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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 387.40+0.5%Dec 9 4:00 PM EST
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To: Rolla Coasta who wrote (34948)5/20/2008 10:43:19 AM
From: elmatador  Read Replies (1) of 218306
 
For the first time: what financial reset will look like.

Financial reset would be dismantling the remaining of the Bretton Woods Agreement.

USD no longer the reserve currency and no longer reference mark for pricing.

The world economy doesn’t leave on the macro-economics. It lives in the micro-economic level.

At the micro-economic level people will continue to buy and sell.

For simplicity I use Argentina and Brazil.

Let’s say there is a bag a coffee to be delivered at a certain price in USD to Argentina.
There is a wheat load to be delivered to Brazil.
Argentinean importer goes to Central bank as asks to buy dollars to pay Brazilian exporter.
Central says, no USD dealing here but we have a pile of BRL
He tells Brazilian exporter: Central Bank says no USD but he’s got some BRL.
Brazilian exporter says, OK wire me BRL.
He goes back to the Central bank and gives Pesos get Reais and wire to Brazilian exporter.
Argentinean exporter does the same, asks for Brazilian importer to buy Pesos and wire to them.

This takes of 20% of our trade.
Now for the other 80%
For the 18% we do with the US, is business as usual because their currency is the US<

38% of our trade is solved.
Then we go to Euroland. Now it starts getting really interesting. The Euroland gives ultimatum for anyone to enter into Euro, Norway, Sweden Danes and British.
So that they flip and become the currency of trade. So if we want to sell frozen chickens to Dubai we do via Euroland.
Europeans do that because they export like crazy to the rest of the world. They may fear the Chinese step in and facilitate trade via balancing and settling over a desk.
But that is not the interesting thing, as the Europeans assert themselves, the pressure is on Arabs and Chinese to dump the USD reserve currency.
USD plummets
Arabs say, well, we want to see some real organization there in this thing and we are cutting oil exports.
Oil skyrockets
FED jacks up interest rates to 20% to make people interested in USD.
US government gives huge tax cuts to multinationals to repatriate profits to support the USD.
Yen goes down as people get Yen to invest in USD
Inflation go double digits in the US
Government tax revenues go down
As emergency, tariff on ethanol is cut to import from Brazil
Brazil impose capital controls to avoid BRL parity with the US
Cry for protectionism and isolationism increases
Troops are pulled out of Iraq
Bank run across UK and US
Supermarket sheleves are emptied
Goverment promise to release strategic reserves of petroleum
Elroy aply for a resident visa in Brazil...
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