2022 was a blockbuster year for commentators at the intersection of geopolitics and finance, and none more so than former NY Fed "plumbing" expert and repo guru, Zoltan Pozsar, whose comprehensive and unique insight into the more opaque workings of the financial world has made him into a household name and one of Wall Street's most closely followed contrarian commentators and strategists. There's a reason for that: two years after Pozsar first correctly predicted the historic monetary and fiscal shock that would emerge as a result of the covid lockdowns, warning correctly in early March '20 - just days before the US financial system nearly collapsed due to covid lockdowns - that the pandemic would lead to a major funding crisis (see "Covid-19 and Global Dollar Funding") and that the Fed should be launching a massive preemptive QE (the Fed did just that, but it first waited for stocks to crash by a third in a matter of days), Pozsar shifted his attention to the multi-polar world resulting from the Ukraine War, a world which according to Pozsar would see the birth of a new Bretton Woods regime, and where the death of the US dollar would coincide with the birth of the petroyuan.
As Pozsar recounts in his first must-read note of 2023 titled "War and Peace" (available to pro subscribers) the events of 2022 inspired him to write four “war” dispatches: War and Interest Rates, War and Industrial Policy, War and Commodity Encumbrance, and finally, War and Currency Statecraft. In these, he identified six fronts (or “hot wars”) in “macro-land” (a “cold place”) where Great Powers were going “at it” in 2022:
- the G7’s financial blockade of Russia,
- Russia’s energy blockade of the EU,
- the U.S.’s technology blockade of China,
- China’s naval blockade of Taiwan,
- the U.S.’s “blockade” of the EU’s EV sector with the Inflation Reduction Act, and
- China’s “pincer movement” around all of OPEC+ with the growing trend of invoicing oil and gas sales in renminbi.