EDITOR NOTE: We talk a lot about the end of the fiat currency system. So, what might the world look like if the fiat system were to suddenly collapse? How might that impact other countries, particularly the US which still holds the world’s reserve currency? These are questions that currency Chuck Butler attempts to answer in the interview below. With sovereign digital currencies entering the economy, and with private cryptocurrencies competing against cash, the function and specification of money might seem a bit complicated. Or perhaps the answer may get a bit simpler, much less surprising, and much more traditional, if not just plain historical. We've seen similar cycles before--financial systems collapsing; empires crumbling. We may or may not be approaching that breaking point quite yet. It's more likely that we're entering the initial phase of crisis and chaos. One thing to remember is that currency systems may fall but real money prevails. And throughout history, the only true forms of money that have prevailed are gold and silver.
I was not surprised when the Wall Street Journal reported, “Senate Moves to Confirm Trump Fed Nominee Waller, but Shelton’s Candidacy Hits Likely Dead End.” Waller is an insider, currently working for the St. Louis Fed, while Shelton is an advocate of returning to the gold standard. Ms. Shelton was described by some senators as “radical.”
The deep state does not want anything close to the gold standard which would help reign in their reckless deficit spending. Quite the contrary, they are pushing for a cashless society, digital currency, total control over what is money and knowing how and where you spend every dime.
Subscriber Mike G. asks a great question:
“What happens when fiat currencies fail? Those of us who have precious metals will still need a value vehicle with which to buy and sell. Even digital currencies, backed by nothing, will fail. Digital debt is still debt. Do we go to a barter system in order to buy and sell? We need to think through our options.”
Mike’s concerns are genuine. How far away from digital currency are we? Some European countries are already there.
Inflation is the relationship of one currency paired against another. Globalists want a universal, digital currency to eliminate the competition. Governments could create fake money and citizens would have no alternative currency available to protect their wealth. Where does gold fit into the picture?
When it’s time to “think through our options”, friend, and currency expert Chuck Butler is on top of the list. I asked him to weigh in on the situation.
DENNIS: Chuck, thanks again for your time and wisdom. Mike really asked several questions, and I’d like to deal with them individually.
While I was hoping Shelton would get nominated to the Fed, I felt it was a fantasy. God forbid an advocate of the gold standard and limiting government spending would get a voice.
I’ll start with a two-part question. What’s the probability of the government pushing through digital currency? If they pull it off, what does that do to gold?
CHUCK: Dennis, thank you, and first let me say, Happy New Year, and hopes that 2021 is better than 2020! I know it won’t take much for that to happen, but still…
I truly believe that a digital currency will replace folding currency in the near future. I wrote about this recently in my in my Daily Pfennig newsletter:
“I keep reading…about different countries announcing their plans for implementation of a digital currency…Singapore, was the latest to do so…. The U.S. hasn’t announced any such plans, yet, that is, but they did say that they were working on developing a digital currency.
.… I first told you months ago about how the U.S. would introduce a digital currency, and you would wake up one Monday morning, turn on your computer, log in to your bank account, and find that it no longer reflected dollars held, replaced by digits. This isn’t going to happen overnight,…or maybe even next year. It…depends on when the U.S. has to default on any of their debt, and the dollar begins to fall like a rock.”
I feel this whole stay at home thing and buy everything with your credit card, is part of the plan. If the Government gets everyone to stop spending folding currency, then they are half way there to their implementation of a digital currency.
I also believe eventually the government will outlaw folding currency, and other forms of digital currency; they won’t stand for any competition.
When this all happens, I believe the rush to buy Gold (& Silver) will be chaotic and will force the price of Gold to soar. The problem then will be there won’t be enough physical Gold to meet the demands for it – thus, the price will soar.
DENNIS: Let’s look at other currencies. I think Mike is right, eventually our ridiculous debt levels will come home to roost and our currency will collapse.
While the Euro was sold as a common currency for trading, the underlying purpose was centralized control of Europe and countries are pushing back.
What do you see happening to other currencies around the world in the next year or so? Will we still have other, more stable currencies available?
CHUCK: I recently wrote, “Countries all around the world (sans Russia) have indebted themselves beyond their ability to ever pay it back. And with debt levels so high, individual countries are finding it very difficult to grow their economy. So, in my mind, I see defaults of debt happening, and that goes for the U.S. too!”
That’s when the digital currency will become prevalent in our economy. Because after defaulting on Gov’t Debt, currencies will be sold like funnel cakes at a State Fair. So, if currencies are going to be worthless, then why not implement your digital currency regime?”
I really don’t see any currencies being able to survive. Russia, hasn’t partaken in this mass splurge to indebt individual nations; but what’s Russia going to do with the ruble, when everyone else is trading in digital currency using blockchain?
DENNIS: If Mike is right about high inflation, how would those holding gold protect their buying power? What would they redeem it for that reflects current value?
CHUCK: Gold would, as stated above, be soring in price, so that would remain an excellent hedge VS inflation. But what does one do with their Gold at that point to pay the bills? Are you going to go down to the store and buy a loaf of bread with a Gold coin? Not really. The store owner might take your Gold Coin, but not give you any change in return! Something will come along by then that has value. To me, land is always valuable, but that’s just one thing.
I think you’ll be able to get loans using your Gold as collateral, and then have the digits deposited in your bank account, to use at the grocery store, gas station or for giggles.
DENNIS: I also feel people will find some way to work around the system; something will be used for barter. Something that has limited supply, like gold, known and recognizable value and easily transportable would be a good place to start. If all currency is digital, do you have any ideas what might fit the bill?
CHUCK: Well, let’s think about that for a minute. I’ve already discussed how Gold & Silver will be in high demand, and besides those I can’t think of anything else that might fit the bill… But, as I said above, something will emerge in the meantime, and everyone will know what it is.
It might be as simple as the gold price soaring in relation to new, digital currency. Whatever the currency of the day is, gold could be sold in relation to those units.
DENNIS: For years pundits have warned about an eventual collapse. With our political situation, the deep state and globalists going full steam ahead, turmoil throughout the world, I fear we are moving toward something chaotic.
What do you see on the 2021 horizon? I doubt you are selling any gold or silver.
CHUCK: Dennis, 2021, is going to be a heck of a year. I have not changed my feelings toward holding Gold…I don’t think I ever will!
I don’t know this to be even on the radar, yet, but we could see the first of the debt defaults in 2021. All it will take is one country, no matter how small, to default, and then the wave of defaults will begin.
I believe our financial system that we know and love, will eventually collapse from the weight of too much debt.
2021 will also be an important year for stocks. Investors have been piling into stocks, no matter what the P/E numbers are, or what is going on in the economy. Will that continue? Well, it will as long as there is nothing else that provides the investor yield. You can only fill a balloon with so much air before it pops…. And so it is with the stock bubble….
DENNIS: One final question. For the most part, China and Russia have unloaded their holdings of US debt. Russia is accumulating gold at an enormous pace. Are they trying to undermine the dollar and strengthen their position in the world?
CHUCK: Yes, yes, and yes…. The de-dollarization that Russia began, followed by China has really taken hold. So far, their moves haven’t provided any major nicks in the dollar’s armor. They need more allies to de-dollarize. What would it take for them to get more countries to join them? Well, I don’t know, maybe a promise to not invade them!
If the US did not allow citizens to sell gold for dollars, might the Russians and Chinese gladly trade their currency for gold?
Right now, the dollar appears to be entering a new weak dollar trend. It’s possible we could see multiple years of dollar weakness, which could compel other countries to de-dollarize. It’s something to watch for, for sure!
And thanks again for the opportunity to address your readers.
Dennis here. Hang in there, Mike. I’m not selling either. The day will come when we’re glad we hung on!
Originally posted on Miller On The Money