Alasdair Macleod: The End of Fiat Is Hoving into View
The comments below are an edited and abridged synopsis of an article by John Rubino
Tragic though the situation in Ukraine has become, the real war which started out as financial in character some time ago has now become both financial and about commodities. Putin made a mistake invading Ukraine, but the West’s reaction by seeking to isolate Russia and its commodity exports from the global marketplace is an even greater one.
Furthermore, with Ukraine being Europe’s breadbasket and a major exporter of fertilizer, this summer will bring acute food shortages, worsened by China having already accumulated the bulk of the world’s grains for its own population. Inflation measured by consumer prices has only just commenced an accelerated rise.
Because they discount falling purchasing power for currencies, rising interest rates, and collapsing bond prices are now inevitable. Being loaded up with bonds and financial assets as collateral, the consequences for the global banking system are so significant that it is impossible to see how it can survive. And if the banking system faces collapse, fiat currencies will fail as well.
Rubino explores the unforeseen financial and economic consequences; the developing commodity and financial crisis; Russia’s central bank will be considering its position; recapitalizing the West’s global banking system; and the consequences of a mass bank recapitalization.