The currency tensions taking place right now are forcing us to make a review of the undercurrents at work right now. Just like the great streams that are covering our planet in the atmosphere and stratosphere, we need to take a look and understand these forces. One of these powerful streams has to do with currencies. They are shaking as we speak. In the last 12 months, the Euro lost 12% versus the US$, the British Pound lost 8% versus the US$, the Japanese Yen lost 5% versus the US$, the Chinese Renminbi lost 6% versus the US$.
We need to zoom in and out, from the particular compartmentalized look of the picture to the larger picture. When you pay a visit to the Louvre Museum or the Museum of Modern Art, you don’t go directly to the Joconde or that Frank Stella painting and stick your nose right there inches away from the surface of the painting.
If you did just that, you would probably understand how the artist created those specific shades or the types of brushes he or she used, but that would be the extent of your understanding.
Before I move further and in order to make the point I want to expose here, let me tell you about that day I discovered two paintings at the Moma museum in New York. They were both from Frank Stella, completely white. Yes the two pieces were completely white, set on the wall next to each other.
As I walked in front of them, my immediate reaction was to pass by them. My mind, that little voice inside my head, was urging me to pass and move on. Why would I waste my time with two white pieces? At least that’s what went straight through my thoughts. But for some reason, something else made me stop. I still cannot explain it but I stood there and kept watching, as if the whiteness of the paintings were pulling me inside. And all of a sudden something happened.
As I was standing in front of one of them, I noticed that my eyes caught the changing colors of the thin border around each of them. These rainbow-like borders were shifting constantly and around each painting, while my eyes kept looking at the center of the white painting. I realized that the last thing I needed to do was to precisely avoid looking at the borders directly.
It’s just like the story of the 7 sisters I was telling you about a few weeks ago; this cluster of 7 stars, also known as the Pleiads, is best perceived when you avoid looking straight at them, but rather next to them.
And that’s what happens when you want to understand currencies and money around the world. In fact, even the very best economists of our times didn’t even write about money. Take a look at the list of Nobel prize winners in economics and you will notice that not a single one even tried to talk about how money works. It’s way too hard of an endeavor, almost mystical.
Right now, what can we perceive ? What would be the blank canvas that defines the global monetary and currency system ?
I think we have to start with the SDR (Special Drawing Rights), issued by the IMF (The International Monetary Fund). The SDR provides indeed a picture/a snapshot of the current situation.
When you look at that picture, that painting of our modern monetary system, try to tell the underlying story. Right now, that story emerges when you look at the composition of the SDR. In fact, that composition was supposed to be modified in 2021, and was postponed to July 31, 2022 as a result of COVID.
As we speak today, the weights of the components in the SDR tell the following story represented by the following sisters;
Sister 1 USD 42%, a mirror of the Bretton Woods system,
Sister 2 Euro 31% a mirror of The Maastricht Criteria
Sister 3 Yen 8% a mirror of the already emerged Asian Dragons
Sister 4 RMB 11% a mirror of a Giant Returning to Power
Sister 5 Pound 8% The Relics of an Older Colonial Empire
Sister 6 The Russian Rouble ? Given the current developments…
Sister 7 The Unknown ? The Countdown to July 31, 2022.
What comes next ?
That’s what I wanted to share with you.
Let me know if you have questions and I look forward to hearing your thoughts. Feel free to comment.