Financial World War Three has begun; Global reset, Bretton Woods 3.0 are next
(Kitco News) - The world is already engaged in a financial "World War", and the transition towards a global reset is currently underway, according to Willem Middelkoop, founder of the Commodity Discovery Fund and author of "The Big Reset".
"This is a war, it's a financial, economic war, and according to me, it's World War Three," he said, noting that China has already demonstrated economic hostility by "not investing in U.S. Treasuries anymore, they're adding a lot of gold because it's the anti-dollar."
Speaking to Michelle Makori, Editor-In-Chief and Lead Anchor of Kitco News at the Prospectors & Developers Association Convention of Canada in Toronto, Middelkoop outlined that the global reset would likely result in a revamp of the current monetary system, in which the U.S. dollar is no longer the dominant reserve currency.
"The thesis of the book is that one day we'll need to find a new anchor for the world monetary system, so the dollar needs to be replaced. We know the IMF is working on that, they have the SDR, which is a currency basket. We could have a digital SDR. We have the central bank digital currencies rolled out, you could make a basket of all these central backed digital currencies, have them managed by the IMF, and use them to price commodities, use them to price oil. That could be an easy transition to a new phase for the international monetary system. We could also expect gold to be brought back into the system to stabilize inflation," he said
Middelkoop said that the world has already split into two major economic blocs, the West and the East, which are currently engaged in a global economic war.
This economic battle has the potential to escalate to a hot war between the East and the West, and the trigger may be conflict over Taiwan, he added.
|15-20% inflation can happen next; This asset can protect you from the 'inflation monster' - Randy Smallwood|
China currently considers Taiwan a rogue province and has stated that re-unification with the island is a top national priority.
"Most of [the military experts] say that China will move [towards action against Taiwan] within five to ten years. China is looking and studying what happens to Russia and don't want to make the same mistake. Don't forget, China is gaining a lot more power without firing a shot because they control Russia now. Without China, Russia is gone, financially," he said.
On current monetary conditions, Middelkoop said that a "severe recession" is on the horizon, and the Federal Reserve will likely realize a monetary policy pivot once they understand this economic risk.
Commenting on the recent 75 basis point rate hike this week, he said that "I think the Fed was really scared by the way inflation took off. Actually, central banks are a bit cornered because they printed so much money to stimulate the economy and to solve each and every crisis in the last two decades, and now the inflation is red and they need to act now, so they need to move fast and take big steps. But, while they do this, the economy is cooling off quite a bit and if you read the reports from real estate in the U.S., I think a recession is close, could be a severe recession, and once the Federal Reserve understands that there could be a severe recession underway and prices are going down because of these recession risks, then they might pivot and stop raising rates sooner rather than later."
He noted that in a few months to weeks, people will get more stressed about the state of the U.S. economy.
On investment implications, Middelkoop said that we are moving towards Bretton Woods 3.0, which "is a monetary system centered around commodities, you can expect the price of commodities to keep rising, you can expect the value from a geopolitical point of view to keep rising, you can expect the position of gold to become more important."
Importantly, gold could also be reintroduced into the world financial system and be "revalued".
For more information on how the Federal Reserve has talked about suppressing the gold price in the past, and for the appropriate asset allocation percentage into gold and Bitcoin, watch the video above.
Follow Michelle Makori on Twitter: @MichelleMakori
Follow Kitco News on Twitter: @KitcoNewsNOW