The Big Reset by Willem Middelkoop

Summary and takeaways from the book.

Hotel Mount Washington at Bretton Woods, NH, USA.
Site of the conference in July 1944 that created the last formal monetary system.

This book is about the "expected Big Reset for the current worldwide monetary system".

ISBN: 978-9089645999
Published: February 15, 2014
Pages: 250
Available on: amazon

Willem Middelkoop is founder and Chairman of Commodity Discovery Fund. He also founded AmsterdamGold. He is also author of 7 books.

"This book combines information from all previous books with an additional chapter on the expected Big Reset for the current worldwide monetary system. The book tells the story of a mostly hidden world of money and gold which I hope will also be of interest to a larger, international public".

"Students today still use the same economics textbooks with outdated models based on efficient markets, just as they did before the crisis. That is why a majority of economists, journalists and business executives still do not fully understand the role of money in our economy".
"The likelihood of failure[of current monetary system] should now be considered a statistical certainty rather than a theoretical improbability".

Monetary system is the set of laws, institutions, tools which are used to create, distribute and manage money.

Our debt based economic and monetary system has failed.

"At some point, politicians will start to understand that only a major change – a big reset, as I call it – in our global monetary system can save it. This realization will probably occur around the time that they are no longer able to refinance their mountains of debt".

Gold backed currency

"Before World War I, almost all major currencies were backed by gold. This was the era of the gold standard.

The money supply was restricted to the growth of the gold supply.

As European countries needed to create money in order to finance the high costs of the war, most were forced to abandon the gold standard in the 1910s. The gold standard was replaced by a fiat money system in most countries, although silver coins were still being used in most European countries until the 1980s

"Unlike fiat money, gold has always maintained its purchasing power. An old Roman aureus gold coin of just eight grams still buys you a few hundred liters of cheap wine, just as it did 2,000 years ago. That is why gold has been used again and again to stabilize fiat money systems during monetary resets in the past".

"Having a gold standard brings with it many advantages.

The most important advantage is that it forces governments to be disciplined in their fiscal policy because they cannot turn on the printing press to finance budget deficits

"A gold standard gives citizens economic freedom because their money is always exchangeable for gold. Gold is recognized worldwide as being valuable and for this reason, citizens are not dependent on financial decisions made by financial authorities, as is the case today.

An undisciplined buildup of credit and debt – the real origin of the current credit crisis – cannot occur within a gold standard

"England, for example, experienced almost no inflation for almost two hundred years up until the dissolution of the gold standard in 1914".

"When money printing is not an option, even fighting wars is made more difficult. The period between 1850 and 1914 – when most European countries were on a gold standard – was a time of economic prosperity in Europe during which no major wars took place".
To summarize, the advantages of Gold-backed currency are:

No inflation. Your money retains its purchasing power.
Forces discipline on the government: government cannot print money to give it to those it wants to favor.
Avoid undisciplined buildup of credit and debt as money is valuable rather than infinite.
Economic freedom: your currency is accepted worldwide.
Governments avoid war as they cannot print money to finance wars.

Governments create Inflation

"As more and more investors stopped buying these government bonds, central banks needed to step up to the plate. By turning on the (digital) printing presses, they have been buying up bad debts and government bonds to a total of $ 10 trillion ($ 10,000 billion) worldwide, between 2008 and 2013".

"This is a process that is easy to start but almost impossible to stop".

The dangers of inflation is stated by Thomas Jefferson, third President of America:
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and the corporations which grow up around them will deprive the people of all property until their children wake up homeless on the continent their fathers conquered".

– Thomas Jefferson, third President of America and drafter of the Declaration of Independence (1808)
"By this[inflation] means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft".

– John Maynard Keynes on inflation (1920)

Bretton Woods Conference

Harry Dexter White(chief international economist at the US Treasury)
and British economist John Maynard Keynes.
A conference was held at Bretton Woods, NH, USA, in July 1944. This was during the Second World War. The Allied forces led by USA had landed on Europe on D-Day June 1944, and were fighting and winning their way to conquer Germany and liberate Europe from the Nazis. The conference was held after D-day landings when it was obvious that USA led allies would win.

The purpose of Bretton Woods conference in July 1944 was to set the monetary system for the future.

Two models of the new monetary system were proposed:

"creation of a new supranational currency, the Bancor. This idea was backed by the British, who resisted the idea of handing over the benefits of owning the world’s reserve currency to the Americans". This was proposed by famous British economist John Maynard Keynes(of Keynesian economics fame).

"blueprint for the dollar to become the new world currency. As the main creditor nation, the US was eager to take on the role of the world’s economic powerhouse. The American plan meant that all commodities would have to be traded in dollars, forcing all countries to buy dollars in order to be able to pay for them. The US would only need to turn on the printing press in order to be able to satisfy the permanent demand for dollars". This was proposed by Harry Dexter White, chief international economist at the US Treasury.

USA was a creditor nation that owned large percentage of Gold in the world. Britain's and Europe's economy had been decimated by the ongoing war and were debtor nations to USA.

The second proposal above from USA was chosen.

The outcome of the Bretton Woods Conference was:

Global Monetary system based on the US Dollar.
Re-evaluation of Gold price: Gold price was set at $35/ounce in 1944. All currencies would be effectively backed by Gold via US Dollar.
The International Monetary Fund(IMF) was setup to regulate exchange of currencies.
Creation of World Bank which would be "responsible for providing financial assistance for the reconstruction after World War II and the economic development of less developed countries".

"The plan was US centric but was accepted as they need USA help to win the war as well as for reconstruction after the devastation of war".

Post Bretton Woods

"European Nations realized that US dollar based system allowed USA to have large deficit. This gave them massive economic advantage".

"European Nations decided to exchange paper assets for Gold".

"In this way, Germany's gold reserves increased from zero to 3,500 metric tonnes, Italy from just over 220 to 2,500 metric tonnes, France from almost 600 to 3,100 metric tonnes, and the Netherlands from 300 to almost 1,700 metric tonnes".

"In early 1971, the Dutch Central Bank (DNB) successfully swapped nearly a billion dollars for gold. Paul Volcker, an important Treasury official who would later become Chairman of the Fed, was sent to Holland to try to change DNB President Jelle Zijlstra’s mind".

"'You are rocking the boat', Volcker is said to have remarked. Zijlstra then replied, 'Well if this rocks the boat, then the boat is not very solid'".

"In the summer of 1971, President Richard Nixon refused a request by the Bank of England to exchange a few hundred million dollars for gold. After rejecting the British request, President Nixon asked his economic advisors for advice. Their verdict was short but sweet: ‘Break the promise that the dollar can be exchanged for gold".

"Technically speaking, America defaulted in August 1971, since the country could no longer fulfill the obligations agreed upon in Bretton Woods".

The Bretton Woods monetary system ended in 1971. No other system has replaced it since.

Monetary system today

The money printing and debt creation continues today in USA, Europe and all over the world.

Governments claim that they are trying to grow out of their debt by stimulating the economy. "the idea that we can 'grow our way back' out of debt seems a little naive".

"Countries with debt issued in their own currency cannot go bankrupt. They can always switch on the printing press to create as much money as is needed to pay off their debts.

There is one drawback, however: when too much money is created, their economy can become paralyzed due to (hyper)inflation. At some point in time, even governments have to get rid of their debts. This will happen either through inflation, debt defaults or debt cancellations. Such monetary resets have been the solution many times in the past. It could well happen again

"central government debt in advanced countries is 'approaching a two century high' and cannot be cured by growth alone".

USA debt as a percentage of GDP is 123%. It is higher than USA debt during second world when it was fighting in Asia and Europe while possessing most of the world's gold.

Debt has been and is rising much faster than GDP.

Economic and hybrid wars

"The US understands better than anybody else that a country can sometimes be hurt more by destroying the value of its currency than by bombing its infrastructure".

"Another Chinese observer stated: 'The military power more and more plays a role of the guardian of the money (power). If any potential factor poses a threat to the operation of the dollar hegemony mechanism, the gigantic military machine might start, thus shifting the American hegemony from the 'benign hegemony' into a 'dangerous hegemony'".

Economic decisions are just as important as military decisions.

Economic power today in the era of hybrid warfare is as important as military power.

The Great Reset

The Great Reset is necessary to solve two main problems.

"Two major problems in the world’s financial system have to be addressed: 1) the demise of the US dollar as the world’s reserve currency, and 2) the almost uncontrollable growth in debts and in central banks’ balance sheets".

The Reset will be done over the weekend just like FDIC closes bad banks on Friday, and have a solution in place by Monday. "In theory, all debts worldwide could be wiped out on a Sunday afternoon".

"Some debts will be canceled. Some parts of the financial system will be nationalized". Public will be loser and much poorer.

"The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies".

Any new monetary system will need Gold backed currencies to have trust. This might involve confiscating people’s Gold, or heavy tax on any profit from Gold.

CBDC(Digital Currencies) will be introduced and currencies could be re-evaluated to a fraction of their original.

"Yes, there is a probability the SDR[Special Drawing Rights from IMF] will be the new global reserve currency. Gold and oil would then be priced in SDRs. It will be used for some of the balance of payments between countries, the creation of reserves and probably the financial accounts of the world’s largest corporations. So Siemens, General Electric and IBM will produce their financial statements in SDRs, because they’re global corporations [...] they want a paper SDR to replace the paper dollar. The question is, will people go along with that?".

"we can conclude that gold is making a remarkable comeback into our financial system and even that a new gold standard is being born without any formal decision".

Financial repression of the public: "measures by which governments channel funds to themselves as a form of debt reduction".

– Strict investments regulations
– Nationalizations (confiscations of pensions)
– Regulation of cross-border capital movements
– Prohibition of certain investment assets
– Special taxes (for the rich)
– Direct interventions (‘plunge protection team’ Wall Street)
– Haircuts on deposits (bail-in)
– Closure of banks (bank holidays)

"the measures are justified by invoking the 'war on terror'".

"History has shown that the closer we come to a major reset, the more likely it is that forms of financial repression will be activated. The reset of the Cyprus banking system demonstrated that very few of those affected were prepared in advance".

Nothing is certain. For every article on The Great Reset, there is another one saying the exact opposite and calling it a conspiracy theory.

To summarize, the Great Reset will involve:

Manufactured crisis like COVID to trigger the reset when government is ready. This could be another COVID pandemic, major climate crisis like sudden rise of sea levels, cyberattacks, wars, financial crisis, bank failures etc.

'Overnight reset' of currencies at a time convenient to the government. Currencies will be evaluated to a fraction of their current value over the weekend.

Wipe out of all government debt, but not public debt. Government debt will be wiped out, but people's debts and mortgages will stay. Clever accounting and financial tricks will be used to hide this. Corporate media will bury this fact under the bigger crisis.

Digital Currencies(CBDC) for the public. End of cash. Demonetization in India will serve as a model for eliminating cash.

Use of Special Drawing rights(SDR) from IMF as the new global reserve currency for use by corporations, and for buying Gold and oil

Financial repression: confiscation of public wealth with Gold confiscation and bank failures. Restriction on cross-border travel and cross border money transfer by public.

Arbitrary taxes such as very high tax on profit from selling Gold.

No regard for any laws or human rights. COVID will serve as a model for this.

Setup of internment camps to mass imprison those who protest or resist. The COVID quarantine wards will be model for setting up mass camps for imprisoning those who protest or resist.

Perception management: Corporate media to present this as big win and good for public, while hiding all the details.

Secret closed door Bretton Woods 3 conference to formalize the new monetary system and setup necessary institutions. This will be the New World Order / Techno-Feudalism.
"The likelihood of failure[of current monetary system] should now be considered a statistical certainty rather than a theoretical improbability".

Emotional appeal for the Great Reset.

Ensure Food, water, energy, security, barterability, wealth preservation, community, and shelter
outside the failed system and without government help.

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The Great Reset

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