E34: Erik Townsend: Macro Economics – What Makes the World Work (Part 2/2)

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Erik Townsend is a retired software entrepreneur turned hedge fund manager and host of Macrovoices Podcast. Throughout his career, Erik has capitalized on his ability to understand complex systems and anticipate paradigm shifts far in advance of the mainstream. A teenage computer protégé, he spent most of his high school years at MIT’s Artificial Intelligence laboratory, where he taught himself several computer programming languages. Erik became an independent software development and design consultant to Digital Corporation’s manufacturing systems technology group at age 17. By age 20 he owned his first private aircraft.

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Listen to the full episode on iTunes (and please leave a rating to help the podcast reach more people): E34: Erik Townsend: Macro Economics – What Makes the World Work

According to the book The Fourth Turning: What The Cycles of History Tell Us About America’s Next Rendezvous With Destiny, every 75-100 years the people unite against the status quo and take extreme political positions (e.g. voting for Trump).

Later a war or big clash happens to “reset” society.

The last big clash or societal reset happened during World War II which ended in 1945 (73 years ago as of writing this).

Right now a new societal reset is coming up.

To be specific, the USD dominance over the financial system is in the crosshairs.

When you give a currency reserve status you give its country a license to borrow and spend beyond its means.

You can’t have the same currency reserve forever because eventually the borrowing and spending will be too high.

The US is moving beyond a 100% debt to GDP ratio.

Furthermore, it is weaponizing the USD as a tool to control foreign policy.

Example of using the USD as a tool to control foreign policy:

  1. The US is imposing uni-lateral sanctions on Iran saying it doesn’t want be part of the nuclear deal they agreed to be part of.
  2. The US told European companies they are not allowed to do business with Iran.
  3. European Companies: The US does not have the authority to prevent us from doing business with Iran.
  4. The US withheld access to the SWIFT payment system for Iran. (By doing so they basically denied Iran access to the global financial system).
  5. The SWIFT payment system is owned by a Belgian consortium based in Europe and they don’t want to ban Iran from using its payment system.
  6. The US had the central banking committee pass sanctions to invoke sanctions against SWIFT itself.

With increased nationalism this is not a cool thing to do.

As a result of this, resentment for the US is building up.

At the UN: The European Union foreign policy chief and Iranian foreign minister showed solidarity and spoke against the US’ abusive policy as the reserve currency issuer denying Iran access to SWIFT.

The EU is now committed to create a new payment system to bypass SWIFT so EU companies can continue doing business with Iran because Iran has not violated any sanctions other than the uni lateral sanction imposed by the US which is a sanction it can only impose on its own citizens.

The global financial system may gradually change away from the USD.

The US has already alienated Russia and China for a long time.

Now also the EU.

The Chinese and Russians have already been hiring cryptocurrency and blockchain experts for years and accumulating gold.

This leads us to think that they’re already working on a new global digital currency system that can replace the dollar, using some of the existing technology developed by cryptocurrency and blockchain experts.

Whoever wins that race has the currency reserve for the next 50 years.

The race will be completed in the next 10-15 years.

When the dollar gets replaced it’s going to lead to a lot of bad consequences and make the world a lot more dangerous place.

Oskar Faarkrog

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