Prepare or fail

May 12, 2020 Letters

DEAR EDITOR,

“Because of the role that the U.S. dollar plays in global financial markets, strains in dollar funding markets overseas can disrupt financial conditions in the United States. To address severe strains in global short-term dollar funding markets, the Federal Reserve established temporary central bank liquidity swap lines (also referred to as reciprocal currency arrangements) with a number of foreign central banks” (Fed website). This swap line is with 15 countries with large US assets. There is no Caricom country in these elite countries and the rest of the world is de facto under US sanctions because trade and tourism and other service with the US is anemic or has completely stopped so other countries earning US dollars will be extremely difficult. What is Guyana and Caricom doing about their inevitable shortage of foreign exchange which could lead to possible food shortage, unemployment and eventually crushing of our economy? The US is using swap line as a geopolitical sword.
JP Morgan says that it will take US 10 to 12 years for US employment to return to pre-Covid shutdown level. In seven weeks 33.5 million apply for unemployment. The unemployment level is far worse because many have not applied because of crashing website or slow processing and the millions that are ineligible for unemployment benefits and estimated millions of undocumented immigrant. Fifty-two percent of small business survey says they will have to close permanently. This is indicative of a depression. Looking at history, every, about 75 years, a new global monetary system is implemented. The last reset was the 1944 Bretton Wood agreement which made the US dollar the world reserve currency.
During a depression or reset four solutions are implemented: 1) printing of money (inflationary), 2) cutting spending (deflationary), 3) debt restructuring (deflationary), 4) redistribution of wealth (deflationary). Humanity have learned from dealing with a disintegrating monetary system so we can innovate and improve. This financial crisis will likely increase self reliance by many countries because of the collapse of the supply chain. For some, the Covid-19 crisis is the first anthropocene- the current geological age, viewed as the period during which human activity has been the dominant influence on climate and the environment. There will be many in the future; whether pandemic or climate change triggered disasters. Prepare or fail.

Yours truly,
Brian E. Plummer

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