Bretton Woods 3 - New World Monetary Order

Many people are interpreting the recent market moves in the light of Bretton Wood III. This is based on an idea about a new world monetary order created by a strategist at Credit Suisse called Zoltan Pozsar.
In my latest video, I examine Zoltan’s ideas, as they can be difficult to understand without explanation, and I discuss four potential consequences of his theory that could have a huge impact on markets and your portfolio.
The link to signup to my free weekly market roundup to get news and views about what's going on in the stock market and wider economy is here pensioncraft.com/market-roundup/
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Timestamps
00:00 Introduction
00:32 Zoltan Pozsar & Timeline
01:22 Bretton Woods 1
02:38 Bretton Woods 2
04:20 Bretton Woods 3
05:31 Commodities Matter (Again)
07:24 Weaker Dollar, Stronger Renminbi
10:02 Instability
10:46 End of Globalisation
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#BrettonWoods3 #NewWorldOrder #PensionCraft

[@Pensioncraft]

If you liked this video then why not sign up for my free weekly Market Roundup. I send it out each Friday and it’s packed full of interesting insights and a roundup of the news that’s most relevant for investors pensioncraft.com/market-roundup/

[@stlouisix3]

Keep it up, Ramin|PensionCraft💯

[@MrMatisse22]

Excellent...the perfect material to bore my dinner guests with tonight. I love the sound of 'Bretton Woods 3' rolling off my tongue, and the admiring glances of the ladies assuming (erroneously) that I know what I'm talking about. 🤠

[@Pensioncraft]

Enjoy!

[@jamesmoylan2861]

Just get him to tell you about the multi billion dollar tax free prophets on war against promises to the troops World War II by FDR.... Providing the ladies don't trade crypto or Forex they may see you as a saviour of the world.....

[@jenniferseiden3838]

Brilliant Topic Ramin! Ray Dalio & other Macroeconomic researchers have been predicting new world order for a few years but was TBD how it would play out. Would love to learn more beyond weekly roundup-which btw is excellent. As always, Thank You for your lovely visuals clarity of extremely complex topics.

[@kytv9000]

New world order all you want, it's definitely not the way these guys see it. Go and live in the country for a month and see if they are still bullish on that currency from a shit hole place.

[@Ganok]

Consistent as always, thanks Ramin!

[@Pensioncraft]

My pleasure!

[@obnoxiaaeristokles3872]

Great video, as always! I like that you explain concepts, theories and forecasts even if you don't think they are accurate. Thank you!

[@Pensioncraft]

My pleasure!

[@andrewcase9652]

Thought provoking- Thank you for your work

[@Pensioncraft]

Thank you

[@simonaserb1]

Fantastic explanation, as always. I've watched this a few times now to try to grasp all the implications.

[@Pensioncraft]

Glad you enjoyed it!

[@timmybrown3836]

We’re witnessing history books being rewritten. I just hope that the old regime resign gracefully. Building a bridge currency might be what’s needed. I’ve always wondered what that saying’s meant about building bridges! Now I realise that it’s about world peace! Instead of China being next in line for the reserve currency! What is best for America?No country has the reserve currency :-) The bridge The cloud The currency converter The peace process The start of new kind of money

[@billytheweasel]

Very nice explainer. I needed this... been a long time since studying Bretton Woods in college - and didn't spend much time on it either.

[@Pensioncraft]

Glad it was helpful

[@AlekseyShevchuk]

Very insightful! Thank you!

[@Pensioncraft]

Glad it was helpful!

[@Ganok]

Great video, I love learning about macro 😄

[@Pensioncraft]

Glad you enjoyed it

[@MultiformeIngegno]

Thank you for this video Ramin! What does this mean for a long term investor who holds - say - unhedged VWRL on Vanguard? I know you usually say that in the long term currency fluctuations are not significant compared to movements in equity prices/volatility. But since this would be a paradigm shift, is there anything one could do to protect against the dollar losing value compared to other currencies? Perhaps buying Renmimbi or adding a Commodity ETF to the portfolio (albeit in a relatively small percentage)?

[@Partha76]

One of your best and insightful videos Ramin

[@Pensioncraft]

wow thanks

[@wucwug]

thank you for this video, very enlightening!

[@Pensioncraft]

Glad it was helpful!

[@dhuryodhankaurav8487]

Great explanation! Everything stated in the video seems plausible... video should clarify what parts of it look unreasonable or wrong?

[@krisnah7]

Always valuable. Thanks

[@Pensioncraft]

My pleasure!

[@jonandrews3528]

Excellent show.

[@Pensioncraft]

Glad you enjoyed it

[@Wallaby1961]

Excellent as usual 😉👍🏻

[@Pensioncraft]

Thank you so much 😀

[@heitorvieirafilho2643]

Clean and also great content.

[@Pensioncraft]

Appreciate it!

[@fjcruiserdxb]

Great video. Problem with ZP' theories is the risk of confiscation by an authoritarian regime is far greater than from a democracy. As an eg China has instigated some strict currency controls that are now preventing foreign businesses from exporting their profit back home. Secondly, the Western world may have confiscated some of Russia's foreign reserves held in the US but have no power on anything outside (Russia has planned for this and its reserves in gold and Euros are held with 'friendly' countries). Thirdly, trade is conducted in Euro$ and is outside any US control (that's what the Euro$ was about in the first place, to avoid any US reg Q control). Forthly, the GFC wasn't caused by subprime but by a breakdown in the Euro$. Subprime was a symptom not the cause. And of course China biggest market is still the US and the US pays China in....US Dollars. I don't think Bretton Woods II is dead, the Euro$ has its issues but isn't dead yet!

[@ds-kj8fq]

You are wrong, so call democracy stole Russian reserve

[@4390100]

There's just something about this term Democracy that's become indoctrinated into our culture, and makes me feel that it's already too late to ever get America back to being America, that it's just plain and simply gone. I digress, it will probably get much worse before it ever gets any better.

[@Joseph-tf4lg]

You mentioned you think some of these ideas are wrong. I'd love to hear your criticisms. In the big picture, all this is accelerating an erosion in confidence in fiat currencies which started with the end of BW1. If the US dollar is weaponized, it's no longer reliable. If commodities are traded in various currencies, then there is no longer a universal. Sooooo, is it time to talk again about crypto currencies?

[@gaborh7655]

Fantastic 😃thank you

[@Pensioncraft]

Glad you enjoyed it

[@timwood101]

Very informative

[@Pensioncraft]

Glad you think so!

[@johnnyworzel3741]

Great content, as ever 👏😀

[@Pensioncraft]

Much appreciated!

[@stlouisix3]

I think Zoltan Pozsar's right ✅️ on his idea of a new commodities monetary world order.

[@andrewmarsden1970]

11.30 - that is a bonus!

[@crysty200718]

Good video

[@Pensioncraft]

Thanks for the visit

[@elizabethlee6907]

Very nice explanation if you are aligned to Black Rock and Vanguard. It means you have wealth in a crumbling system. Nice way to calm those in your class. But the days are coming when #3 will be announced. Shouldn't you be warning them instead of advising them of possible outcomes?

[@kenneho]

Thanks, this is very useful information. However, as I'm quite new to macro economics many of the main points are way over my head. If possible, I'd be great if you elaborate on, and gave some simple examples, of the key points.

[@jenniferseiden3838]

True, despite many,many years of studying these significant historical events it is challenging to understand the Chinese market dynamics since we’ve been so insulated & US focused. A wake-up call to pay close attention to the new Global dynamics & China’s sudden key linchpin role in the world.

[@ashishtiwari1912]

China is also planning to buy oil from saudi arabia in yuan. India is having rupee- rouble mechanism for purchasing crude oil. Economic sanctions on Russia has sent warning signals to many emerging countries and that is the reason countries are making contingency plans seeking alternative for SWIFT payments and USD. If the top buyers of crude oil stop purchasing it in USD, then it will lead to the gradual fall of petrodollar hegemony. Currently, that is what it looks like.

[@davidlewis5737]

Something on the philosophy of science and economics might be interesting. There is a view - I'm not sure how popular -that economics simply fails to generate theories with stable law-like regulates or predictive power. I think the philosopher Alexander Rosenberg did his early work on that. Or perhaps something on the theory and history of money and credit. Maybe the work of Robert Skidelsky and Richard Werner.

[@EatRawGarlic]

That sounds really interesting, maybe approach it through game theory. I can certainly imagine a feedback mechanism by which select agents - exclusively aware of such a theory - would undermine the predictive character of the theory by maximising it to their own advantage, especially when operating in a zerosum context.

[@blackbaron0]

i certainly agree with some of this. I would take issue with the situation with the Reminbi, as i think this would only happen if it became a convertable currency. The CCP is obsessed with control, and would find this hard to do. A more inflationary world looks likely, and there will be a more multipolar world. End of globalisation? Depends on how you define it. Things like automation and for instance 3d printing will allow more domestic production at cheaper rates than before, but will it mean many more domestic jobs?. Certainly a more Nationalistic fevour around the world. How will it feel though once the price of so many things goes much higher than we have seen for a long time? and then what? Ah the cycles of money and econonics - always swing too far, as they will here too.

[@Ubik_Fresh]

Seen lots of other videos floating around on this that seemed very OTT, sensationalist and verging on slightly crackpot. Most sober dismantling of the idea I've seen. Was a good watch.

[@Pensioncraft]

Glad you enjoyed it!

[@danielmz99]

No disrespect Ramin but I believe you are trusting far too much the FED and ECB in their calls for control on inflation. Zoltan has got many calls right in the last few years. Recently yields spiked specially after the move for commodities sales in Ruble. This is with no material lowering of FED balance sheet and BBB being dead. Any of these could really trigger MUCH higher yields. With 60/40 portfolios being caught in the

[@danielmz99]

A cascade of portfolios rushing out from the 60/40 model due to very consistent loses, liquidation of portfolios due to baby boomer retirement and sustained inflation driven by demographics and re-shoring will make things much worse. You have to recognize that inflation had every opportunity to improve the last 12 months. The excess liquidity from 20 years of central bank negligence is most certainly behind traders bidding up commodities. We already passed the trigger point for a prolonged stagflation period in the west. I can only see price controls, capital controls, YCC and gaslighting from the government moving forward. I would only suggest to plan ahead for it as it is the most likely scenario

[@SP-cx2qi]

Agreed, I believe we are in transition of change, all ties in with the forth turning and Ray Dalio's theories..

[@NbyD]

The big commodity trade was discussed in summer 2020... now it is *very late and I suspect some peops talking thei rown book

[@Peter-MH]

It’s going to be very interesting to see how this plays out. The US basically relies on trade being done in USD, and countries investing USD into treasuries, to support their position as global superpower. However, they’ve essentially poisoned this system by seizing Russia’s treasuries and kicking them out of SWIFT. Everyone besides the US’s closest allies will want out of this ASAP now, so it’s going to lead to big changes with significant implications.

[@craigthebrute3945]

The Arabs in particular will want out. They are no friends of the West, have a tenuous “alliance” at best & have been invaded by their western “allies” numerous times. Saudi Arabia will be next in the crosshairs of the globalist liberal LGBT pushing insect eating hegemonic order if MBS decides not to play ball anymore. MBS is well aware of this & I’m sure he is currently considering his options carefully.

[@___JJ]

which powerful countries will want out ? Saudis?

[@Skessu]

We haven't yet seen much indication of countries trying to distance themselves from USD-based trade and that makes a lot of sense as there is really no viable alternative yet. Most countries aren't planning on invading a country on the neighborhood of US/NATO (nor anywhere else really)

[@Peter-MH]

China will certainly start reducing treasury holdings. Saudi will probably do the same as their relationship with the US has soured & China is by far their biggest customer now. Some South American & Middle Eastern countries will probably follow suit. It’s created a huge opportunity for China really, they sell everything so plenty of ways for countries collecting yuan to spend it.

[@Skessu]

​@@Peter-MHSaudi distancing from the US is not surprising as the US is pretty much energy independent now. If China & Saudis reduced their UST holdings meaningfully it would come with a significant cost to their export economy. That would in turn strengthen the domestic economy of the US but sure they could do it. Their holdings are "just" around 4% of all US federal debt which is something but not enough to do with the two of them Now if many countries see the US seizing Russian treasuries as a threat, why would they do trade in yuan right now? China has a lot of capital controls, very tight control over its FX rate compared to the dollar and the currency lacking acceptability internationally. China would like that, but it's not solely up to them. China has been very reluctant to loosen their grip on controlling their monetary and economic policy. Sure this could be the start of some changes in the monetary order, but I'm not holding my breath yet. And keep in mind that the crowd that is "US's closest allies" is fairly large economically. If that somehow changes though it will be interesting to see what happens but that might take a very long time.

[@alexanderdevereux2873]

Could there be a Bretton woods 0? How have these changed played out over history? For example the east India company collapse when is owned a 1/4 of the globe.

[@Cssaarr]

Thank you ! Question (sorry I am a real ignortant about this): why is it that China selling bonds would necessarilly bring the price down? wouldn´t be expected that China (or any buyer of bonds) sold at a higher price than she bought? (otherwise china would have lost money!) , and if that was so, wouldn´t the price go up instead of down? example: I buy a bond for 100 dollars under the expectation of recieving 1000 dollars in 10 years (yield: 900 dollars). Then after 5 years I decide to sell it; I would try to sell it for 200 dollars (the expected yield of the buyer would be now 800 dollars) because: a. The buyer has to wait a shorter time (only 5 years) and b. I want to make a profit for the risk I took for 5 years.......any other subsequent buyer would do the same; of course if the country that emits the bond falls in a really bad situation the price of the bond would go down and the yield would go up.....but I don´t see why in this case the price of the bond would go down.........sure, the bigger the offer the lower the price.......but that depends on the price the demand is willing to pay, right?

[@sciagurrato1831]

You need to understand the pricing and trading of bonds. Begin with understanding what the yield to maturity means

[@lapserdak24]

Ok, so what are we buying now? Which company would do stockpiles for the US government?

[@harlyslamm2888]

Zoltan stole my paper, I left it in the park when I went to buy a diet coke when I came back it was missing. In its place was a CSFB napkin written on it said 'I owe you one Bruh'.....

[@Pensioncraft]

I'm sorry to hear that Harly... I'm not sure I agree with the stuff in your paper I'm afraid, but at least it's interesting 8-) Thanks, Ramin.

[@sciagurrato1831]

@@Pensioncraft you’ve hardly presented any lucid counter arguments. I’m betting on the guy that talks directly to central banks, I’m afraid.

[@CaseyBurnsInvesting]

I’d be interested to hear what you think about the World Economic Forum, their ties to Black Rock, and The Great Reset Agenda.

[@Sock1122]

7:30 an important caveat I think needs highlighting China does NOT in fact completely dominate in international holdings of US treasuries as they hold an almost identical amount as Japan, both over $1 trillion

[@rksleung]

Except that Japan is a defacto occupied country with no mind of its own pandering solely to the US daddy.

[@dmenace2003]

I think the European response will most likely be to defending their own currency when this happens. The period of unlimited US dollar printing press might be ending. I’m concerned that in desparation, US policies will become more n more coercive.

[@TheEarthsEyes]

What do you think is wrong with this argument? You alluded to misgivings but didn't specify...

[@sciagurrato1831]

It was a throwaway statement to entice you to watch his next video. No way this guy is in a position to know more than Zoltan.

[@notarobot4088]

I knew Bretton Woods 3 at Harvard. He only got in due to his rich father, Bretton Woods 2.

[@texasscifi3431]

Steve van Metre is right. The buyer or Importer can name what currency to use and USA is the biggest importer. The Petro dollar might diversify to other currencies but the dollar remains the safest most demanded currency backed by the strongest armed forces in the world. Petro exchanges have and will be in other currencies but other currencies won't be the reserve currency and it won't be the Yuan or Ruble or any other foreign currency universally and the SDR isn't replacing it either . USA will remain the reserve currency unless our military falls our country gets nuked or we stop importing and stop demand we receive payment in dollars.

[@Sock1122]

This theory by Zoltan Pozvar unfortunately glosses over a crucial point - which is why China has built up such significant US treasury reserves in the first place He must assume that these reserves do not mean so much to China, who uses them as a means to regulate the value of their currency It is an interesting concept for certain, but also quite a fanciful one which I am not very convinced by, but thanks so much for illuminating us to this perspective, I do appreciate these videos greatly

[@twiiFM]

Its just the result of trade deficit

[@chrisharrison763]

This is how I imagine Ramin proposed to his wife: "Darling, will you marry me? And now let's look at all the reasons why you should...in a bit. more. detail."

[@jonandrews3528]

Isn’t North Sea oil of better quality than Russian oil? For china to do that they would have to pay more for Russian oil. This is fascinating. I think China would love to get Russian oil cheaper but Russia is a small market. Wouldn’t china prefer to trade more with Europe?

[@damianpos8832]

Central banks need to be abolished..

[@edan2629]

seems like inflation isnt coming down anytime soon... weaker dollar, worsen supply chain... Snp500 going to 6k? Russia and china is not in such a good state too. with the war going and china pandemic lost control... my all shipments are already on hold for a week. god knows how severe is their quarantine

[@Pensioncraft]

Hi E Dan I agree it looks like inflation is going to be high for some time as producer price inflation has also skyrocketed e.g. in Germany www.destatis.de/EN/Press/2022/04/PE22_172_61241.html. That has to feed through to more widespread price rises in Europe. Thanks, Ramin.

[@mrmoore2485]

An ex-colleague convinced me into stock trading and investments as profitable alternative sources of income. Unfortunately, I have been down ever since. Next time, I will spend my money on myself first before considering whether I will invest or not.

[@cooper8t]

Could happen, but there's a small elephant in the room which is Taiwan.

[@boldbaatardashdorj9389]

Zero chance this to become reality.

[@jmitterii2]

Well, globalism, colonialism, mercantilism/feudalism, imperialism whatever you want to call it was never a good thing in history and always ends in civil war, war, and just pure misery for most. And even the oligarchs who parasitical feast on the flesh of this exploitation setup eventually start eating themselves. I mean this is just a faction of oligarchs warring with another faction now in Russian and Ukraine. The pressure on labor to be exploited more and more means aggregate demand declines... hence the 40 year lowering of interest rates to get the borrowing stupidity on full tilt to flood the system with artificial demand... because the intrinsic demand from workers producing was gone along ago and continues to decline in a race to the bottom for labor. The trade trade itself is at that crux of inauthentic comparative advantage... they can force labor or pressure labor to work for next to nothing. Cheap labor. Additionally, many nations will subsidize the raw material costs of inputs. Cheap labor and cheap inputs. Additionally, many nations will forgo normalized social expenses such as pollution controls, infrastructure expenses, etc. Cheap labor, subsidies taxes, subsidized inputs... you can then make a spaghetti of cost ineffective, and thermodynamic expensive trade networks that make utter nonsense, costing a fortune... only because of the temporary misery factors of the desperate and oppressed labor, the always crumbling infrastructure or lack thereof, and the credit/debt hole of subsidized taxes and adding insult to injury the subsidy of input purchases. A supply chain that is actually insanely expensive. The cost of diminishing authentic demand in aggregate demand slump mixed with the increased cost of the trade as described has to be paid back. There is no free lunch. As always, this structure of economics eventually collapses. This type of setup whatever buzz word you want to call it is self refuting and defeating, generally ends catastrophically. First use was the late bronze age collapse. Very sudden (however doesn't need to be a sudden calamity, it can linger in a state of malaise) and apparently catastrophic. It's always ends catastrophically... about 80% it's sudden and history shows 20% it can linger on for a century or four. But we saw this with Classical Greece collapse, and the Roman Empire collapse... smaller regional examples goes to the Assyrian collapse. And we can go through all through the AD/CE periods and see the same thing. Over and over and over again.