Sometimes reactions help to better understand the significance of an action, an event. That is the case of the speech held by Canadian Prime Minister Mark Carney at the World Economic Forum on Jan. 20. Whereas in real time we covered only his exposure of the fraud called “rules-based order,” in reality, Carney’s speech was a call for the re-creation of the British Empire in new clothes and in an anti-U.S.A. function.
As Der Spiegel, under the headline “The Speech That the World Was Waiting For,” wrote, “in reality, he [Carney] says: it is not about Trump. When he is gone, another President will come along who will continue where Trump left off. The same applies to Russia and China.”
Der Spiegel is exemplary of the entire panoply of mainstream media, which celebrate Carney as the new prophet of Western liberalism.
In order to understand what Carney said, or the hidden significance of what he said in Davos, it is necessary to go back to his Aug. 23, 2019 speech in Jackson Hole, Wyoming. At the end of a long speech before all central bankers (including emphatically the Federal Reserve, the host), Carney called for an international synthetic currency to replace the dollar:
“It is an open question whether such a new Synthetic Hegemonic Currency (SHC) would be best provided by the public sector, perhaps through a network of central bank digital currencies. Even if the initial variants of the idea prove wanting, the concept is intriguing. It is worth considering how an SHC in the International Monetary and Financial System (IMFS) could support better global outcomes, given the scale of the challenges of the current IMFS and the risks in transition to a new hegemonic reserve currency like the renminbi. An SHC could dampen the domineering influence of the U.S. dollar on global trade. If the share of trade invoiced in SHC were to rise, shocks in the U.S. would have less potent spillovers through exchange rates, and trade would become less synchronised across countries. By the same token, global trade would become more sensitive to changes in conditions in the countries of the other currencies in the basket backing the SHC. The dollar’s influence on global financial conditions could similarly decline if a financial architecture developed around the new SHC and it displaced the dollar’s dominance in credit markets. By reducing the influence of the U.S. on the global financial cycle, this would help reduce the volatility of capital flows to EMEs. Widespread use of the SHC in international trade and finance would imply that the currencies that compose its basket could gradually be seen as reliable reserve assets, encouraging EMEs to diversify their holdings of safe assets away from the dollar. This would lessen the downward pressure on equilibrium interest rates and help alleviate the global liquidity trap.”
Interestingly, Carney has never addressed the issue so openly since then, but it is to be assumed that this is the agenda hidden behind his call to “build a new order that embodies our values” and “create institutions and agreements that function as described,” launched in Davos. Do not stick to the nice words of his speech: read between the lines. To help your judgment, remember Carney’s trajectory: His modern career started in 2008, as central banker of Canada, when he understood that a “wall of money” had to be built in order to prevent bank insolvencies. While his colleagues were blocked by inflation fears, Carney cut rates from 4.5% down to 0.25%, providing ample liquidity to banks, which borrowed money and paid back less (inflation was over 3%). He then broadened the range of corporate assets purchased by the central bank. While enjoying a high rating, many of those assets were eventually revealed to be junk.
