BRETTON WOODS III (I)

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. 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. We are 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. "The new world order will bring a new monetary system – Bretton Woods III.... Commodity reserves will be an essential part of Bretton Woods III, and historically wars are won by those who have more food and energy supplies." - Zoltan Pozsar Zoltan Pozsar: The Death Of The Petrodollar And The Rise Of Bretton Woods III