Friday, 18 January 2013

Great Expectations

A Sage of Old
The Latin root Credere lays to birth both the word credit and credible. Such is the importance of trust within the financial system that the Bundesbank is presently moving all its Gold holdings under the Banque de France to Frankfurt. The credibility of Gold offered trust within the system to trade and to speculate, the latter which undermined the Bretton Woods System by 1971.

Credibility is akin to blind trust; trust underpinned by an aggregate and mutual understanding of a cooperative equilibrium which would be otherwise undermined without the conditions in place. As it is with our fragile financial system, trust has become a word of caution and rarity. With the lack of trust between borrowers and lenders, and third parties, we are in a state of unconquerable demise of Post Bretton Woods.

What was Post Bretton Woods? A period of unprecedented prosperity , in main between 1992 and 2007, determined by financial rather than real forces. Lacking the significant advances in macro inventions, much of society succumbed to the petty innovations in high-end finance that read most into an unsustainable real asset boom in many of the economies in the advanced world.