Canadian PM Carney Warns of "Rupture in World Order" at Davos

Canadian Prime Minister Mark Carney delivered a speech at the World Economic Forum in Davos, describing a "rupture in the world order" and the end of a "pleasant fiction." He stated that the rules-based order is fading, leading to an era of great power rivalry.

"The strong can do what they can, and the weak must suffer what they must."

Carney noted that "intermediate powers" like Canada, Australia, and the United Kingdom, which have benefited from American influence, must seek alternative alliances. He indicated Canada is exploring new relationships with China and the European Union, referring to this as "diversifying" and "buying insurance." He characterized the current situation as a "rupture, not a transition."

Carney predicted a future "world of fortresses" or economic blocs, which he believes will result in economies becoming "poorer, more fragile and less sustainable." In response, Canada is pursuing new trade agreements with Mercosur and India.

Following Carney's speech, U.S. President Donald Trump reportedly disinvited Carney from joining the new Board of Peace. This America-led initiative is viewed as an effort to replace the United Nations. Carney had previously expressed willingness to pay a $1 billion fee for the initiative if it served the public.

Global Economic Warning Signs Intensify

These geopolitical discussions unfold as global economic warning signs intensify. The price of gold recently neared $5,000 per ounce, and silver surpassed $100 per ounce for the first time in history. Rapid increases in gold prices are often interpreted as indicators of economic concern.

Economist Ray Dalio on "Breakdown of Monetary Order"

Economist Ray Dalio, speaking from Davos, described the global situation as a "breakdown of the monetary order." He highlighted the U.S. faces a choice between printing money or experiencing a debt crisis, noting the national debt exceeds $38 trillion and unfunded government liabilities surpass $100 trillion.

Dalio also observed a questioning of fiat currencies and debt as reliable stores of wealth. He pointed to central banks' changing behaviors, particularly in the context of trade deficits and "capital wars."

Questioning the U.S. Dollar's Dominance

Historically, the U.S. dollar became the world's primary reserve currency after the gold standard was abandoned in the 1970s, providing significant benefits to America. However, trust in the dollar system is now being questioned, with nations expressing concerns about their dollar reserves' safety.

Central Banks Boost Gold Reserves

In a related development, Poland's central bank announced plans to acquire an additional 150 tons of gold. A board member stated their goal is to build a portfolio for "unstable geopolitical times" that ensures "stability, security and credibility," with price not being a primary factor.

"Stability, security and credibility."

This trend follows increased central bank gold purchases globally, especially after Russia's foreign dollar reserves were frozen, illustrating the perceived security of domestically stored gold. China and Russia are also significant gold purchasers.

India is also reportedly reducing its U.S. treasury holdings to a five-year low and acquiring gold, indicating a potential shift away from dollar reliance. These collective actions by central banks suggest growing apprehension and a reevaluation of the importance of dollar holdings.