Bretton Woods set the stage for the US dollar to become the world’s reserve currency. Today, 79% of all transactions of any kind globally are conducted in US dollars. This is why despite the trillions of dollars created through quantitative easing and fiscal borrowing there is a global dollar shortage.
Monetary, fiscal and pandemic crises only drive the demand for dollars higher. As emerging markets and global companies scramble for dollars to pay for their trade, borrowing and hedging. Driving the dollar higher and increasing deflation, debts and insolvencies. And with the Eurodollar monetary system larger than the US domestic system, the Federal Reserve either needs to become the entire world’s central bank (some might argue they already are) and continue to create credit and provide swap lines at Infinitum, or one day abandon this poisoned chalice. A rock and a hard place.
World central banks (especially the ECB) are wholly dependent on the dollar and swift payment system, which means printing their currency has little effect in stabilising their banking system. This is why the IMF is now discussing a new Bretton Woods. A payment system not beholden to the US dollar. Driven by Central Bank tokens, directly paying money into the bank accounts (wallets) of its cash-strapped companies and citizens. It means avoiding the broken banking system that shows quantitative easing does not lead to more commercial bank credit creation and stimulus. It means a system where privacy ends (your central bank and governments will know exactly how and where you spend your money). It means all governments, who love to tax and spend until all the money has run out, can feed at the trough at their heart’s content. It could mean the lunacy of MMT becomes reality and the start of UBI.
It means, probably, a massive dollar bull market over the short term. That would collapse after the shift away from the swift payments system. It means a greater global debasement of all currencies. Accelerating an already existing trend. And the desperate need for and acceleration of decentralised finance (DeFI) and sounder digital currency(ies) systems.