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Moveable Multipolarity in Moscow: Ridin’ the ‘Newcoin’ Train
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Ah, the joys of the Big Circle Line (BKL, in Cyrillic): circumnavigating the whole of Moscow for 71 km and 31 stations: from Tekstilshchiki – in the old textile quarter – to Sokolniki – a suprematist/constructivist gallery (Malevich lives!); from Rizhskaya – with its gorgeous steel arches – to Maryina Roscha – with its 130 meter-long escalator.

The BKL is like a living, breathin’, runnin’ metaphor of the capital of the multipolar world: a crash course in art, architecture, history, urban design, tech transportation, and of course “people to people’s exchanges”, to quote our Chinese New Silk Road friends.

President Xi Jinping, by the way, will be ridin’ the BKL with President Putin when he comes to Moscow on March 21.

So it’s no wonder that when a savvy investor at the top of global financial markets, with decades of experience, agreed to share some of his key insights on the global financial system, I proposed a ride on the BKL – and he immediately accepted it. Let’s call him Mr. S. Tzu. This is the minimally edited transcript of our moveable conversation.

Thank you for finding the time to meet – in such a gorgeous setting. With the current market volatility, it must be hard for you to step away from the screens.

S. Tzu: Yes, markets are currently very challenging. The last few months remind me of 2007-8, except instead of money-market funds and subprime mortgages, these days it is pipelines and government bond markets that blow up. We live in interesting times.

The reason I reached out to you is to hear your insights on the “Bretton Woods 3” concept introduced by Zoltan Poszar. You’re definitely on top of it.

S. Tzu: Thank you for getting straight to the point. There are very few opportunities to witness the emergence of a new global financial order, and we are living through one of those episodes. Since the 1970s, perhaps only the arrival of bitcoin just over fourteen years ago came close in terms of impact to what we are about to see in the next few years. And just as the timing of bitcoin was not a coincidence, the conditions for the current tectonic shifts in the world financial system have been brewing for decades. Zoltan’s insight that “after this war is over, ‘money’ will never be the same again…” was perfectly timed.

Understanding “external money”

You mentioned bitcoin. What was so revolutionary about it at the time?

S. Tzu: If we leave aside the crypto side of things, the promise and the reason for bitcoin’s initial success was that bitcoin was an attempt to create “external” money (using Mr. Zoltan’s excellent terminology) that was not a liability of a Central Bank. One of the key features of this new unit was the limit of 21 million coins that could be mined, which resonated well with those who could see the problems of the current system. It sounds trivial today, but the idea that a modern monetary unit can exist without backing of any centralized authority, effectively becoming “external” money in digital form, was revolutionary in 2008. Needless to say, Euro government bond crisis, quantitative easing, and the recent global inflationary spiral only amplified the dissonance that many felt for decades. The credibility of the current “internal money” system (again, using Mr. Poszar’s elegant terminology) has been destroyed long before we got to the Central Bank reserve freezes and disruptive economic sanctions that are playing out currently. Unfortunately, there is no better way to destroy credibility of the system based on trust than to freeze and confiscate foreign currency reserves held in Central Bank custody accounts. The cognitive dissonance behind the creation of bitcoin was validated — the “internal money” system was fully weaponized in 2022. The implications are profound.

Now we are getting to the nitty-gritty. As you know, Zoltan argues that a new “Bretton Woods 3” system will emerge at the next stage. What exactly does he mean by that?

S. Tzu: I am also not clear on whether Mr. Poszar refers to the transformation of the current Western “internal money” system into something else, or whether he hints at the emergence of the “Bretton Woods 3” as an alternative, outside of the current financial system. I am convinced that a new iteration of the “external money” is unlikely to be successful in the West at this stage, due to the lack of political will and to the excessive government debt that has been building up for some time and grew exponentially in recent years.

Before the current Western financial order can move to the next evolutionary stage, some of these outstanding liabilities need to be reduced in real terms. If history is any guide, it typically happens via default or inflation, or some combination of the two. What seems highly likely is that the Western governments will rely on financial repression in order to keep the boat afloat and to tackle the debt problem. I expect there will be many initiatives to increase control over the “internal money” system that will likely be increasingly unpopular. Introduction of CDBC’s, for example, could be one such initiative. There is no doubt in my mind that we are in for eventful times ahead in this respect. At the same time, it also seems inevitable at this stage that some sort of an alternative “external money” system will emerge that will compete with the current “internal money” global financial order.

And why is that?


S. Tzu: The global economy can no longer rely on the “internal money” system in its current weaponized state for all its trade, reserve, and investment needs. If sanctions and reserve freezes are the new instruments of regime change, every government out there must be thinking about alternatives to using someone else’s currency for trade and reserves. What is not obvious, however, is what the alternative to the current flawed global financial order should be. History does not have many examples of successful “external money” approaches that could not be reduced to some version of the gold standard. And there are many reasons why gold alone, or a currency fully convertible into gold, is too restrictive as a foundation of a modern monetary system.

At the same time, recent increases in trade in local currencies unfortunately have a limited potential as well, as local currencies are simply a different instance of “internal money.” There are obvious reasons why many countries would not want to accept other’s local currencies (or even their own, for that matter) in exchange for exports. On that I fully agree with Michael Hudson. Since “internal money” is a liability of a country’s Central Bank, the lower the credit standing of the country, the more it needs investable capital, and the less willing other parties become to hold its liabilities. That is one of the reasons why a typical set of “structural reforms” that IMF demands, for example, is aimed at improving credit quality of the borrower government. “External money” is badly needed precisely by the countries and the governments that feel they are hostages to the IMF and to the current “internal money” financial system.

Enter the “newcoin”

A lot of experts seem to be looking into it. Sergey Glazyev, for instance.

S. Tzu: Yes, there were some indications of that in recent publications. While I am not privy to these discussions, I certainly have been thinking how this alternative system could work as well. Mr. Pozsar’s concepts of “internal” and “external” money are a very important part of this discussion. However, the duality of these terms is misleading. Neither option is fully adequate for the problems that the new monetary unit – let’s call it “newcoin” for convenience – needs to solve.

Please allow me to explain. With the weaponization of the current US dollar “internal money” system and a simultaneous escalation of sanctions, the world has effectively split into the “Global South” and the “Global North,” slightly more precise terms than East and West. What is important here, and what Mr. Pozsar immediately noticed, is that the supply chains and commodities are also getting weaponized to some extent. Friend-shoring is here to stay. The implication is that the newcoin’s first priority would be facilitating intra-South trade, without relying on currencies of the Global North.

If this were the only objective, there would have been a choice of relatively simple solutions, ranging from using renminbi/yuan for trade, creating a new shared currency (fashioned after euro, ECU, or even Central African CFA franc), creating a new currency based on the basket of participating local currencies (similar to the SDR of IMF), potentially creating a new gold-pegged currency, or even pegging existing local currencies to gold. Unfortunately, history is full of examples of how each one of these approaches creates their own host of new problems.

Of course, there are other parallel objectives for the new currency unit that neither of these possibilities can fully address. For example, I expect that all participants would hope that the new currency strengthens their sovereignty, not dilutes it. Next, the challenges with the Euro and previously gold standard demonstrated the broader problem with “fixed” exchange rates, especially if the initial “fix” was not optimal for some members of the currency zone. The problems only accumulate over time, until the rate is “re-fixed,” often through a violent devaluation. There needs to remain flexibility in adjusting relative competitiveness inside the Global South over time for participants to remain sovereign in their monetary decisions. Another requirement would be that the new currency needs to be “stable,” if it were to become successful unit of pricing for volatile things like commodities.

Most importantly, the new currency should be able to become an “external money” storage of capital and reserves down the road, not just a settlement unit. In fact, my conviction that the new monetary unit will emerge comes primarily from the current lack of viable alternatives for reserves and investment outside of the compromised “internal money” financial system.

So considering all these problems, what do you propose as a solution?

S. Tzu: First allow me to state the obvious: the technical solution to this problem is a lot easier to find than to arrive at the political consensus among the countries which might want to join the newcoin zone. However, the current need is so acute, in my opinion, that the required political compromises will be found in due course.

That said, please allow me to introduce one such technical blueprint for the newcoin. Let me start by saying that it should be partially (I suggest a share of at least 40% of value) backed by gold, for reasons that will soon become clear. The remaining 60% of the newcoin would be composed of the basket of currencies of the participating countries. Gold would provide the “external money” anchor to the structure and the basket of currencies element would allow the participants to retain their sovereignty and monetary flexibility. There would clearly be a need to create a Central Bank for the newcoin, which would emit new currency. This Central Bank could become a counterparty to cross-swaps, as well as provide clearing functions for the system and enforce the regulations. Any country would be free to join the newcoin on several conditions.

First, the candidate country needs to demonstrate that it has physical unencumbered gold in its domestic storage and pledge a certain amount in exchange for receiving corresponding amount of newcoin (using the 40% ratio mentioned above). Economic equivalent of this initial transaction would be a sale of the gold to the “gold pool” backing the newcoin in exchange for proportional amount of the newcoin backed by the pool. The actual legal form of this transaction is less important, as it is necessary simply to guarantee that the newcoin that is being emitted is always backed by at least 40% in gold. There is no need to even publicly disclose the gold reserves of each country, as long as all participants can be satisfied that sufficient reserves are always present. An annual joint audit and monitoring mechanism may be sufficient.


Second, a candidate country would need to establish a gold price discovery mechanism in its domestic currency. Most likely, one of the participating precious metals exchanges would start physical gold trading in each of the local currencies. This would establish a fair cross-rate for the local currencies using “external money” mechanism to set and adjust them over time. The gold price of the local currencies would drive their value in the basket for the newly-emitted newcoins. Each country would remain sovereign and be free to emit as much of local currency as they choose to, but this would eventually adjust the share of their currency in the newcoin’s value. At the same time, a country would only be able to obtain additional newcoin from the central bank in exchange for a pledge of additional gold. The net result is that the value of each component of newcoin in gold terms would be transparent and fair, which would translate into the transparency of newcoin’s value as well.

Finally, emissions or sales of newcoin by the central bank would be allowed only in exchange for gold for anyone outside the newcoin zone. In other words, the only two ways external parties can obtain large amounts of newcoin is either receiving it in exchange for physical gold or as a payment for goods and services provided. At the same time, the central bank would not be obliged to purchase newcoin in exchange for gold, removing the risk of the “run on the bank.”

Correct me if I’m wrong: this proposal seems to anchor all trade inside the newcoin zone and all external trade to gold. In this case, what about the stability of newcoin? After all, gold has been volatile in the past.

S. Tzu: I think what you are asking is what could be the impact if, for example, the dollar price of gold were to decline dramatically. In this case, as there would be no direct cross-rate between newcoin and the dollar, and as the central bank of the Global South would be only buying, not selling gold in exchange for newcoin, you can immediately see that arbitrage would be extremely difficult. As a result, the volatility of the currency basket expressed in newcoin (or gold) would be quite low. And this is exactly the intended positive impact of the “external money” anchoring of this new currency unit on trade and investment. Clearly, some key export commodities would be priced by the Global South in gold and newcoin only, making the “run on the bank” or speculative attacks on newcoin even less likely.

Over time, if gold is undervalued in the Global North, it would gradually, or perhaps rapidly, gravitate to the Global South in exchange for exports or newcoin, which would not be a bad outcome for the “external money” system and accelerate the broad acceptance of newcoin as reserve currency. Importantly, as physical gold reserves are finite outside of the newcoin zone, the imbalances would inevitably correct themselves, as the Global South will remain a net exporter of key commodities.

What you just said is packed with precious info. Perhaps we should revisit the whole thing in the near future and discuss the feedback to your ideas. Now we’ve arrived at Maryina Roscha, it’s time to get off!

S. Tzu: It would be my pleasure to continue our dialogue. Looking forward to another loop!

(Republished from Strategic Culture Foundation by permission of author or representative)
• Category: Economics • Tags: Banking Industry, Bitcoin, China, Crypto, Dollar, Gold, Russia 
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  1. Where can I buy Newcoin futures?

    • Agree: Notsofast, Decoy
  2. Realist says:

    Let me start by saying that it should be partially (I suggest a share of at least 40% of value) backed by gold, for reasons that will soon become clear. The remaining 60% of the newcoin would be composed of the basket of currencies of the participating countries.

    And there is the crux of the weakness; the only 40% gold is the camel’s nose under the tent. This allows countries to continue their fiat money schemes. It must be 100% gold or other tangible material.

  3. The subway ride of P. Escobar and friends.

    A good go at re-inventing financialization without strutting the foundation: not mentioning a central database of global values, energy, territory, population quantification, deciding on the “margins” for dynamics as innovation, matured real human assets [buildings, roads, rails, military hardware, on the asset/liability axis]. The accounting of the former, to be decided along the lines of transparency and “no-middle-man” interference [traditionally the middle-man was the biggest liability of trade and value quantification, the International Jew championing the gaming, and being the biggest liability to fairness].

    Something in the “style” of digital coins as they exist, and “AI [an honest database that can be transparently updated and read from]” [instead of out of prison reach FTX’ers (fixers to the powerful)].

    Something that makes it hard for Biden and Putin, our elites, to tally up out of thin air, un-earned value into hidden off-shore [from whatever their physical location] digital deposits. For confiscating each others wealth thus affecting havoc as war [Ukraine, Georgia are good examples of maneuvering the money systems as exist for individual/group purpose]. The biggest problem is the underlying lack of accounting/auditing. The thief is the guard-keeper for now [IMF is the beauty pagant indeed].

    There is so many facets to quantifying assets, all assets, over time, a real tempting problem solving provocation. The Chinese friend of P. Escobar is well within the public domain conventional confusion that solves nothing but takes over the reigns on the promise of better morals. Finance is an intellectual problem as a first. Way bigger then media, politics, race and culture. It is not mathematics either since the data to build upon are ever shifting. It [finance] is either nihilism at it’s best, or a real hard problem.

    • Replies: @Kurt Knispel
  4. Chris Moore says: • Website

    First, the candidate country needs to demonstrate that it has physical unencumbered gold in its domestic storage and pledge a certain amount in exchange for receiving corresponding amount of newcoin (using the 40% ratio mentioned above). Economic equivalent of this initial transaction would be a sale of the gold to the “gold pool” backing the newcoin in exchange for proportional amount of the newcoin backed by the pool. The actual legal form of this transaction is less important, as it is necessary simply to guarantee that the newcoin that is being emitted is always backed by at least 40% in gold. There is no need to even publicly disclose the gold reserves of each country, as long as all participants can be satisfied that sufficient reserves are always present. An annual joint audit and monitoring mechanism may be sufficient.

    Pepe’s hippy grifter side is showing in this paragraph. The Bretton Woods Gold Standard was supposedly sufficient to keep the the US honest, until ((Jews)) were allowed to infiltrate and putrefy it, which happened by 1971.

    The laws need to be against ((Jews)) and their stooges. That is the true “gold standard.” And only Christendom can deliver. This is Putin’s true value: the Orthodox Church keeps Russia largely free of ((Jews)) and their Judas Class stooges (let’s just call them the Parasite Class.)

    The Catholic Church can keep the West free of the Parasite Class.

    Can Protestantism keep the Anglosphere free of the Parasite Class? I have my doubts, unless it folds itself into Western Christendom.

    The Chinese and Asians in general are utterly clueless about fending of the Parasite Class. This is why Xi needs Putin, which is really saying Xi and the Chinese need Orthodox Christianity.

    Hippy grifter Pepe Escobar and the fantasies he weaves smack of kike induced naivety. No wonder he’s so fond of ((Zoltan Poszar)) — rhymes with Ponzi schemer.

    BTW, where is crooked Credit Suisse and “senior advisor to the US Dept. of Treasury” Zoltan Poszar’s Wikipedia page?

  5. Notsofast says:

    what we appear to be witnessing is the healthy economies of the world peeling the parasitic economies away from their financial systems and brilliantly done, imo. i understand realists healthy skepticism but when you think about the gold holdings of china and russia and the fact that russia has not scratched the surface of their gold deposits yet to be mined, i am now comfortable with the concept backing this newcoin. this sounds to me like the perfect solution to the impending crash of the worthless dollar. if we are allowed by our oppressors to buy this newcoin, this will be my first venture into any digital currency. get out of the dollar while it is still worth something and get into something that will appreciate as the dollar depreciates, yet be easily transferable into dollars.

  6. Meet the “newcoin”….just like the old coin! The money-magic soothsayers have by-now so thoroughly debased their long-time stock-in-trade (called here, for some sleight-of-hand strategic misdirection, “internal money”), that the effects of its always essentially toxic, corrosive, and habit-forming properties, on the actual LivingLoving Arrangement of Earth and Sky, have finally penetrated and began destroying even their own make-believe virtual “world” and is polluting even the rarified air upon the heights from whence they own and rule all they survey, and which was set up precisely for the purpose of perpetually insulating the money magicians theirownselves from these very same “real-world” consequences, to All “the rest of us,” of all their arcane and insane money machinations.

    So having again rendered everything made by and made-of money unsafe-for-work and unfit-to-live-with, it is now once more high-time to enforce fully and strictly the age-old “shit-rolls-down-hill” Law, and to dump all the degraded and disintegrating stuff onto the muddled heads of the huddled masses, who might not even notice at-first that it’s just one more “weaponized” instrument among the battery of bio-and-geo-engineered existential assaults already deployed and intended to reduce them first to institutionalized permanent penury, and finally to outright extinction. Meantime, those personifications-of-privilege The Players get a fresh deck they can start stacking, and racks of shiny clean “brandnewchips” to bet for THE END Game….in which some yet-to-be-determined “Lucky Winner” at-last takes all.

    Typically though, these wannabe M&MotU’s (“Masters and Mistresses of the Universe”) remain blissfully oblivious to the Natural Fact that the inherently toxic, corrosive, and habit-forming nature of money becomes even more pronounced the more abstract and ephemeral the form that it takes. This will accelerate and intensify its degenerative effects by probable orders-of-magnitude. So their optimistic projections of yet another multi-millennial run with the “new” stuff are dead-certainly doomed to bitter disappointment much sooner than later.

    Here in Indian Country us surviving Free Wild Peoples of every Kind long ago declined the offered “opportunity” to get on the “3:10 to Godhood” gravy-train, giving the money-magical mystery trip a wide miss. To borrow again from John Trudell: We aren’t double-crossers, and we don’t need any book-keepers. So, unlike our captive domesticated Human Relations, we can’t get fooled again.

    • Replies: @PetrOldSack
  7. Anon[280] • Disclaimer says:

    Just stupid.

    Smacks of Jewish finagling.

    God gave us Gold and Silver and Platinum and Palladium and Copper and Nickel.

    They are honest and immutable… cannot be fictitious.

    Use them only.

  8. @Priss Factor

    How can China be terrified if USA reneges on it’s Treasury holdings? The moment China agreed to sell tangible goods to the USA for fiat US dollars, someone (1.4 billion people) knew this was the price to pay for modernization (doing business). The USA (Mob boss post 71 gold standard decouple) is not going to let anyone get rich (modernize) without taking a cut of the action. With US dollars, China bought needed resources (oil, metals etc..) and the surplus went to US Treasuries (mob boss fee). Now, with the Multi-Polar world, China has negotiated trade in resources using it’s own fiat currency (Yuan) with Nations like Russia, Saudi Arabia, Iran etc… Countries will use Yuan to trade for tangible goods and other technical resources from China. No middle man (American mob boss) taking a cut for doing nothing. Like Russia having it’s assets seized, China is likely looking at the possible loss in Treasury Holdings as “protection money” paid since the 70’s; money necessary to do buisness.

  9. Notsofast says:

    i’d been under the weather for the past couple of days and hadn’t checked the news, and now i find that silicon valley bank has failed due to a run on the bank. apparently the rapid interest rate hikes by the fed combined with the run on deposits drove them into insolvency. the shit now hits the fan, as other banks will face the same fate. hurry up with that newcoin please!

    • Replies: @dogbumbreath
  10. E_Perez says:

    First, the candidate country needs to demonstrate that it has physical unencumbered gold in its domestic storage and pledge a certain amount in exchange for receiving corresponding amount of newcoin (using the 40% ratio mentioned above).

    The role of gold is exaggerated in this type of theories and gives undue preference to gold-digging low-productive countries like South-Africa and Russia over gold-poor high-productive countries.

    Gold has no real role in money theories except as stabilizer, penalising money printing.

    But this can be achieved in different ways as has shown the Euro precursor ECU, which did not have the Euro birth defect of fixed exchange rates: a participating high-inflation country choosing to print money gets its share diminished and its ‘internal’ money devaluated wrt. the ‘newcoin’.

    • Agree: bike-anarkist
  11. @Notsofast

    i’d been under the weather for the past couple of days and hadn’t checked the news, and now i find that silicon valley bank has failed due to a run on the bank.

    Fed restarting money press and swooping in to bail out “un-insured depositors”…so says the article:

  12. @PetrOldSack

    “…a real hard problem”, solved by Silvio Gesell.

    • Replies: @PetrOldSack
  13. “Investor” is spelled wrongly; correctly: infestor (re. infestation).

  14. @Kurt Knispel

    Thanks for the pointer, will look into it.

  15. @Constant Walker

    Your parlay is a great read. The vessel holds some content as much. Like a leather briefcase, horse-saddle, a two-stroke in a motor cycle. Fun.

  16. Finding a little fun in the midst of all this terminal-stage folly, might be just what finally gets us through it with at-least some of our wits still intact.

  17. Just ugly

  18. Slavs sure are dumb.

    Chris Hedges: Ukraine’s Death by Proxy

  19. Funny enough I live near the Bolshaya Koltsevaya Liniya in Moscow. I use the train all the time to go to Tekstilshiki to teach English. Despite not being 100% commodity based the proposed “newcoin” could deal a serious blow to the US dollar, which is backed by air (or the US military to be exact). I think it’ll take a while for this all to take off, but it could pay well to get in early on whatever is happening somehow.

  20. @Priss Factor

    Much of it China (almost $300 billion less)…. But pretty much only Japan and the UK have increased their holdings in US debt. Almost everyone else is dropping little by little.

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