The biggest financial paradigm shift in our lives is underway, and there’s no turning back. No one knows exactly what it’s going to look like going forward nor how we’ll be able to get there.
A working definition of “paradigm” taken from dictionary.com is that it is “a framework containing the basic assumptions, ways of thinking and methodology that are commonly accepted by members of “an operating system.” Think global to local and buy/ sell/exchange finance.
When a new paradigm starts being formed, an original set of rules has to be put together in order to operate successfully within it. Most of the rules that worked in the old paradigm(s) no longer apply. (An example would be trying to communicate with business associates and family by sending letters instead of email via the internet.)
During the new system’s “early days,” everyone using it is pretty much in the same boat as we all attempt to figure out what the rules are, how to best apply them, and what the results might be. Getting it right will hopefully enable us to be safer and more successful in our personal and professional lives.
The national and global financial systems were already under great stress due to mismanagement, indebtedness, the Covid response, and rising socio-political unrest.
To cite just two examples, the Canadian government’s response to the truckers’ drive to Ottawa, and the invasion of Ukraine by Russia and the West’s response to it have inflicted structural damage that could destroy the whole house of cards.
At minimum it is sweeping away operative assumptions most of us have followed in order to provide predictability, safety and financial growth.
This is not the place to argue the merits for or against one side or the other, but to state that the world is changing, and in many ways will never be the same.
Consider these data points:
- The West’s freezing of Russian Central Bank’s $600B in assets is a first.
- Exclusion of Russia from the SWIFT payment system of international trade.
- Breakdown of the petrodollar system for oil purchases to allow yuan and gold.
- Europe’s largest grain exporter, Hungary, ceasing all exports effective immediately.
- Critical metals sources (REEs, copper, uranium, nickel, etc.) in limbo.
- Cancellation of many billions, if not trillions of dollars in international contracts.
- Canada freezing accounts of anyone contributing even $40 to an unapproved cause.
- A gas supply cutoff from Nordstream 1 could bring German industry to a standstill.
- The U.S. facing its highest inflation rates in 40 years.
- The inevitable global drive toward “paperless” digital money and total privacy loss.
- Gold and silver retail supply sources and premiums stressed as never before.
- Most uranium and its processing coming from Kazakhstan and Russia respectively.
Anyone reading the above can list an additional dozen. The point being that the few remaining assumptions of our money being safe, accessible, and utilizable as we see fit have been shattered….