A New Monetary System

The G20 meeting is over and I think we are moving towards a new monetary system worldwide.

What you didn't hear much about in the press are the secret meetings hidden from the media to forge a radical overhaul of the world' monetary system. There is likely to be the creation of a new financial order based upon drastically new units of paper or fiat money to help wipe the world's debt ledgers clean.

How will they achieve this? By systematically and progressively devaluing existing currencies, especially the U.S. dollar, and re-inflating ALL asset prices.
If the plan shapes up as I think it will, my current target for gold of over $2000 per ounce could turn out to be much too conservative.

Over the next few weeks and month, keep your ears tuned to the media for phrases like “new financial architecture” … “new monetary system” … the “rules of the game” … “Bretton Woods II” … and other financial jargon. They are essentially the cover words that will ultimately spell a dramatic change in the value of money.

French President Sarkozy recently declared, “We must rethink the financial system from scratch, as at Bretton Woods” … and that it's time to “change the rules of the game.”

British Prime Minister Brown touts “a new global financial order,” describing this as a “decisive moment” for the world economy to adopt a “new Bretton Woods.”

At the recent World Economic Forum, Russia's Prime Minister Putin explains that “Excessive dependence on a single reserve currency is dangerous for the global economy.”

The People's Daily , the official newspaper of the Chinese Communist Party and the unofficial mouthpiece of the Beijing government, warns of the threat of a “financial tsunami” and urges action. “ The world urgently needs to create a diversified currency and financial system and fair and just financial order that is not dependent on the United States.”

On March 23, the People's Bank of China (PBOC), China's central bank, proposed replacing the U.S. dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In the past, whenever an international financial crisis crops up, authorities in high places have often referred to a new Bretton Woods “solution” (i.e., changing the value of paper money).

This time, though, given the Great Depression II, it looks like the current generation of leaders is ready to walk the walk. Indeed, they may have no other choice.

Today, we are again facing a major, worldwide epidemic. Deteriorating economic conditions in the U.S., Japan, China, Germany, and elsewhere are virtually forcing nations into competitive devaluations to stimulate growth. It's become a “race to the bottom” to see who can drive their currency the lowest, to help their current account balance.

The result is a flood of fiat paper money such as we have never seen before. The potential for disaster in this free-for-all melee is not lost on the G-20 ministers and bankers. That's why I think that they plan a coordinated devaluation of world currencies en masse rather than each country going it alone.

While world leaders might talk about a “New World Order” in global economics, they give few details of how this might be accomplished.