Today we face a new Bretton Woods moment according to IMF chief Kristalina Georgieva and yet such a profound moment, the rebuilding of the monetary system with an agenda, the greatest development in global finance of this century, which is likely to impact billions of people not only doesn’t make mainstream headlines the story barely gets reported.
Such an important announcement by the IMF, “a new Bretton Woods moment” is flying under the radar.
“Today we face a new Bretton Woods moment according to IMF chief Kristalina Georgieva”
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What is the Bretton Woods system where IMF plans to rebuild a better pre-pandemic world in this new Bretton Woods moment?
The 1944 Bretton Woods system was intended to rebuild the international economic system after the end of World War II and it was the first monetary order that organized monetary relations among independent nation-states.
WWII and the 2020 pandemic both caused mass loss of human life, economic contraction, and large government debts.
“Today we face a new Bretton Woods moment. A pandemic that has already cost more than a million lives. An economic calamity that will make the world economy 4.4 % smaller this year and strip an estimated $11 trillion of output by next year. And untold human desperation in the face of huge disruption and rising poverty for the first time in decades,” said IMF’s Kristalina Georgieva.
“The 1944 Bretton Woods system was intended to rebuild the international economic system after the end of World War II”
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“Once again, we face two massive tasks: to fight the crisis today— and build a better tomorrow.
A durable economic recovery is only possible if we beat the pandemic. Health measures must remain a priority,” added the IMF.
“We can do better than build back the pre-pandemic world-we can build forward to a world that is more resilient, sustainable, and inclusive” – Kristalina Georgieva
A new Bretton Woods moment could also financially support and foster global mass vaccinations
“I urge you to support the production and distribution of effective therapies and vaccines to ensure that all countries have access” said the IMF.
Historic fiscal deficits could also be a feature of a new Bretton Woods moment
“I also urge you to continue support for workers and businesses until a durable exit from the health crisis” she added.
The IMF wants to rebuild a better pre-pandemic world in this new Bretton Woods moment
“We must seize this new Bretton Woods moment” said IMF’s Kristalina Georgieva.
So we have a classic problem, reaction and solution scenario. In short, the 2020 pandemic great lockdowns triggered global fiscal actions of $12 trillion and the major central banks in cahoots expanded their balance sheets by $7.5 trillion. Unprecedented central bank liquidity and Fiscal expansion were all necessary, according to the IMF to prevent a financial meltdown.
“These synchronized measures have prevented the destructive macro-financial feedback we saw in previous crises” said the IMF’s Kristalina Georgieva.
Moreover, the IMF has loaned out over $100 billion and willing to lend more. “We have committed over $100 billion—and we still have substantial resources from our $1 trillion in lending capacity,” said IMF’s Kristalina Georgieva.
So the 2020 pandemic is also a debt pandemic.
Here comes the agenda for IMF’s Kristalina Georgieva new Bretton Woods moment
“We can do better than build back the pre-pandemic world-we can build forward to a world that is more resilient, sustainable, and inclusive” added IMF chief.
“We have a chance to address some persistent problems low productivity, slow growth, high inequalities, a looming climate crisis” added IMF chief.
But how do you address fourth revolution technologies which are displacing humans from the productive economy at an alarming rate, a macro trend playing out before the pandemic hit?
IMF’s Kristalina Georgieva new Bretton Woods moment “moment speech could be paving the way for the Central bank digital currency (CBDC), global fiat currency, and a likely vehicle for Universal Basic Income (UBI)
CBDC will use blockchain technology, which is already being deployed in cryptocurrencies and will lead to the fading out of notes and coins. Late in 2019, Philadelphia Fed President Patrick Harker told Reuters that the issuance of digital currency by central banks including the Fed and the European Central Bank (ECB) is “inevitable”
“We can steer toward zero emissions by 2050 and help create millions of new jobs” – Kristalina Georgieva, IMF chief
Could this new Bretton Woods moment also usher in an Orwellian control of society?
CBDC could do a lot of great things, it could potentially open up direct central bank accounts for millions of people all at once. This digital currency will give central banks unimaginable control, having real-time data on consumption, which could help find tune monetary policy. If policymakers can see real-time consumption, the push-button stimulus could send millions of citizens CBDC to their smartphones, and they could watch consumption pickup in real-time with a bird’s eye view of every single transaction made. CBDC could be designed with an expiry date forcing every recipient to spend it or lose it.
CBDC could also be a threat to free societies, bearing in mind the digital currency could even incorporate a Social Credit System already used in China
Citizens deemed untrustworthy could be locked out of fast rail travel, air travel. In extreme cases, those failing to take mandatory vaccinations could have their CBDC frozen.
On a less heavy note, the new Bretton Woods moment is also an opportunity to build a Greener world
“We can steer toward zero emissions by 2050 and help create millions of new jobs” said IMF chief Kristalina Georgieva. “With low-interest rates, the right investments today can yield a quadruple dividend tomorrow” she said
“We focus on climate change because it is macro-critical, posing profound threats to growth and prosperity. It is also people-critical and planet-critical.
In the last decade, direct damage from climate-related disasters adds up to around $1.3 trillion” she added
So the green agenda is a boost for certain metals
Silver is used in solar energy. Moreover, copper is an excellent conductor of electricity. All combustion engines are fitted with Catalytic converters, which are designed to reduce harmful emissions. Catalytic converters contain the metal palladium and rhodium, both metals are up 20% and 30% respectively year to date. Lithium is a major component in batteries.
Readers can listen to IMF’s new Bretton Woods moment speech.