With many investors worried about the economic turmoil that has engulfed the globe, here is China’s stunning plan for gold and a new monetary system.
China’s Plan For Gold & A New Monetary System
Stephen Leeb: “The world is headed to a new monetary system. But most in the West are still valiantly trying to deny that reality. Whether you’re reading The New York Times or Bloomberg News, or delving into recent white papers released by various institutions, you’re sure to find anti-gold propaganda, stories about how oil is plentiful, all the while stalwartly maintaining that the dollar won’t be superseded by the renminbi…
“One of the white papers I referred to above was authored by Amar Reganti. He’s on the asset allocation team of the massive asset management firm GMO, and formerly served as deputy chief of the U.S. Treasury Department’s debt management unit. Reganti argues the renminbi won’t usurp the dollar as the world’s foremost reserve currency in either the short- or medium-term. But that’s really missing the point, because promoting the renminbi over the dollar isn’t China’s goal. Rather, as I’ve argued before, the Red Dragon wants a new monetary order in which gold plays a central role, with the renminbi first among equals among fiat currencies.China, in an orderly and deliberate way, is accumulating critical commodities like oil and metals like gold. Equally relevant, it’s also acquiring vital technologies, ranging from its purchase of a high-tech German firm to the development of 21st century defense items, ones that in some cases the West can’t create because it lacks access to the critical commodities that would be required.
The Path To A New Monetary Order
Also relevant is that China’s newest supercomputer is five times faster than the fastest U.S. supercomputer. Supercomputers, thanks to their unique ability to create fantastically intricate code, will play a vital role in a world that moves to conduct international trade using digital currencies in conjunction with gold. This is a possible path China may choose in its push to create a new monetary order.
I had originally believed the transition from West to East would revolve largely around SDRs assuming a larger role. The idea was that after the renminbi and then gold joined the basket of SDR currencies, the renminbi, whatever its initial weighting, would naturally emerge as the currency of global choice because of China’s outsized gold holdings and its control of critical technologies. This would be a likely orderly path to a new monetary order.
I am still hoping such an orderly path exists – because if it doesn’t, the world will stumble to a new monetary order in far more chaotic fashion. Developments in an increasingly turbulent West, rather than actions by the Chinese, would be the catalyst.
Just this morning I was reading about protests in Europe over trade deals with North America and over the past week there were stories about German banks being up in arms about new regulations that would require them to raise massive amounts of new capital. Meanwhile, NATO member Turkey appears to be taking a page out of Russia’s book – not the Russia of today but Russia circa 1950.
As KWN’s extremely informative interview with Nomi Prins showed, the Chinese are no fans of chaos. They don’t want to see a market meltdown, even though they wouldn’t be hurt by it nearly as much as the West, where a far greater proportion of wealth resides in the stock market. A replay of 2008 – which, given the potential for a collapse of the eurozone, not to mention a Russian bear bearing down on the Baltics, could turn into 2008 on steroids – would not be in their interests…..More here