Today I am going to be talking about the “Great Reset” and this idea has been widely criticized as a conspiracy theory. It is not often that we get conspiracy theories about accounting and finance, so I think it will be helpful to take a closer look and try and figure out what it all means. WATCH NOW
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VIDEO SUMMARY
Disclaimer: In this video I will be talking about investments. If you use any of this information to make investment decisions, you do so at your own risk. Investing is risky and you should discuss your investments with a finance professional.
Let us start with where the concept of the Great Reset came from. The Great Reset was the name of the 50th annual meeting of the World Economic Forum (WEF), held in June 2020. Several other major economic meetings since then have also used the same name. These are meetings organized by rich and powerful people like Prince Charles from Great Britain. Prince Charles of course is the brother of Prince Andrew that has been served in a sexual assault lawsuit in the United States from his connections with Jeffrey Epstein. The topic of these meetings was economic recovery following the COVID-19 pandemic.
Just hearing these facts, I think it is easy to see how a conspiracy theory could spring up from this. The whole world has just suffered through strict government lockdowns. You have rich and powerful people with bad reputations talking about how they are going to mess with your money. So, people are freaking out. These people took away your freedoms and now they are going to take your money.
Our job as finance professionals is to look at this conspiracy theory and figure out the truth. Because like all good conspiracy theories, there is a grain of truth behind it. But the “Great Reset” is not what you think… it is a lot more boring.
When we look at the topics from the World Economic Forum, they are all focused around the idea of the Great Reset, but the topics are the same topics they have always discussed at these economic meetings. They talk about batteries, 3D printing, air pollution, human rights, global health, etc. They are talking about ways to improve the economy, just now they are using a catch phrase of the “Great Reset” in order to get more buzz about the event. Unfortunately, I think their attempts at publicity backfired, and now no one trusts them.
Link to Economic Forum website: https://www.weforum.org/agenda/2020/06/now-is-the-time-for-a-great-reset/
To understand the fear from people, we have to go back in business history to an economic event called the Bretton Woods Agreement. This happened in 1944. We were in the middle of World War II and delegates from 44 nations met in the United States to regulate international monetary and financial order. The result of this agreement was to establish the US dollar as a global currency pegged to the value of gold. It also established the International Monetary Fund (IMF) and the World Bank.
The Bretton Woods Agreement continued until the US dissolved it in 1973 when the US went off the gold standard and nations began trading their currencies on a floating index no longer pegged to gold.
The Bretton Woods Agreement is part of the current conspiracy theory. People talk about the Great Reset as a repeat of the Bretton Woods Agreement. They point to this meeting from seventy years ago as a time when rich and powerful people took over the monetary system of the world, and they are trying to do it again. The problem is that people are misunderstanding what the Bretton Woods Agreement was about.
In 1944 we were in the middle of a World War that destroyed most of the developed world. There were all these countries that needed to rebuild and their currency was in shambles because they did not have a functioning economy. If you are going to rebuild a nation, you need a stable currency. The United States was the most stable currency in the world at that point. The Bretton Woods Agreement was all of these struggling nations coming to the US saying “please let us use your stable currency.” It was not about rich and powerful people taking control. It was about helping other countries rebuild.
When the US abandoned the agreement 20 years later, it was because these other nations had rebuilt their economies. They were fully functional and had healthy currencies again. This started causing the United States imbalances in the US dollar as so many people were using dollars throughout the world. So the US ended the agreement, and everyone started trading their own healthy currencies once again.
Let us bring this back to today. You need to ask yourself, “Who is using this conspiracy theory?” There are a lot of YouTube videos out right now talking about the Great Reset and they are almost all encouraging people to buy gold and bitcoin. The argument goes like this: 1) The Great Reset is coming 2) It is just like the Bretton Woods Agreement where they will take away your money 3) buy gold and bitcoin to avoid powerful people from destroying your wealth.
There is a couple of problems with this argument. It really shows a misunderstanding of the Bretton Woods Agreement. The Bretton Woods Agreement was about strengthening the US dollar. And it was not some tricky power play. The US dollar was the most stable currency in the world because it was backed by real economic activity. US dollars are strong because there are actual real world transactions taking place with those dollars. If you hold your wealth in US dollars, you know there will be demand for those dollars because people need them to make actual transactions. The world was using the stability of the US to support the rebuilding efforts that was necessary.
But even worse than a misunderstanding of the Bretton Woods Agreement, you need to realize that these videos have a significant conflict of interest. The videos talking about the Great Reset are trying to sell you gold and bitcoin. They are a sales pitch. Gold and Bitcoin are not like other financial assets. It is not like purchasing a stock. If you buy a stock for a company, the way you will make money, is if the people in that company work harder, and then your stock goes up in value. Gold and bitcoin are not like that. A bar of gold cannot work harder. It just sits there. For someone who holds a lot of gold and bitcoin, the only way for them to make money is to convince other people to buy it. Then demand will go up, raising the price of their gold or bitcoin.
Now I am not saying you should never buy gold or bitcoin. I am saying you need to recognize there is a conflict of interest here, and it is very suspicious that this conspiracy theory is only mentioned in videos where they are trying to sell you gold or bitcoin. These people are telling you how you should think about the Great Reset in a way that makes them a ton of money.
I am going to break down how this scam works.
- Economic Pain
- Conspiracy Theory
- Fear
- Take Your Money
First, you experience economic pain. This whole idea stems from real economic hardship we have all faced during the COVID-19 pandemic. Next, people develop a conspiracy theory to make sense of the pain. This conspiracy theory is designed to give you someone else to blame. It is the corrupt rich people who are friends with Jeffrey Epstein who are doing this. Next, this creates fear. People are afraid of what will happen to what little money they have left.
What you need to understand is that at this point in the cycle, you are extremely vulnerable. You have been primed for people to take your money. It would be very easy to influence someone in this state to believe a phony sales pitch.
Again, I am not saying you cannot invest in gold and bitcoin. My message is to be careful with your investments. Make your investments in a thoughtful way and protect yourself so you are not taken advantage of.
Now I am going to give you my opinion of what is going to happen in the future. To be clear, no one knows the future. I could be wrong here. This is my best guess based on what we know about business history.
There is some truth behind the conspiracy theory. A Great Reset is likely to happen, it will just have a different outcome than everyone thinks.
- China will increase military aggression
- China’s housing bubble will continue to burst
- There will be an Asian currency crisis
- The US will step in with stable US dollars to help rebuild countries
There is a Great Reset coming, where there will be intervention on international monetary systems. But the outcome of this is not that people will switch to using gold and bitcoin as currency. The outcome will be a strengthening of the US dollar. If you look at currencies around the world today, the US dollar is the strongest currency. The US dollar is the most commonly held reserve currency by different countries’ central banks. The reason is because it is the most stable. It is the most stable because it is backed by real economic activity.
When we look at China, there are more and more signs that it is heading for a collapse. The huge real estate company Evergrande has been failing to make international bond payments. Just last week on Oct 4 a second real estate company called Fantasia has also failed to make $206 Million bond payment. To contrast this, on Friday Oct 15, The Chinese Central Bank released a statement claiming “China Evergrande Group’s problems in the real estate industry are an individual phenomenon. Most real estate businesses are operating stably and have good financial indicators, and the real estate industry overall is healthy.”
Fantasia default: https://www.reuters.com/business/chinese-developer-fantasia-misses-repayment-deadline-2021-10-04/
China Central Bank press release: https://www.cnbc.com/2021/10/15/chinas-central-bank-says-evergrande-is-unique-and-most-real-estate-developers-are-stable.html
China is saying that Evergrande is an isolated problem, but that is a lie. And everyone knows it is a lie, because there is already a second company defaulting on its payments. When the Chinese Central Bank is making such a blatant lie, that is a sign that economic trouble is likely to follow. When someone is corrupt, backed into a corner, and lying about their money, the only way out is to take other people’s money by force, which is why we see increased military aggression from China in places like Taiwan.
You need to combine this information with the fact that all the major central banks are working to regulate cryptocurrencies. Just this week, on Weds Oct 13, Sir Jon Cunliffe the Deputy Governor for Financial Stability for the Bank of England gave a speech. In the speech he was describing the dangers of cryptocurrency. He points out exactly what I am saying in this video, that the value of cryptocurrency is entirely dependent on other people wanting to buy it. He says “These have no intrinsic value… the cryptoasset is determined solely by the price a buyer is prepared to pay at any given moment.” He continues by describing a scenario as a warning to people. He says, “So a necessary thought experiment from a financial stability perspective is what would happen in the financial system if there was a massive collapse in the price of unbacked cryptoassets – at the extreme end, if the price fell to zero.” The problem is not just the decrease in value of the assets, but that people are buying cryptocurrencies using debt. He estimates that “leveraged exposures to cryptoassets total around $40bn.” So it is clear from his comments that there is a lot of risk in holding cryptocurrency, and Central banks are committed to providing stable government backed currency.
Bank of England speech: https://www.bankofengland.co.uk/speech/2021/october/jon-cunliffe-swifts-sibos-2021
All these facts together suggest to me that yes, a Great Reset is coming but the result is a stronger US dollar. And keep in mind what this means. A stronger US dollar means more freedom throughout the world. You not only get a stable currency, you gain access to the values that make America great. You get freedom, and democracy, the rule of law, justice, fairness, and human rights. There are major countries in the world today where people still do not have the ability to vote for their leaders. That is crazy. The government corruption that tyranny creates leads to currency crisis, and using the US dollar to stabilize currencies will enable people to rebuild their country back stronger with more freedom and prosperity for their people.
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Neither Zach De Gregorio or Wolves and Finance shall be liable for any damages related to information in this video. It is recommended you contact a CPA in your area for business advice.