The Great Reset: A Monetary Perspective

In the footnotes below is information that could not be cited in the published version of this article.

The 'Great Reset' of our economy is just around the corner; six to eighteen months away, by some accounts.1

The current monetary system, a '0% reserve' system (phased in between 1991 and 1994), has run its course. This system has often been referred to as a Ponzi Scheme,2 as it required ever more debt (in the form of bank loans) to continue functioning.3 All Ponzi Schemes, by definition, will eventually hit the wall; and we hit that wall hard in March of 2020, under the convenient cover of Covid-19.

So what's next, you may ask?

Monetary systems come and go: 1974 to 1991, 1994 to today, and almost no one noticed these earlier resets. Very few people know what 'monetarism' is (or was), and even fewer have read the Basel Accords; the first of which precipitated the 1991 – 1994 economic reforms.4 We were largely unaware of these changes when they were made, and their impact was not noticed until many years later. The 1974 'reset' (which handed the privilege – and profit – of money creation to commercial banks)5 wasn't really felt until the late 80s, and we didn't feel the consequences of the 0% reserve system (which significantly increased the amount of credit banks could issue) 6 until the 2007 financial crisis.

The system lurched onward from this point (with some minor adjustments)7 for another decade, but even Rothschild Bank began warning of the danger in 2016; advising clients to buy gold, as the monetary "experiment" sailed deeper into "uncharted waters."8 The Bank of England Governor, who presided over the 2007 financial crisis, has said many times since that another crash is coming, and that it will be 'exponentially worse' than before. Sir Mervyn King's 2016 book, The End of Alchemy, suggests that profound changes lay ahead, although the title of this work is somewhat ironic.9

The BIS, IMF, WEF,10 even the Canadian Bankers Association (CBA), have all been telling us that change is coming, and they have described it in detail. Our new system, if the international bankers have their way, will be the system Communist China has embraced: Central Bank Digital Currency (CBDC) in conjunction with digital ID and social credit.11

There are other options (that really would spell 'the end of alchemy') but these alternatives are not yet on the table.12 Our political class must be made aware of these, or we will have no choice but to accept the Communist Chinese system. Since money itself is a form of governance, this should be of great concern.13

It is our intention here to present the alternatives in a series of short articles, beginning with the '100% reserve' system, as proposed in the 2018 Swiss referendum.14 Please check back here next time, and continue reading at: www.independent-culture.com/monetary-reset

Also, importantly, join us in our effort to share these options with the leaders of this country,15 so that Canada can remain a strong – monetarily sovereign16 – democratic nation.

 

W. David Ward    07.07.2022

Footnotes:

1. Edward Dowd. Former BlackRock Portfolio Manager

2.  Many in the business, including Dowd, based on the fact that as system which requires ever increasing inflows of money (in the form of bank loans in this case), cannot be sustained in perpetuity.  An ever increasing loans are required to cover interest paid on earlier loans. Since money to pay the interest on any given loan is not created at the time of the loan, this money has to be extracted from the existing economy. Eventually, when insufficient new money is put into circulation (due to a lockdown for instance) a scarcity of money from which to cover loan repayments and interest will result in cascading defaults. 

3.  Whereas any 'fractional reserve system' will eventually confront this same issue, the 0% reserve system, which allows for significantly more more debt creation, us that much more vulnerable.  In the former, reserve requirements can be adjusted to reign in the amount of money in circulation, but in the later, based on capital requirements (rather than reserve requirements), is vulnerable to the revaluing of asset revaluations. 

4. Basel Accords I, II and III. The introduction of capital requirements, eventually replacing reserve requirements, is the reason this new '0% reserve' system is also known as a 'capital adequacy' system.  From the“The six months under review have seen central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world. We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30% of global government debt at negative yields, combined with quantitative easing on a massive scale.” Bank of Canada (notes at the bottom of the linked page):
'In compliance with the 1991 Bank Act, the statutory requirement on chartered banks to hold reserves against certain of their deposit liabilities was reduced to zero in July 1994.'

5. This is the beginning of the so-called 'Monetarist' period, in Canada; generally marked by comments made by Governor of the Bank of Canada at a Chamber of Commerce meeting in Winnipeg.  Pierre Elliott Trudeau was Prime Minister at the time, and John Turner, Minister of Finance. What actually happened on their watch is still a matter of great speculation, as no written notes on the discussion behind this policy decision have been found. This is the reason a great many people today suspect fowl play. 

6. As mentioned above, the impact of this change was not noticeable for some time (the point of Adam Smith's detailed essay, 'Much Ado About 1974'); nevertheless, the resulting change in Bank of Canada Policy resulted in a rapid expansion of bank money, and a growing tax burden to service this new, private debt.

7. These 'adjustments' consisted largely of adjustments in the 'capital adequacy requirements.'  As discussed below in the notes for 9 

8.  Lord Rothschild's actually words were quoted on the bank website, along with a warning for the bank's clients to buy gold. The statement, which has been widely publicized, went as follows: 


“The six months under review have seen central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world. We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30% of global government debt at negative yields, combined with quantitative easing on a massive scale.”

9.  Sir Mervyn King's book, The End of Alchemy: Money, Banking and the Future of the Global Economy, despite it's title, suggests adjustments in capital adequacy requirements will be the main took for avoiding major financial crises. This is far from an 'End' to the 'Alchemy' of 'fractional reserve' / '0% reserve' banking, of course. Though a likable man, he remains, it would seem, a banker to the core. However, perhaps he is something of a visionary, though he cannot bring himself to put into words what he sees. The cover of his book shows an pyramid toppled over, with the capstone, and eye with it, lying on its side, as distance away. During his numerous speeches and interviews following, he said often the banks would not make the changes necessary to keep the system from trouble (as Lord Rothschild suggested), and as a result, banking as we know it may be at it's end (a warning for those feeling safe with their portfolio of dividend paying bank shares). Is This what King means by The End of Alchemy?

10. Bank for International Settlements (BIS), International Monetary Fund (IMF), World Economic Forum (WEF).

11. My assertion here is that this system is de facto, Communist Chinese / authoritarian. Though many nations are looking at these ideas (aggressively promoted, as they are, by the institutions above), the CCP has lead the way. Having wholeheartedly embraced this technology (technocracy), they have wasted no time in demonstrating how it will be used to suppress opposing views.
https://www.reuters.com/world/china/china-bank-protest-stopped-by-health-codes-turning-red-depositors-say-2022-06-14/ 
It isn't just China, of course. In Canada, though we do not even have this system yet, the current regime in Ottawa has demonstrated how eager it is to have these 'tool,' as Chrystia Freeland calls them. Though the protest in Ottawa was deemed legal, in the court, authorities did not hesitate to use the techniques described, to imposed their will, irrespective.


12. I will expand on these later, but for now, the options are as follows: A 100% (full) reserve banking system;  Public Banking, as already exists in Alberta, with the Alberta Treasury Branch, the use of what I call P4s Public Pension Plan Partnerships, as opposed to P3s (Public Private Parnterships).  There are other options, and these will be explored later.

13. I paraphrase Harvard Professor Christine Desan from her book:  Making Money: Coin, Currency and the Coming of Capitalism:
'Like other forms of governance, money serves both public and private purposes. It can be designed in ways that are democratic, or dictatorial . . . ' pg 24
Thus, whereas (referring the the article above) while the 1974 'reset' handed the privilege – and profit – of money creation to commercial banks, and the 0% reserve system significantly increased the amount of credit banks could issue , the so-called Great Reset, if successfully implemented (in the manner described) will ensure those behind it absolute, 'dictatorial' control. This will be the end of democracy, as technocracy is antithetical to the idea of people determining their own futures. Our future will be decided by technocrats, and imposed on us by means of CBDC and Digital ID; the ultimate form of authoritarian governance.

14. The 2018 Swiss Sovereign Money Initiative. A plan for 'full-reserve' (100%) banking, which would have taken the power of money creation away from the commercial banks. I'll examine this in more detail next time, but for now, you can read more at the Wiki link above.

15. More on this later.  A plan of action is called for here.

16. A nation that issues its own currency, particularly by means of its own Central Bank (and doesn't use another nations currency, like Puerto Rico and El Salvador) is referred to as being Monetary Sovereign. I have argued for a long time, that there is far more to it than that.  A nation that uses bank credit as currency, rather than sovereign money created by its own Central Bank, I would argue, is monetarily sovereign in name alone. A nation that has the ability create its own money, and yet gives this privilege to commercial banks (along with the profit that goes this privilege), should not be considered sovereign, in my opinion. If money is a form or governance, then we are beholden to whomsoever creates (and owns) the money. The banks, in effect, call the shots.  Whether a Central Bank is Publicly owned or privately own should be a consideration too; though owning your own Central Bank means little if the private banks create the currency the nation uses. This is the very heart of the issue we must now wrestle with in earnest. Thank you for your patience. I hope you found this information interesting. 

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