Zoltan Poszar's "War and Peace" Broken Down
Housekeeping: For the better part of 3 days we have worked on this piece trying to make deeper sense of what is coming for our subscriber/readers. As result there will be no traditional weekly post today. We assure you it will return next week. We think this will be worth it.
As it is long, we structured it so you can read it any way you want, in chapter form or all at once. It flows more logically than Zoltan’s pieces do (we think) and carves out the actionable bottom-line on what we all need to consider as investors. We hope you enjoy reading it as much as we enjoyed putting it together. Best: -VBL p.s. Tell your friends, spread the word
GoldFix is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.
Zoltan Pozsar’a fifth and final “War” dispatch can be divided into four self-contained sections that carve a path from action to reaction at the global level all the way down to the individual investor level.
It is a decision-tree analysis flow chart of path-dependent actions based on cause and effect at specified nodes. 1 It is a plumber’s delight.
The first section is what the BRICS have done and will continue doing to divorce themselves from USD hegemony— The Cause.
In the second section he revisits Perry Mehrling’s Four Prices of Money concept as a framework for diagnosing where the aforementioned BRICS behavior could cause the most trouble for western dollar-based markets— The Effect.
The third section is what he believes the US Fed will do to combat the effects of BRIC dedollarization on the West’s markets— The Response.
Finally he steps into the investor’s world and describes in summary how people should best position themselves to weather the effects of this sea-change coming to the markets. — The Trades.
Here then is an attempt to translate Zoltan’s prose using our Fed plumber’s flowchart including the original PDF at bottom
The Cause: What the East is Doing to Get Out of the Dollar
The first part recaps what has materially happened in BRIC countries pursuant to Zoltan’s prior prognostications. Pozsar accurately predicted what the Eastern world’s trading block wanted to accomplish with their next moves: To diversify their monetary and financial risk so concentrated in the USD and the West.