Stephen Leeb discusses the potential major catalyst for a new monetary syatem

On March 6, 2021 at 4:44 am,
cfs (A valued listener) says:

I think about the Weimar Republic, inflation and the price of precious metals.
At the time of German hyper-inflation, the Reaichmark was not a reserve currency.
IT SEEMS TO ME THAT IN ORDER FOR GOLD TO BE A RESERVOIR OF WEALTH, IT CANNOT HAVE ITS PRICE DETERMINED BY THE CERVE CURRENCY.
i.e. In order for gold to preserve purchasing power for Americans, the U.S. HAS TO LOSE STATUS as a reserve currency.
Now, it is possible that eventually some form of SDRs might be primary reserves. It is certainly true, however, at this point in time, neither the Euro nor the Renminbi is capable of becoming a reserve currency.

Dr. Leeb responds to the comment by our listener CFS below:


I argue in my latest book that the major catalyst for a new monetary system will be growing resource scarcities. This means a central problem for the world over the foreseeable future will be the proper allocation of resources among countries. Keep in mind that in the first generation of this century gold climbed five-fold far outperforming all financial assets. E.g., the S&P 500 with dividends reinvested climbed about 3-fold. Copper, silver, and iron also outperformed the S&P. In other words, hard assets, largely not acknowledged by Wall Street, have begun to outperform financial assets. Gold’s stunning performance in this environment is at least consistent with this notion of scarcity and in some ways a strong suggestion that we must replace the dollar, or the U.S. would have overwhelming control of the distribution of scarce goods. In the end all – including the U.S. – would suffer tremendously.

What I suggest in my book is that the new worldwide reserve currency will be a digital collection of major currencies, which is backed by gold. Worth noting is that when we went off the gold standard in 1971 it unleashed an economy (ours) that could print as much money as it liked. The result was a shift in focus from long-term projects such as the interstate highway and the development of the transistor to short-term get rich schemes such as you see in the financial sector, which, not coincidentally emerged as a primary sector of the economy in current era of nearly unlimited money.

Even a sovereign currency backed by gold would not be a good idea. Foremost we have to recognize we are not facing a crisis that will just affect some nations but one that will affect the entire world, and whose solution will require cooperation among all countries. The gold standard, I talk about, will not involve a fixed price for gold but rather one that will reflect nominal worldwide economic activity and therefore will have to rise over time. Moreover, gold’s price will likely have to be reset to many multiples of where it is today. The final stages of this process will have to be carefully phased in. (We are not going to wake up one morning to find that the price of gold multiplied 10-fold overnight. The initial phases, however, are already under way – big time.

China, for all its faults, seems to be most aware of these challenges. Currently they have the most liquid physical markets for many major commodities including gold, copper, and iron ore. (To let leveraged speculators have a major role in determining the price of ever scarcer critical commodities is madness.) Moreover, any trading of critical physical commodities in China is de facto backed by gold.

You are right that the yuan – even a yuan formally backed by gold could not be a reserve currency. But a digital basket of currencies could and will, in the not-too-distant future, serve that role. China has recently been aggressively testing a digital-yuan, which I believe is another step on the way to a new monetary system. Again, my most recent book spells out many of these points in much greater detail.

One final comment on the Weimar Republic. The hyperinflation experienced in Germany in the early 20’s, largely the result of the disastrous Treaty of Versailles, came to an abrupt end sometime in the mid-20’s. What marked the end was when the Germans decided to back up their currency with their land. From the mid-20’s until the market crash in 1929 Germany’s economy hummed along with relatively low inflation and moderate growth. What brought down Germany and led to the rise of Hitler were the speculators in America who overleveraged their stock purchases, creating possibly the most damaging bubble in the history of capitalism. It was not until the end of WWII that the world’s economy led by America and a gold backed dollar was able to get back on its feet. America during the generation or so after the War was, in my opinion, the greatest economy the world has ever seen. We are going to have to work long and hard and have some technological luck to get back to those days. I am hopeful but feel a long road lies ahead and that gold msut play a vital role.  I hope this helps. Steve Leeb


Comments:
  1. On March 8, 2021 at 8:14 am,
    cfs says:
  2. On March 8, 2021 at 8:25 am,
    cfs says:

    BIDEN’S POLICIES ARE DIRECTLY KILLING AMERICANS.
    You don’t think so ? Are you really stupid or just plain ignorant. ?
    Fact: OVER 100,000 ILLEGAL IMMIGRANTS HAVE ENTERED THE U.S. IN THE LAST 3 MONTHS.
    25% of those illegals that are caught, test positive for covid-19, and are then released to go on buses and planes to travel within the U.S.
    Normal people stay home when they are sick, BUT ILLEGALS ARE PUT ON PUBLIC TRANSPORT.
    THIS IS A CRAZY POLICY, which is killing Americans.

  3. On March 8, 2021 at 10:13 am,
    cfs says:
  4. On March 8, 2021 at 12:07 pm,
    cfs says:
  5. On March 8, 2021 at 12:40 pm,
    Holy Grail says:

    For those who want to seek safety you might consider moving to the ghost cities over in China that’s where all these dignitaries are going from the Western World when it all collapses and burns. All these major structures and facilities are empty they can facilitate millions of people and they plan on using them. The chicoms are moving in and their will be no mercy. Chicoms will strip all the citizens here of everything. They won’t be taking any prisoners either because they would rather execute them than care for them. Trudeau and Biden are going to facilitate this reset everything’s going as planned.

    Notice, that chicom Bidden is now starting a war. China holds all the cards most of the World trade goes through the South China Sea and everything we buy is made in China so you can just imagine what’s going to happen. Steven Leeb nails it, Weimar Republic Germany hyperinflation. China’s largest trading partner is now Europe. They have the largest trade exports on record right now. In the meanwhile, the Western world is collapsing financially and morally. Canada has already surrendered to China.

  6. On March 8, 2021 at 2:41 pm,
    cfs says:
  7. On March 8, 2021 at 2:44 pm,
    cfs says:

    Latest covid info…..

    Too skinny is as big a comorbidity factor as too fat.

    Keep BMI in range 15-30 for lower problems.

  8. On March 8, 2021 at 2:47 pm,
    cfs says:

    The covid Aid bill has $ 1 Billion available for socially-discriminated farmers.

    Free grants available up to 120% indebtedness of “farmers of color”.

    NIce racial discrimination, if you can get it.

  9. On March 8, 2021 at 2:50 pm,
    cfs says:
  10. On March 8, 2021 at 2:54 pm,
    cfs says:
  11. On March 8, 2021 at 5:29 pm,
    cfs says:

    In light of illegal immigrant handling…..

    https://www.youtube.com/watch?v=tPYMgwN-oII

    If an American is required to carry a covid vaccination passport, would that be RACIAL DISCRIMINATION ?

  12. On March 8, 2021 at 5:42 pm,
    cfs says: