Today, years of "strong dollar policy" have created an epic imbalance of dollar denominated "claims in the system" which hundreds of trillions in fiat denominated derivatives (in part) attempt to keep in balance. This status quo position has afforded the United States an exorbitant privilege which extends beyond purely financial or economic advantage. As we have discussed before in these annals, the international usage demand of dollars has not only kept the dollar strong, but has allowed it enormous political influence around the world - and that political influence is a direct reflection of the political will of the dollar's issuing authority.
For those new to these writings (welcome) notice I have made the distinction between "issuing nation" and "issuing authority" because in our world of privately owned central banks, a nation's "political class" has less to do with monetary policy than in times past, and even less to do with the people which that political class was once presumed to serve. That said, global fascism still presumes some degree of partnership between government and corporation. But as government becomes more "privatized" (individuals serving their own self interests as opposed to serving the interests of their constituency) the distinction becomes blurred. So to avoid confusion I will continue to use the more commonly accepted terms like "Washington" or the "United States" or "US" or "America" (and their equivalents) when describing the various Corporatist issuing authorities going forward.
The distinction above is more of a premise than a point. The point here is balance, and the lesson learned is that without monetary balance there can be no political balance.Witness the continuing changes in our world's socio-economic / political landscape. Needless to say, these are anything but balanced.
Sovereign nations, acting in their own self interests, have begun the process of rebuking the political will of the United States, including its dollar-funded military and ideological operations in their countries. The best way to do this is to refuse to accept dollars for oil. Most of Washington's Middle East initiative and much of it's other foreign policy intervention has been a reaction to countries opposing the political will of dollar primacy. Just look at any nation refusing to sell its oil or natural gas (and a few other strategic items) in dollars. There you will find the list of past interventions. These interventions were designed primarily to preserve America's self interests and maintain it's prime currency advantage - most often under the guise of "spreading freedom and democracy" so as to preserve the public opinion illusion which mainstream propaganda sources were able to maintain.
But with "alternative" (a.k.a. "real") news sources, this strategy has faltered. Calling reality "fake news", while typically bold and arrogant, was not effective, domestically. Then abroad, we have nations greatly reducing their usage and storing of dollars - in large part, again, as a repudiation of U.S. political will being imposed on their economies, and (more importantly) upon their political class.
So ... the issuing authorities of the current system's flagship currency needed to respond. When one looks at recent events in this context, it becomes clearer as to how the "America First" policy was both contrived and then later perceived.
The world hired Trump to say, in effect that: "America no longer wishes to rule the world. We are back to minding our own business and cleaning up our own house. No more expansionism, we are focused on Making America Great Again!" But do not make the mistake of taking this implied policy statement at face value. At best, it is an effort to redirect, diffuse and reduce tensions already in place, which will in essence prolong the demise of "dollar usage value".
The system's appointment with the massive iceberg that lies dead ahead is an unstoppable and foregone conclusion. Trump's election represents a reaction to that appointment, in the way of "hard over" with engines in full reverse.
In today’s world, the claims that wait to be settled are so huge that the (role) that gold is currently playing while being under the influence of .. strong dollar policy prevents it from functioning to settle these claims. In other words, at strong dollar prices, there is not enough gold in the world to settle claims – claims continue to build.At one time it was thought that the Euro could fulfill the role of a "politically neutral currency". But the Euro members are not enough to preserve neutrality. While their politics are indeed a "sideshow", the perception around the world is unbalanced. Still, it was a step in the right direction.
At some point, the claims will overwhelm the economy. At some point, the world will realize that their claim doesn’t really mean anything. At that point, they will do whatever they can to redeem their claim .. In the absence of the strong dollar, gold can find its rightful "role" as functioning to settle the surplus claims in the system.
The SDR has a chance to present itself to the world as an international settlement currency that is politically and even monetarily neutral (i.e. relative exchange rate impacts are fairly factored into it's value). But in a world of irrational and imbalanced claims in the system and a gradually failing FX market, the SDR remains nothing more than a supranational claim in the system.
Real things owned, like land and fine art, represent title to "payment in full" in a civilized world. But you will not find much in the way of title to such things on the "balance" sheets of the world's central banks. Still you will find shares of operating companies and claims of many sorts on our modern CB balance sheets, there has been a great deal of growth in such claims upon the future.
There is only one asset they hold which represents "payment in full" in a universally accepted way. No other CB holding represents the capability or liquidity to settle or balance claims in the system. As the currencies begin their transition that asset must also change, as there is not enough of it at it's current "average world currency price" to settle dollar claims.
Even if every single ounce of it was sucked up out of private hands and transferred to CB balance sheets, the world's supply is far too little. It doesn't matter whether gold or claims upon the system are "repriced" - the action and outcome are one and the same - to achieve balance.