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(Kitco News) – With geopolitical tensions escalating, Peter St Onge, Economist at the Heritage Foundation, weighed in on whether the “Fourth Turning” — the so-called civilizational crisis — is inevitable.
The term “the Fourth Turning” comes from a book titled ‘The Fourth Turning: An American Prophecy’ by William Strauss and Neil Howe. It describes a theory of generational cycles in American history.
“The Fourth Turning” posits that history moves in cycles, specifically in 80-100-year cycles called “saecula.” Each cycle is divided into four turnings, lasting about 20-22 years — High, Awakening, Unraveling, and Crisis (the Fourth Turning).
Another way to understand this idea is with a popular meme: “Hard times create strong men, strong men create good times, good times create weak men, weak men create hard times.”
A thread on Machiavelli and the “Hard Times Create Strong Men” meme.
Many of you have seen this meme, which became popular in recent times.
This concept is not new. Niccolò Machiavelli’s writes about this theme in his History of Florence and of the Affairs of Italy. pic.twitter.com/iBMe26Hlyu
— Lessons From History (@Lessons_History) May 12, 2023
The economist explained that history happens in these types of cycles, and we’re at the point where our civilization is overdue for a crisis. “The moral of the story for me is that, yes, we’re in a dangerous time,” St Onge told Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, on the sidelines of the Pacific Bitcoin Festival. “History has told us that there is this cycle. When we look around, there are a lot of very concerning trends.”
To find out what St Onge sees as the most likely trigger for the next crisis, watch the video above.
People running U.S. dollar policy ‘lost the plot’
St Onge addressed the dangers of weaponizing the U.S. dollar and the expansion of the BRICS – Brazil, Russia, India, China, and South Africa.
“There are large chunks of the world economy that are pulling out of the dollar sphere and are opening up to joining this China-led alternative sphere,” St Onge said.
One of the main drivers behind the accelerating de-dollarization trend is the politicization of the U. S. dollar, said St Onge, highlighting the West freezing half of Russia’s international reserves.
“Even during the Cold War, the U.S. never touched the Soviet central bank’s sovereign dollars. This was because we were run by adults who understood that the most important thing to remain the world’s reserve currency is that you want everybody to use it, even your enemies,” he said.
If the U.S. dollar loses its status as the world’s reserve currency, the U.S. economy will face real dangers in the long term.
“It is a much larger priority for the American people to keep the U. S. dollar as the reserve currency of the world because there are several times more dollars in existence than Americans actually use,” St Onge explained. “After 70-80 years of reserve currency status, most dollars are held outside the U.S. There are potentially tens of trillions of U. S. dollars hiding out all over the world. If the U. S. dollar is no longer the reserve currency, all of those tens of trillions will come flooding back.”
If that were to happen, it would be “absolutely catastrophic” for the U.S., St Onge stated. For more details on this, watch the video above.
St Onge warned that recent developments regarding Saudi Arabia receiving one of the six invitations to join the BRICS alliance is potentially pivotal. “Saudi Arabia is the linchpin of the so-called petrodollar system. The adults who used to run dollar-related U.S. policy have lost the plot,” he said. “Countries are now peeling off. They’re at an absolute minimum. They’re realizing that the U. S. dollar is a risky asset to hold.”
St Onge also made a case for a BRICS gold-backed currency system. On whether it can work and how it can impact gold, watch the video above.
The coverage of the Pacific Bitcoin Festival is brought to you by Swan Bitcoin.
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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