The IMF's New Bretton Woods Moment

The cancellation of debts would involve a quid pro quo so that the major creditors, who have lent to the states, do not see their capital disappear overnight.

Historically, when a state wanted to reduce its debts, it devalued the currency. It was enough for a long time to remelt the coins while reducing their silver content. Then during the relatively short period of the gold standard, to increase the price of gold in the national currency. Today, the price of gold should go up in the main dominant currencies, especially the dollar and the euro. International negotiations have been underway since 2008 about that, but The Economist magazine was already writing about it in 1988.

Since the G20 on March 23, the dollar has been in a well-defined bearish channel.

On July 31, prices rebounded on the bottom of the channel, before lateralizing into a long level of consolidation of the previous decline.

The support at 92.8 had been attacked and defended many times over the past 3 months.

Oblique resistance could force prices lower before November 15th.

But who knows what could happen after Election Day?

CURRENCY ADJUSTMENTS

Stephen Roach, former Morgan Stanley chief economist for Asia, a lecturer at Yale University, and author of Sino-American Interdependence, has been hammering out the same message for months.

"The economies of Americans are going to be weaker and weaker, worse than in the entire history of the United States but also of any dominant nation, while the budget has been in massive deficit for many years. And at the same time, l America seeks to move away from Globalization by decoupling from the rest of the world, and this is a lethal combination.

The dollar is expected to fall 35% against all other currencies. It's hard to give the timing, it might take a year or two. This will be extremely negative for the US stock market."

What is interesting is that Stephen Roach did multiple interviews with Bloomberg on June 9, CNBC on June 15, MarketWatch on June 23, Business Insider on June 26, EconomicTimes on July 14,…. And he resumes his crusade in September on CNBCBusiness Insider... And he continues to hammer the message on September 30 Les Echos, October 5 on Financial Times, on Sputnik News on October 7.

Stephen Roach lectured at the Davos Economic Forum in 2007, 2008, 2009… 2014, 2016… He is therefore a very listened economist.

For my part, I would not be surprised if the dollar lost its dominant place in central bank reserves and in the IMF's basket of currencies since this negotiation of monetary geopolitics is underway.

On June 3, 2020, in front of the World Economic Forum, Kristalina Georgieva, the current IMF director, gave a talk under the title "The Great RESET". In her speech, she refers to the Bretton Woods conference, which set the monetary rules for the following decades and she declares that this epidemic is an opportunity to change the world. Klaus Schwab, the president of the World Economic Forum in Davos, even specified that this pandemic offered a rare and narrow window to reimagine and RESET our world. "Narrow" means that the time for this opportunity is running out and you have to go ahead without procrastinating.

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