The Multilateral World is a Decentralized World
Short-term and long-term trends can provide invaluable information while validating previous theories and conclusions. The patient and competent analyst or researcher can use the passage of time to build confidence and strength in theories which may have been questioned or dismissed as unrealistic. This is the place where we now find ourselves.
There have been a lot of events occurring over the last few months which I haven’t written about or weaved back into the overall POM (Philosophy of Metrics) thesis and narrative. There are various reasons for that with the most relevant one being around the need to allow the trends to develop at an organic pace. Caution should be used to not allow too much time to pass without closing certain loops because the thesis will fragment and drift apart if not nurtured and referenced.
From the onset of POM the thesis has been built around the expansion of multilateralism across the worlds geopolitical, monetary, and cultural spheres. The core of the thesis contained a series of instrumental changes which would cause a transformation of the existing unipolar world centered around the international use of the USD and the benefits this arrangement provided to a select group of banking, industrial, military, academic, and political interests which stretched across the borders of western nations, such as America, Great Britain, the European Union, and to a smaller extent some Middle Eastern nations, such as Saudi Arabia and Israel.
The first important stage of the transformation required the development and agreement of an alternative exchange or reserve asset which could be used to replace the domestic USD in its international role. While the SDR of the International Monetary Fund was targeted as this replacement asset, the structural and streamlined benefits of utilizing blockchain technology, and more specifically the digital asset XRP, became more apparent as the company Ripple developed the architecture required to replace the SWIFT international payment system. SWIFT served as the primary conduit for USD liquidity. This article is not specifically about Ripple or XRP, but it does need to be referenced as its position and importance in the emerging multilateral framework needs to be understood.
The second stage of the transformation needed a domestic political platform within America which could package and implement the broader transition points. The campaign platform of Donald Trump provided that package under the umbrella of the new-modern nationalism which started in America and has since spread with the BREXIT vote and rise of populism in Europe, as reflected in the growing influence of right-leaning political parties, and the gradual but subtle shift in cultural conditioning from a liberal mindset to a conservative mindset.
This cultural shift may not be obvious to everyone at this point, but consider the growing pushback against mass migration in Europe, and the increasing changes in American culture, such as pop star Kanye West aligning with Trump, and other conservative personalities, such as Jordan Peterson and Candace Owens gaining ever more of the spotlight. The waning interest and falling box office revenues of Hollywood movies which promote the liberal agenda is another indicator that a fundamental shift has taken place in the western cultural consciousness. The human mind deals in opposites and can easily influence itself through a self-inflicted form of cognitive dissonance, which provides the building blocks for human interaction and communication across multiple cultural and socioeconomic platforms. This makes it somewhat tempting for more aware people to leverage such presets for personal advantage.
The Trump doctrine also provides a tangible and explainable path for America to pull back from being the dominant funder and policeman of global interactions. Reduced international use and demand of USD will require an equal adjustment to America’s spending on international programs and institutions, with the need to solve what formerly appeared to be unsolvable geopolitical challenges, such as tension on the Korean peninsula, the Middle Eastern quagmire, and the schism between Western and Eastern Europe. All of these and others are at various stages of transformation themselves.
Another key multilateral transition point is a solution to the monetary imbalances within the European Union. The EU imbalances are a micro representation of the international macro imbalances which have developed around the international use of the USD. In the case of the EU, the Germany economy, and the inclusion of the Deutschmark in the euro regional currency weighed heavy on one side, as other nations, such as Spain, Greece, and Italy, suffered the opposite effects of the imbalances.
The EU is incrementally tearing itself apart so it can rebuild its alignment with a new multilateral world. The growing divide between European nations and America is representative of this new dynamic. The BREXIT vote in Great Britain is a strategy to maintain an alignment with the United States as the rest of Europe becomes integrated into the larger Eurasian economic and geopolitical arrangements.
We previously covered back in 2015 how European nations would bring back national currencies for domestic use while maintaining the euro for trade between one another. The benefits of this would be widespread, as it would allow heavily indebted nations to redenominate sovereign debt in their domestic currency in order to write it down without having a large negative impact on the euro, assuming that the euro would remain a part of the SDR basket, and the SDR would be used in some capacity as the USD alternative within the multilateral architecture.
This is where the function and purpose of the SDR are different from that of XRP, which is meant to facilitate global payments and replace SWIFT. The function which the USD provided to the international monetary and financial systems will now be divided across various platforms, with XRP being one of those platforms, and the SDR providing a platform to provide a sovereign debt mechanism and possible use in substitution accounts to address the massive accumulation of USD in the foreign exchange reserve accounts of central banks around the world.
Some of these reserves can be exchanged for crypto assets and held by central banks to support the new emerging crypto ecosystem, but there may be a more gradual approach taken to this aspect of the multilateral transformation to ensure a minimum amount of disruption. A large amount of USD foreign debt held around the world will need to be addressed by America. The most straightforward path involves depreciating the dollar against the currencies of its largest trading partners. This will make American exports more affordable to the rest of the world, which in turn will reduce America’s trade deficit, which in turn will reduce a large amount of USD denominated debt held in foreign exchange reserve accounts.
This is where Ripple’s xRapid platform and the digital asset XRP come into play. Widespread use of XRP to facilitate global payments will reduce international demand for USD and allow it to depreciate. The remaining foreign exchange reserve amounts can be addressed through SDR substitution or some other mechanism which would involve a much broader adoption of the larger crypto ecosystem.
Almost weekly now there are reports and indicators that the American dominated unipolar world is being replaced by a multilateral world with shared allocations of wealth and influence. This is a major validation of the POM thesis which was first put forward back in the early months of 2014. The fact that this transformation is happening without the parallel global conflicts which usually associate such structural changes is an even deeper validation of our overall thesis, as that was one of the most disagreed upon aspects of the predictions made back then.
We are now in the final phase of geopolitical and financial desperation as the fading world of Anglo-American dominance attempts to hold onto power in a world that has fundamentally changed and left it behind. The diametric of left and right politics has been used by this establishment to maintain political and cultural control over mass populations for at least the last hundred years. This is not uncommon. Governance frameworks organically develop and evolve to protect the centers of power and wealth for the simple reason that the framework originates from within those centers.
The multilateral world is not a centralized world like that of the unipolar USD world. It is a decentralized world built upon distributed centers of shared power and influence. EU Commissioner Oettinger said “the markets will teach the Italians to vote for the right thing” as a response to the emergence of a populist party in Italy. This should provide us a validated example of this desperation. The Italian government has suggested it will deport 500,000 illegal migrants and return to the use of its national currency. The majority of the Italian people support this. Oettinger’s threats are as outdated as they are hollow.
This comes on the same day that the infamous George Soros said “everything has gone wrong” and suggested that a major financial crisis is coming. Sounds like if they can’t have the whole pizza they want to burn it up. But in reality, such a strategy is unworkable, which is why Soros is already hedging his survival probabilities by investing in crypto markets.
Another consideration is that a financial crisis within the old framework, or at a minimum some substantial volatility, could push capital and wealth into the new crypto market, which is exactly what Soros would want, now that he is invested.
Ethereum creator Vitalik Buterin recently stated his belief that generational wealth families such as the Rothschild’s do not control crypto markets. Buterin asked, “Are the Rothschild’s actually remotely as powerful and coordinated as the conspiracy theorists seem to believe, or are they just a group of old-money socialites and all that other stuff is overhyped?” He later wrote, “[M]y updated view after seeing the replies is that they are just people born into various old-money-type high-society positions, and the theories that they are anything beyond that are fairly baseless.”
Vitalik Buterin is well respected in the crypto community, and even though his conclusions are accurate now, it doesn’t mean that accuracy applies to the past. However, he does provide some insight into how the world is restructuring itself. The Rothschild’s were a very powerful family which were instrumental in building the central bank system. This banking system is now in the early stages of being replaced. They were also one of the core powerhouses behind the British Empire and American period of unipolar dominance. This is the Anglo-American Establishment which is now attempting to redefine itself or maintain power and influence through financial and geopolitical acts of desperation. The Rothschild interests and investment in the crypto market is more reflective of their attempt to adjust and survive as opposed to them maintaining the power and influence which they welded in a world that no longer exists.
Since I started POM 5 years ago so much has changed in the world. Most of it has happened behind the scenes with little media attention or awareness by the mass populations. Most power and governance structures appear impossible to defeat at the height of their power and influence. But power, wealth and influence never stay in the same place for long.
On the timescale of world history, the central bank system and its supporters in the spheres of finance, commerce, geopolitics, academia, and culture, have maintained power for a short stint. The names and brands will remain for a long time to come, but new names and brands are emerging which will drive the world forward onto new levels of wealth and technological advancement. Short-term trends show evidence of this and the long-term trends will validate them. - JC
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