past 50 years, is being called into question. An article by Wall Street Journal writer Jon Sindreu, for example, said the sanctions on Russia, which showed that reserves accumulated by central banks can simply be taken away, raised the question of “what is money?”

That question may explain why Pozsar believes a huge shift in the way the world organizes money and reserves is now underway, “creating a “Bretton Woods III backed by outside money,” (gold and other commodities).

He added that: “We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West.”

China, Pozsar says, will have two ways of protecting its interests – either selling Treasury bonds to buy Russian commodities or doing its own quantitative easing, for example, printing renminbi to buy Russian commodities. Pozsar expects both scenarios will mean higher bond yields and higher inflation in the West.

“When this crisis (and war) is over, the U.S. dollar should be much weaker and, on the flip side, the renminbi much stronger, backed by a basket of commodities,” Pozsar wrote. “After this war is over, ‘money’ will never be the same again…and bitcoin (if it still exists then) will probably benefit from all this.”

Looking ahead

That should be music to the ears of crypto investors.

After all, crypto advocates argue digital assets serve as a hedge against the debasement of fiat currencies and inflation. And that they will eventually take over gold as a 21st-century safe haven.

Still, prior to Biden’s executive order, bitcoin and other major cryptos hadn’t behaved anything like a reliable store of value—much less a gold successor.

Since Moscow began its onslaught, gold has been steadily rising. It has now shot past $2,000 an ounce, gaining 13.8% from its 2022 low. By contrast, the price of bitcoin and other currencies has been on a rollercoaster.

That isn’t likely to encourage investors to ditch gold in favor of cryptos. However, the volatility might partly reflect the lack of regularity clarity.

So, if policymakers really do start drawing up plans to further legitimize cryptocurrencies and Pozsar’s “Bretton Woods III” prediction comes true, bitcoin and other cryptos may emerge as one of the most reliable stores of value.

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From MoneyControl.com

Credit Suisse short-term rate strategist Zoltan Pozsar, a former United States Federal Reserve and US Treasury Department official, in a report said the US is in a commodity crisis and this will give rise to a new world order that will weaken the US dollar and create higher inflation in the western world.

Here are the key takeaways from his note titled Bretton Woods III

— We are witnessing the birth of Bretton Woods III – a new world (monetary) order cantered around commodity-based currencies in the East that will likely weaken the euro-dollar system and also contribute to inflationary forces in the West.

— A crisis of commodities is unfolding. Here commodities are collateral, and collateral is money, and this crisis is about the rising allure of outside money over inside money. Bretton Woods II was built on inside money, and its foundations crumbled a week ago when the G7 seized Russia’s FX reserves.

— We have two convictions today.

First, June FRA-OIS spreads can widen more, to at least 50 bps, both due to funding premiums driven by commodity prices and the market taking out Fed hikes.

Second, it’s a good time to get long shipping freight rates, which, at the current juncture are linked to “geo-monetary” dynamics. Freight rates are the price of the balance sheet for “commodity RV traders” (the commodity trading houses) and for sovereigns that can take the risk of moving and storing subprime, sanctioned commodities.

— Non-Russian commodities are more expensive due to the sanctions-driven supply shock that basically took Russian commodities “offline”. If you are a (leveraged) commodities trader, you need to borrow more from banks to buy commodities to move and sell them.

— What we are seeing at the 50-year anniversary of the 1973 OPEC supply shock is something similar but substantially worse – the 2022 Russia supply shock, which isn’t driven by the supplier but by the consumer.

— The aggressor in the geopolitical arena is being punished by sanctions, and sanctions-driven commodity price moves threaten financial stability in the West. Is there enough collateral for margin? Is there enough credit for margin? What happens to commodities futures exchanges if players fail? Are CCPs bulletproof?

— The higher non-Russian commodity prices get and the lower Russian commodity prices fall, the wider FRA-OIS will get.

— Money has four prices:

(1) Par – which is the price of different types of money and which means that cash, deposits, and money fund shares should always trade 1:1.

(2) Interest – which is the price of future money and which refers to OIS and spreads around OIS across all possible money market segments.

(3) Exchange rate – the price of foreign money, i.e. US dollars vs. the rest.

(4) Price level – which is the price of commodities (all of the Russian, non-Russian stuff) and, via commodities, the price of everything else.

— Every crisis occurs at the intersection of funding and collateral markets and in the presently unfolding crisis, commodities are collateral, and more precisely, Russian commodities are like subprime collateral and all other stuff is prime.

— The pattern is concerning. It’s a buyers’ strike. Not a seller’s strike. Every crisis is about the core vs. the periphery, where someone, somehow must always provide a backstop – or an “outside spread”. If we are right, and if this is a “crisis of commodities” – 2008 of sorts thematically, if not in terms of size or severity – who will provide the backstop? We see but only one entity: the PBoC!

— The idea behind going long shipping freight rates is simple: the price the PBoC will be paying to lease ships to fill them up with Russian commodities can in theory rise as much as the collapse in the price of Russian commodities: a lot. Renting boats is like renting a balance sheet at a dealer to fund inventory,

— If China does not have enough storage capacity on the mainland, it will store Russian commodities on vessels floating on the seas, encumbering not the balance sheet (the PBoC is funding all this by printing money) but shipping capacity, which, for the rest of the world, will also be inflationary.

— If you believe that the West can craft sanctions that maximize pain for Russia while minimizing financial stability risks and price stability risks in the West, you could also believe in unicorns. When this crisis (and war) is over, the US dollar should be much weaker and, on the flip side, the renminbi much stronger, backed by a basket of commodities.

— From the Bretton Woods era (backed by gold bullion) to Bretton Woods II (backed by inside money, i.e. Treasuries with un-Hedgeable confiscation risks), to Bretton Woods III (backed by outside money i.e. gold bullion and other commodities); After this war is over, “money” will never be the same again… …and Bitcoin (if it still exists then) will probably benefit from all this.