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Intro

Wonderful to have Alex Krainer on the show today. He is the first guest on China Rising Radio Sinoland who knows finance and is not afraid to talk about the bad aspects, as well as the positive.His biography is at the beginning of the transcript below. Here is his contact information. Enjoy a great discussion!

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Transcript

Jeff J. Brown: Good afternoon everybody. This is Jeff J. Brown China Rising Radio Sinoland, and I am incredibly honored and humbled to have on the show today an incredibly well-informed individual. That’s Alex Krainer. How are you doing, Alex?

Alex Krainer: I’m doing very well, Jeff. Thank you for having me and warm greetings to your viewers and listeners.

Jeff: I saw Alex on another video. He was a guest on another video program. And I was so impressed with him that I reached out to him. And let me read you his bio. And you will see why all of us are going to be very glad to hear what he has to say.

Alex is the founder of Krainer Analytics and the creator of I-System Trend Following. He has worked as a market analyst, researcher, trader, and hedge fund manager since 1996. Alex was born and raised in a socialist regime of former Yugoslavia, under one-party communist rule. As a 17-year-old, he joined a student exchange program and took up his university studies there, ultimately transferring to Switzerland on a scholarship where he completed a degree in Business and Economics.

From Switzerland, his path led him to Venezuela where he lived for a year and experienced his first banking crisis in 1994 when 9 of Venezuela’s 16 largest banks failed and brought the country’s economy to a grinding halt. The same year he returned to Croatia and joined the military where he served through 1995 during the last phases of Croatia’s war of independence. In 1996, upon discharge from the military, Alex took employment at an oil trading company in Monaco. In 1998 he became the head of risk and CEO in 2000.

Alex originated the firm’s research and development program in market analysis and the application of neural networks and artificial intelligence in the trading of financial and commodities markets. By 2007 Alex launched his own investment management business and was among the small minority of managers who generated positive investment returns (+27%) during the 2008 financial crisis.

Over the following six years, his fund outperformed the Dow Jones Credit Suisse index of Blue Chip commodity futures trading funds. In 2011 Alex joined Lee Robinson’s Altana Wealth to manage the firm’s inflation hedging strategy. In 2019 Alex created Altana Wealth’s systematic portfolio allocation strategy designed to bridge the gap between technology and finance. In more recent years, Alex also busied himself as an author.

He published his first book “Mastering Uncertainty in Commodities Trading” in 2015. In 2021 this book was selected as #1 on Financial- Expert.co.uk’s list of “The 5 Best Commodities Books for Investors and Traders.” In 2017 he published “The Grand Deception” which is available exclusively from the RedPill Press. In 2021 he published “Alex Krainer’s Trend Following Bible.” I am so impressed, Alex. Thank you for being on the show.

Alex: Thank you very much, Jeff. That’s very kind of you to say.

Jeff: Alex is in Croatia and I am in France. And so we are European buddies already. Let’s go ahead and get started right away because it’s not very often we get a guy like Alex on the show who understands finance. We all know finance is wonderful when you need to buy a car or buy a house, or you need capital for your business, or your government needs money for infrastructure or whatever.

But there’s also the dark side, usury, the City of London, Color Revolutions, and fomenting war for profit. So there’s the two sides. So I’m really happy to have Alex to help us. My first question: Most people do not understand at least I don’t how someone like George Soros could crash the British pound in 1992. I also know that when French President Francois Mitterrand was elected in 1981, there were maneuvers by the City of London and Wall Street to put pressure on the French economy to sabotage his socialist policies.

We can also mention the financial raids on the Asian Tigers in 1997 and Japan in 1988. So my question is, how do the City of London and Wall Street go about doing this, bringing down currencies and economies? It seems a real contradiction to the country’s sovereignty. And then I’ll have a follow-up question when you finish answering that one, Alex. Take it away, my friend.

Alex: Okay. So where do we start from, George Soros? That episode, what was that? 17th September 1992. So we’re going 32 years ago about. George Soros crashed the British pound. Now, there’s a lot of background to that. The British pound at that time was we didn’t have the euro yet. What we had was an exchange rate mechanism where member European Union member countries agreed to fix their exchange rates one against the other in a relatively narrow band. And because the strongest currency in Europe was Deutschmark.

This was all expressed in the Deutschmark. So the British pound was supposed to be between, I think, 2.9 Deutschmarks and 3.1 or 3.15, I forget. This was John Major’s brainchild. Joining the URM was John Major’s political ace card. As it turned out, that particular exchange rate effectively overvalued the British pound. And so things were going okay until in 1992 recession hit and you had unemployment rate jump in Britain from, I don’t know, from like 8 or 9% to 12%. The economy was in a recession.

And so there was a great deal of political pressure to either devalue the pound or to just get out of the Exchange Rate Mechanism, ERM. And I’m not exactly sure how the thing played out because there were statements by officials of the Bundesbank in Germany that kind of suggested that something was going on. The Bundesbank officials were talking about increasing the interest rate on the Deutsche Mark, on the German mark.

And so somehow the financial markets came to the conclusion that this should put pressure on the British pound, which to be honest, I don’t quite understand they were going to cut the interest rate on the German mark because there was a recession in Germany as well. So that would have reduced the exchange rate value of the Deutsche Mark. But that would increase the exchange rate value of the British pound.

Anyway, one thing led to another, and the financial markets kind of got into this frame of mind that the British pound had to be devalued. And so they started to bet against it. And George Soros’s Quantum Fund. By early September of 92, they had about 1 billion pounds or $1 billion, I don’t know, a bet against the British pound. And then for some reason, George Soros decided to aggressively bet against the British pound, so they threw the march off through the month of September 92nd.

Soros had his traders increase their bet against the British pound to something like $15 billion. And so they had a very massive bet against the pound. And they weren’t the only ones, because there were also other hedge funds and large banks who were all betting against the pound. So it was a massive position that piled up against the British pound. And so on this fateful day, which was Wednesday, Black Wednesday, September 17th, 1992, the pound started going down and Soros and others just kept piling in against the pound.

At the same time, the British government and the Bank of England tried to defend the pound. And in the end, they spent something like $27 billion dollars buying the pound to try to keep its exchange rates stable at around 2.9 Deutschmarks. And it didn’t work. Nothing helped. It was just going down. And then John Major’s government, the Chancellor of the Exchequer was Lamont. I forget his first name doesn’t matter. They decided to increase the interest rate from 8% to 12% first. That was in the morning of that day. Nothing happened. The pound kept collapsing. And then by the afternoon, they increased the interest rate another 300 basis points to 15%.

Jeff: In one day.

Alex: In one day. Yes, absolutely spectacular.

Jeff: Unbelievable.

Alex: All told the pound lost about 25% of its exchange value. It declined from 2.9 pounds to the Deutsche Mark to 2.9 Deutschmarks to the pound to 2.4 Deutschmarks to the pound. It was pretty much, that it exacerbated the recession because when your economy’s in a recession and you yank the interest rate up to 15% in one day.

Jeff: That’s not very.

Alex: Yeah, exactly. That’s going to push a lot of people into bankruptcy. And this did happen. A lot of people went into bankruptcy. It very much exacerbated the economic crisis in Britain. It lost a massive amount of foreign exchange for the Bank of England, for the British government. And in the end, George Soros walked away with something like $1 billion in profits or $2 billion. It’s not exactly clear. Now, how could this happen? That’s a good question because the way it was sold to us through the media, they tried to build George Soros into this larger-than-life financial genius, I believe that he knew ahead of time what was going to go down.

The officials at the Bundesbank and the Bank of England and the Exchequer, all kind of signaled the weakness of the pound that a devaluation was pretty much inevitable. Everybody knew everybody was ready to jump in on that trade. George Soros and whoever was backing him were in that trade already early and somehow he knew to go very, very aggressive. So until that day, they were comfortable with the billion-dollar position against the pound. And then all of a sudden, they went 15 times higher. That’s not genius. That’s knowing something that others didn’t know. That’s like having inside information. There are reasons to believe that George Soros was very close with people like Jacob Rothschild.

Jeff: I was going to ask you about that.

Alex: Yeah, yeah, yeah. So there’s no doubt that they cooperated on various things in the past or maybe it was over time we know that they cooperated closely. Sir, I forget his first name. Goldsmith.

Jeff: Yeah, I know you are.

Alex: In on it. As well as where some other sharpshooters from the City of London. And so I think it was okay granted. Britain was in a recession. Granted the British pound may have been overvalued. Granted a typical government move at that point would be to devalue your currency by decree or by some kind of intervention. You know, simply your exports are uncompetitive. So what do you do? You devalue your currency.

And then all of a sudden your current account starts improving because you start importing less because imports become more expensive and you start exporting more because your exports become more competitive. So all that is good. And governments around the world routinely do that. Only for a major Western government that’s seen as a major sign of weakness because Western nations like particularly Britain and the United States, they swear by free markets and by nonintervention and government can’t have anything to do with this, and so on.

And so I think they orchestrated the devaluation of the British currency for one reason to improve the current account, to let’s say try to get Britain out of recession except the government went the way of increasing the interest rate. So they made that worse. But also to get rid of the euro and to discourage British governments from ever considering joining the euro. So at that point at the end of the day the minister of the Exchequer, Lamont, not only announced the 15% interest rate, he also announced that Britain was getting out of the exchange rate mechanism.

And so that was where we were going to manage our currency by ourselves. We’re not entering into an exchange rate mechanism or a common currency. So that way the British managed to preserve their financial sovereignty, and not allow themselves to have their currency ruled by the European Central Bank. But clearly, it was a manipulation by a high cabal to use Winston Churchill’s terminology.

Jeff: Amazing. Well, what controls would a country need in order to prevent this from happening? Is this one of the reasons why China has not been attacked? I mean, does it have certain policies in place that keep it from being raided? What’s going on?

Alex: Yes, China does. Well, China has a dual circulation. You know, they have a currency with different circulation for foreign trade, and they have a different circulation for domestic exchange.

Jeff: I didn’t know that.

Alex: Yeah. And so it’s not a different currency. It’s the same currency. It’s just two differently managed systems. Right? And so that they can control that one doesn’t spill into the other or their one doesn’t drain the other. So that when the financial crisis happened in East Asia in 1997, it toppled all of the tiger economies except for China, because China basically insulated their domestic economy from the risk of foreign investors pulling out the money from China and draining the liquidity from their economy and all the other countries that didn’t have that defense that didn’t have that dual circulation, they were basically left hung out to dry.

Jeff: That’s an understatement. And also China just went right through 1988 with Japan. And I wrote an article recently, I think the last recession, they haven’t had a recession in like 40-something years. So I don’t know what it is that of course they print their own money and don’t borrow from private banks. Why don’t other countries adopt what China’s doing if it’s so successful?

Alex: Jeff, I wrote an article about that also recently, and I posed exactly those questions. I’m not sure if it’s on my Substack because I have another daily newsletter that’s for subscribers only. But I basically posed the question so China hasn’t had a financial crisis in over 40 years, at least not system-wide. You know, there are individual sectors of the economy like real estate now that have hit a snag, but it hasn’t imploded the whole of the economy. It hasn’t pushed the economy into a recession. And then you also have the same in Russia. Russia hasn’t had a financial crisis since Vladimir Putin was in power, which is almost 25 years. And so I said, why don’t we ask ourselves what they are doing differently rather than always piling on them the Damn communist didn’t.

Jeff: I did read that. That’s the one where you talked about how when you were growing up in Yugoslavia. The article that you wrote about when you were growing up in Yugoslavia and how safe it was. And is that the article that you’re talking about?

Alex: No, I’m not sure which article that was. I honestly, don’t remember. Once the article is published, it recedes into the fog.

Jeff: Next.

Alex: Yes, exactly. So I don’t know. I don’t have all the answers. I’m trying to understand these things, but I said people who are experts, people who are in charge of our economic systems, our monetary and financial systems, why don’t they study what the Russians and the Chinese got right, rather than condemning them? Because they’re tyrants and autocrats and because communism because whatever socialist management, all these labels that people throw around without really knowing what they’re talking about. And you see that now with Venezuela.

Jeff: Yeah. Of course.

Alex: Because I don’t quite understand how even people who are intelligent and learned and who understand the technology of color revolutions when they are implemented in places like Belarus or Kazakhstan or Georgia or Ukraine and so on, they get it. But when the same thing happens in Venezuela, all of a sudden they have this cognitive dissonance because Maduro is bad, socialism bad and now suddenly exactly the same playbook is being implemented there.

But they’re all jumping on this narrative of Venezuelan people fighting for freedom against the repressive communist government. Anyway, I think that this default to the shortcut of labels and ideology is keeping us from really understanding. So even, let’s say maybe, maybe we hate the Chinese political system and maybe we hate the Russian political system, but there are certain things that they’re doing better than we are. The Chinese lifted 800 million people out of poverty. They have built in the space of about 15 years or less, they’ve built out tens of thousands of miles of high-speed.

Jeff: 38,000km in counting. They’re going to get up to 40.

Alex: There you go. 38,000km. In the United States, I promise you, I’m 54 years old. I remember George Bush’s first election, which was now 24 years ago when he was running for president. And they were talking about high-speed rail lines, about clean diesel technologies. They were talking about everything that China is actually doing but none of it was done. And the Chinese did all of it. And they eclipsed the West in the development of their economy and their infrastructure and prosperity for the ordinary Chinese.

So why not just go and study what they’re doing and then say, well, we like these things and these policies are valid and we should study how to implement them ourselves rather than piling and trash-talking over the Chinese and the Russians. I don’t understand that. But I did understand through my day job, through my career in the financial markets that groupthink is very real and it’s a very, very powerful driver of conduct and behavior of serious people. And even though it’s often very heavily to their detriment, they can’t quite get rid of that groupthink and they persist in it. And I’m afraid that our policymakers are in the same pitfall. And this is why we’re falling way, way, way behind and the Russians and the Chinese are running circles around us.

Jeff: Absolutely. Something unimaginable even five years ago is happening in Africa. Mali, Niger, and Burkina Faso have kicked NATO forces out of their countries. I mean, it’s just hard to imagine that this actually happened and left the Western-backed West African bloc called Ecowas. This defiant trio has now created a confederation called the Alliance of Sahel States, using the French acronym, as many people are calling the president of Burkina Faso, Ibrahim Traoré, the 21st century Thomas Sankara.

Sankara was the Communist leader who led Burkina Faso from 1983 to 1987 before being assassinated by French intelligence along with 22 other African presidents. I’ve got the list. However, these three countries are still colonized financially by having as their currency the French central bank’s franc of the Financial Community of Africa, known by its French acronym CFA. In order to be fully independent and not be financially colonized, they will have to get rid of the CFA. Is it possible? How should these three countries go about doing that? And could the Russian ruble or the Chinese yuan play a role?

Alex: Yes, the Chinese yuan could play a role maybe the Russian ruble as well. But I think that what’s critical there is for those countries to be able to physically defend themselves from Western-sponsored terror gangs separatist movements, and generally violent extremism because this is what the West has been using for the past several centuries as a means of destabilizing regimes and toppling them and replacing them with something that is more to their likings. So these regimes have to be able to defend themselves militarily and to have effective and efficient security forces that can counteract terrorism.

You know, gangs like Boko Haram, which are on the remote control of the Western powers, and they’re there whenever when some government has to be destabilized, they’re right there in the region. And I think this is critical, but I know for a fact that Russia is helping those countries in this sense to be able to prevent those acts of terrorism and color revolutions and assassinations that have been practiced in Africa and elsewhere for centuries, literally. With respect to currency, the problem is that Western policy which has been basically what you could describe as neo-colonialism has brought all these nations into a relationship where they basically became exporters of raw materials and they needed to import pretty much everything else.

So they were very highly dependent on imports from Western countries for medicine, critical supplies, technology food staples, refined fuels, things like this. And so the way the Western powers could pretty much blackmail them is that if you dared to maybe trade with your neighboring country and use your own currency, or to sell you export to a country that we don’t like, like Russia or China or somebody like that, well, then we could freeze your accounts. We could block, we could block you, we could sanction you.

And now suddenly you can’t procure insulin, you can’t procure grain, you can’t procure fertilizers and now suddenly your people are going hungry. They’re going without medicine. They’re going without health care. And so now you’re starting to get this how do you call it political and social pressures that threaten to topple the government? And then you say like, well, okay, okay we’re going to trade in US dollars only. We’re not going to sell any of our stuff to the Russians or the Chinese.

And then the West magnanimously says like, okay, then we can do business. Just don’t get uppity on us anymore. And so I think that for those African countries to be able to break free of this neocolonial dependency, they had to have an alternative. The West was the one who was selling protection to them Mafia style. It’s a nice country you have here it would be a shame if something happened to it. I think that Russia came in as the alternative provider of protection services.

This now allows these countries a little bit of maneuvering space to regroup, reorganize their economies, trade between themselves, use their own currencies in their trade between neighboring states, and at least to a degree insulated from Western sanctions. The West has so extremely abused this weaponization of sanctions that the whole policy, the whole tactic has become ineffective. And we can see that on the example of Russia because they threw the worst, most extreme sanctions ever conceived against Russia. Not only did it not destroy the Russian economy, but the Russian economy is doing much, much better than any of the Western developed economies.

I think that this year so far they grew 5% of their GDP and the United States has barely grown over 2.3 or 2.4%, if I remember correctly. And then also, there’s the reality that sanctions don’t necessarily manage to topple governments in all cases because you have Cuba that’s been under embargo pretty much since 1958. They’re still independent. They still haven’t folded before the Empire and Venezuela has been under sanctions for the last 20 years, which have always escalated and increased and made worse.

Jeff: And North Korea is another good example.

Alex: North Korea as well. There you go.

Jeff: Not going anywhere nor Iran.

Alex: Correct.

Jeff: Sanctions just kill people. They just kill the citizens. That’s all they do. They just kill citizens.

Alex: Yes. I think that the Western arsenal to control all these countries has gone very, very wobbly. And now they also have to reckon with Russia and China, which are dead serious in their intent to end colonialism once and for all.

Jeff: Amen. Amen. Well, I just saw an article, Alex. I’m sure you probably saw it, too. Apparently, some Wagner soldiers in Mali were killed. There was a Tuareg terrorist group that attacked their convoy, and I don’t know how many they killed, but they actually also got, unfortunately, they got some prisoners to some Wagner prisoners. So I know Russia’s they’re trying to help this new alliance the Sahel alliance to try to fend off these people. As you say, they’re just financed and equipped by the Western deep state. I mean, when you see Boko Haram coming over the horizon with 50 brand new trucks with rear mount rear-mounted 50 caliber machine guns in the bed of the truck in the back.

And they’re armed to the teeth with AK 47 seconds and hand grenades. That’s a lot of money. All right. In spite of Saudi Arabia’s public warnings, which owns US euro billions and external investments in bonds, the European Union is taking a 1,500,000,000 interest on the seized assets after Russia’s special military operation in Ukraine starting in February of 2022. And it’s official actually I saw the headlines. They did do it. Russia has also given stern warnings about using this stolen money totaling $300 billion in the West while it is not the principle being used, interest is accrued capital. What do you think is going to happen as a result of this? What could Russia and Saudi Arabia do to show their displeasure?

Alex: Okay. So this is a bit more involved because at the moment it would seem there’s nothing much Russia can do. But actually, that’s a short-sighted view of the problem. Russia will prevail in Ukraine. Russia will dictate its terms of peace. And those terms of peace will pretty much include a capitulation of the Kyiv regime. Russia will take over the control of most of Ukraine, certainly all of Ukraine on the east side of the Dnieper River. I think not necessarily by military conquest, but administratively, definitely simply people in power, in Kharkiv, in Odesa, in Kyiv, will be people who are not part of this extreme right-wing junta that is loyal to Washington and to NATO.

And from that point on we’re going to see some reforms in Ukraine which might even include the reversal of privatizations, where groups like Blackrock Vanguard, and JP Morgan took over Ukraine’s energy industry and Ukraine’s agricultural land. And that’s going to put a very, very significant squeeze on these institutions, but also the whole Western financial system. And I think that Russians and the Chinese as well, I think they understand that they can’t stop there. They have to carry on. They have to carry on fighting the West. And again, I don’t mean that by military means, but it will be by diplomatic and economic means.

I think the first thing that’s going to have to happen at some point in the near future is that Western jurisdictions are going to have to open up to Russia once more because they have been shut down by virtue of the so-called Magnitsky Acts. So the Magnitsky Act is a law that was lobbied through the US Congress in December of 2012. Basically, it’s ostensibly a human rights legislation that pretends that this is a way to sanction companies and government agencies and individuals in Russia who have infringed on people’s human rights, people who were guilty of killing this accountant named Sergei Magnitsky.

That’s why it’s called the Magnitsky Act. The man who lobbied piece of legislation is a guy named Bill Browder who used to run the largest foreign-owned hedge fund in Russia during the 1990s. Basically, the whole point of this legislation is to erect a barrier between Western jurisdictions and the Russians to make it impossible. Because what happened during the 1990s was the greatest, most elaborate pirate raid ever conducted in the history of mankind by the West against Russia or any country. So literally hundreds of billions, maybe trillions of dollars of assets were stolen from Russia and taken to the West.

And so the Russians have hundreds of files of investigations of illegal activities by Western financiers and their representatives in Russia and to pursue this theft of assets, they need to go through Western jurisdictions like Cyprus, New York, London, Switzerland, Germany, British, Virgin Islands, Cayman Islands. And so all the jurisdictions where these assets were siphoned through. And so Bill Browder, who participated in this pirate raid against Russia was tasked by his bosses at the MI6 or CIA or both with lobbying this legislation through the United States.

So this was the first law that was passed through the US Congress, but then it was passed to another 30 legislations in the Western world. And so the way I see this conflict continuing is that Russia will put pressure on Western governments one by one to overturn this Magnitsky legislation and to open their judicial systems to Russian court cases and investigations. And at that point what you have is that the whole legal system gets into play, which then is a machine that you start interviewing witnesses participants, you start deposing people. All of this stuff starts to get on the record, documented in black and white in legal documents.

And I think that in this way, the Russians will be able to trace the stolen asset to their beneficial owners by name. You know, I don’t know Jacob Rothschild, George Soros people like that. And then they will demand accountability. They will demand the return of those assets, and they will demand accountability. And the $300 billion of frozen assets in the West and whatever interests they were supposed to earn on that, that’s going to get it turn as well.

Already almost 200 years ago Otto von Bismarck said, “If you’re going to be making any kind of a deal with the Russians, make a straight deal, don’t try to cheat because the Russians will eventually come for their due. They don’t just forget and they don’t just forgive”. And so I think that all of these legal pursuits, they will probably take a long time. They might take decades, but they’re not going to leave them. They’re just not going to say like, oh, well you stole a couple of trillion dollars from us. That’s fine. Let’s just move on. In the short term, it may appear that Russians can do nothing. In the long term, there’s going to be held to pay for this theft.

Jeff: Yeah, absolutely. What happened in the 1990s was the biggest gang bang as you said in the history of the human race, it was just. And the suffering and the death and the poverty and the misery that the Russian people were put through. It’s just ridiculous what Vladimir Putin has done to that country and working with his people to turn it into a real superpower again.

Alex: Yes, yes. All right.

Jeff: Well, this, in fact, I sent you a link. Apparently, I wrote this question a couple of weeks ago, but apparently, it’s really getting. They’re really working on this and have announced that it’s going to happen. The BRICS countries are talking about creating a special drawing right/currency for international trade and financing. Russia, which currently heads the BRICS meetings this year, says they are working on it but that it is complicated and will take time.

Why is it complicated, and why is it so hard to create an SDR currency between countries? That’s my first question. And then until that happens, why is it so difficult to create international payment systems to challenge the West Swift? China and Russia have both created cross-border payment systems. The Chinese have their CIPs and the Russians have their SPFs, respectively, but seem to struggle to integrate other countries into the fold.

Why the slow uptake? And then why not combine forces and create a Sino-Russian platform? Several years ago there was talk of a CRIB, which would be the Chinese Russian interbank. But it seems to have not advanced. Why? Do you know why? So basically two questions. What’s going on with BRICS? And what about which I guess leads us straight into creating a swift system, at least within BRICS? So let us hear what you have to think.

Alex: There was a lot of talk about creating an alternative financial system basically a replacement for the dollar a new trade currency and a new reserve currency that would be a common currency of all the participating nations. Russia, China, India, Iran, and so forth, which would be commodity-backed, not just gold, but whatever commodities. And then at some point, Sergey Glazyev wrote quite a bit about this.

And at one point, not so long ago, maybe a year or two ago, I read an article that he wrote in which he said, well, actually none of this is really necessary. Countries can simply use their own currencies to trade between themselves. So we don’t need to build a new currency system. This is not an urgent priority. And he didn’t quite explain why. He said that it was not necessary. He didn’t explain why. But what I believe is you know somebody would have to be in charge of this. There would have to be a bureaucracy, an administration in charge of this.

And you could design some kind of rotating presidencies and countries, every country having their participant in it kind of like the IMF. But it still creates a powerful incentive to game the system that then some countries might try to impose themselves as the arbiter of how things are going to be. And then if other countries lose confidence in them, it kind of creates a weakness in the whole system. And then countries might be jumping ship and say, you know what keep your system.

We’ll go back to the dollar or we’re trading gold or whatever. And so if each country is in charge of their own current account balances and trade and their own currencies, then there isn’t a way for anybody to be beginning the whole system. So that’s my take. Maybe there are other problems with it, but I just see, one of the problems is that you would have to police this. You would have to not only create the currency exchange system, but you would also have to police it and administer it and make sure that it’s fair and equitable and that nobody is gaming it.

And you could do a good job today, but who knows a decade or two later, there could be different governments and the people with different ambitions who would come to power and maybe the whole system would have the same fate as Bretton Woods. And Bretton Woods, if I’m not mistaken, it has lasted about 15 years, right? The country that was in charge of the system, which again, was supposed to be different countries.

Because Bretton Woods, the conference was I think in 1948, but the system wasn’t implemented until, I think, 1956 or something like that. I’m going with a broad brush. Right. Don’t quote me on these numbers. And then it fell apart in 1971. So it was about 15 years that it was in operation. And then Nixon pulled the rug when he ended temporarily the convertibility.

Jeff: Temporarily forever.

Alex: Yeah, exactly. Convertibility of the dollar into gold. So what happened? The United States was in charge of the system. The United States was the one who was supposed to honor the convertibility of the dollar to gold, and everybody else was supposed to be trading in the dollar. And so that created an incentive to game the system by the United States, which they did. And then when all the countries started saying like, hey, you’re cheating. Take your dollars, I want my gold.

Then regrettably to protect the system from speculators and other kind of dishonest players, Nixon had to temporarily suspend the convertibility. And 53 years later, if they still that temporary period still hasn’t expired. So I think that this is why maybe Glazyev thought we don’t need to do any of this. We can just facilitate each nation to trade with other nations in their local currency and then deal with the balance of payments themselves. Easy peasy.

Jeff: Yeah. Well, it seems to be working because you read all these articles about Iran trading with Russia and local currencies, and China trading with Russia, and India trading with Russia. And so, this Asian block, Saudi Arabia trading in its currency. And so apparently, the local currency thing is working. I don’t know how they handle how they hedge against currency volatility and currency fluctuation but apparently, it’s working. So at least for some of the countries some of the time.

Alex: Yeah, it should work in the long term. And currencies are going to fluctuate. They are going to be volatile. And sometimes you win, sometimes you lose. That’s a normal course of business. You can buy gold today and tomorrow. They might knock it down to $100 an ounce which just happened a few weeks ago. That’s a normal course of business. Nothing is guaranteed. Nothing can be cemented. Everything flows and fluctuates. But at least, countries are not beholden to some hegemon who tells them, well you may trade with these people, but not with those people.

And I think that the best illustration of a colonial relationship was exactly one of the Sahel countries Niger. And Niger was selling its uranium ore to France at $1 a kilo when the market price was between 100 and $200 a kilo. And so how do you maintain that relationship that somebody there doesn’t say, like, well, we’d actually like $2 a kilo, thank you very much. And the French say like, no, you get one. And what you do it, you do it by making it impossible for them to trade any other way. And if they do, there’s assassination squads.

There’s NGOs that can engineer a color revolution and so forth. And then there are also financial sanctions when you say like, well, okay, guess what? You have all this, all this money in our central bank, and you were going to use it to buy insulin for your people and to buy fertilizers for your farmers. Well, guess what? We’re freezing your account. So no insulin, no fertilizers, no energy for you.

And then you have like, okay, well, thank you very much. We’ll take that $1. Thank you. That’s very generous. So I think that what’s going on today is that after several centuries, this system is coming to an end. And I think that the whole of humanity is transitioning to something that’s a complete discontinuity with respect to everything we’ve known for the last, I would say 500 years at least.

Jeff: Yeah, absolutely.

Alex: And I think it’s a good change. And I think that it’s going to be humanity collectively coming out at the end of the tunnel.

Jeff: Well, Alex, with people like you out there informing thousands of people around the world about what’s really going on in the financial world and all of your amazing background and experiences, I am sure that this show will make some people wake up and change their minds if they have any precondition assumptions about the greatness of Western finance vis a vis the rest of the world. So thank you so much for being on the show.

Alex: It’s a great pleasure, Jeff. Thank you for having me. And once more, warm greetings from Croatia to your viewers and listeners.

Jeff: Absolutely. Alex has written books. He’s got a website. He’s got a Substack. I even cross-posted one of his Substacks recently. I was so impressed with it. It really resonated with me. Did you know I did that, Alex? I cross-posted one of your posts.

Alex: I didn’t

Jeff: Don’t worry about it. it was about Yugoslavian communism. But anyway, I loved it.

Alex: Oh right. Okay. Yes.

Jeff: Because it really, really resonated with me. And anyway, he’s got a website and he’s also got financial services. I will put all of that on the website page for his interview. And again, thank you very much, Alex. I will give you a Buddhist bow and wish you all the best. And I hope this isn’t our last interview together. So take care.

Alex: Take care. Thank you. Jeff.

Jeff: Bye-Bye

###

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