Some of Wall Street’s titans, the great billionaire investors who made fortunes in America’s financial markets, are very concerned about how much the U.S. economy has suffered from the coronavirus. U.S. billionaires are usually patriotic and optimistic, for this is a kind of commitment to their social position, but as we have already written, they are now in a rather depressed state of doubt about the bright economic future of their country, at least in the near future.
But now to the chorus of sad, and sometimes panicking billionaire financiers joined the bankers, who vying for advice to their clients to look at the risks are no longer so much economic as monetary nature. For some reason, despite the seemingly successful fight against the economic crisis performed by Federezerv and his dollar printing press, such reputable American banks as JPMorgan and Goldman Sachs want to recommend their clients to invest not in dollars but in gold.
And the point is not that the yellow metal has suddenly become something very attractive (its physical characteristics and generally recognized value as a “stable currency” is a timeless constant), but that against the background of unprecedented measures to stimulate the world economy under the pretext of coronavirus, as well as in conditions of the most severe geopolitical turbulence, in which the whole world will have to live in the next few years, American bankers see gold as less vulnerable than green notes with portraits of American presidents.
The most recent example of this attitude to all world currencies is contained in an analytical study of the bank JPMorgan, which is reported by Bloomberg business information agency: “According to JPMorgan Chase & Co., unprecedented monetary and fiscal measures taken around the world, may lead to weaker long-term growth and depreciation of the currency, supporting the price of gold.”
Bank analysts believe that the dollar in the event of a massive devaluation of world currencies will suffer the least, and it is logical, but still point to customers to gold, not the dollar as the main asset, whose value in this unpleasant scenario will be maintained at a high level. And the unprecedented fiscal and credit measures that the bank is talking about are precisely the same efforts to save economies that materialize in the record budget deficits of Western countries and galloping levels of government debt. Amazingly, mainstream Western economists are confident that these measures will have no serious negative consequences. However, bankers clearly disagree with this assessment.
By the way, another influential American bank also woke up with a sudden sympathy for investments in yellow metal – at the end of March, when gold was worth about ten percent cheaper than it is now. The Financial Times then wrote in direct text: “Goldman Sachs tells customers it’s time to buy gold.
It is worth noting that bankers see not only inflationary, but also geopolitical risks associated with the dollar and the vulnerabilities of the U.S. financial system. The same JPMorgan indicates that now U.S. competitors and opponents in the international arena have technological opportunities that threaten American hegemony in the financial sphere.
Bloomberg quotes evaluation of dollar and sanctions risks: “According to JPMorgan Chase & Co., as the idea of digital currencies of central banks begins to gain momentum, the United States should also pay attention to this situation – or they risk losing the main aspect of their geopolitical power. “No country can lose more from the destructive potential of digital currencies than the United States”, – says Josh Younger, head of interest rate derivatives strategy, and Michael Feroli, the bank’s leading expert on the American economy, in their analytical report. Everything revolves primarily around American dollar hegemony. The release of a global reserve currency and the means of exchange used in international trade and services provides huge benefits.
Banking analysts recall that if China and the EU can succeed in creating digital yuan and digital euro technologies (i.e. equivalents of existing currencies but operating virtually outside the traditional banking system – based on electronic wallets available in the database of a particular central bank or its authorized structures), there is a huge risk that both the EU and China will make serious efforts to squeeze the dollar out of international trade. As rightly noted analysts JPMorgan, even the fact that such digital currencies do not need a system of SWIFT (disconnection from which the U.S. is used as a sanction against geopolitical opponents) – this is already a big problem for the U.S. financial domination of the planet. It should be noted that in this scenario not only the capabilities of Washington diplomacy, but also the demand for the dollar will obviously suffer. Although the U.S. economy (in terms of purchasing power parity, Statista’s data for 2019) is only 15% of the world economy, and the dollar is used in more than half of international trade transactions, the demand for the U.S. currency has a long way to fall – until some “naturally justified” level is reached. This does not mean that the problem will materialize tomorrow, but if the threat of a “digital” euro and the yuan has attracted the attention of a major U.S. bank, it seems that the problem is definitely there, and it is more than serious.
Ironically, those who may suffer the most from the world inflation shock in the future (i.e. ordinary Americans themselves and those who love dollar savings in other countries) will be the last to know about the risks. Forbes Magazine has learned that Goldman Sachs is organizing a special conference call with wealthy clients with the declared theme of “inflation, gold and bitcoin”, but access to the call for ordinary mortals is closed.
However, many geopolitical opponents of the U.S. do not need to eavesdrop on American bankers – they themselves have calculated all the risks in advance. This is the reason for the fact that long before the “viral” dispersal of the American printing press and the first Chinese experiments with the “digital yuan” central banks, including even the central banks of some U.S. allies, began to buy gold or repatriate bars stored abroad. It is difficult to predict when and in what form the global financial system will be reconfigured, but the fact that large geopolitical players are already actively preparing for such a reconfiguration and the risks it entails is unlikely to be questioned.
Ivan Danilov, RIA