How Far Down the Road Can Our Global Natural Resources Last?
Commodity Scarcities On The Rise
Can you give us your thoughts on the major geopolitical events currently taking place and how they are affecting the global economy?
Stephen Leeb: The major driver is United States policy. When Nixon took the U.S. off the gold standard in the early 1970s, basically we had all the money in the world (literally) to spend. It took fifty years to come to fruition but it’s now become a critical issue. Just look at the Federal Reserve’s balance sheet. $33 trillion dollars is an awfully big number. My rationale is this:
“A nation isn’t truly free without discipline or any real cohesion.”
Unfortunately, America has become a society that’s gone downhill. I don’t know how to sugar coat it! The United States economy still has a chance to rally and make a strong comeback. But what you’re seeing today… This is all about commodity scarcities.
The U.S. is not looking very strong right now with involvement in both Ukraine and the middle East- spreading itself out so thin. We see Russia testing them in Syria and Taiwan as a pawn in the South China Sea. And all this condemnation that is going on simultaneously.
In fact, Putin went public with the true fact that said; “Well, actually, no one had ever published this before, but we wanted to join NATO and President Clinton shut us down.”
I think America is going to have to learn a hard lesson here. And I fear that the United States will have to take a big step backwards in order to take any steps forward. The catalyst for this will be again, a gold backed reserve currency.
On that same line of thought, the next gold backed reserve currency certainly will not be the Chinese yuan. The Chinese have made it clear they have no intent for the yuan to serve as a potential reserve currency. Hard evidence of this fact was cited by a highly regarded member of the PBOC, who wrote a white paper in 2009. Whereby, in the white paper he said; “The business of having a sovereign currency- also being a reserve currency- is crazy.” And he pointed to the SDR as an example of what could have and should have come out of Bretton Woods. If you read very closely, he states his case for a gold backed basket of currencies, but doesn’t mention gold by name.
In a world where you have commodity shortages, you can’t back up currency with something that’s going to run into short supply. Let’s face it folks… Are we going to back the currency with copper? What sense does that make?
Gold is truly unique in the sense that it’s prized not for its industrial uses (because other metals can be substituted) but for its beauty. And I will let the philosophers decide why that’s the case! The philosophers and the economists can come together to work out a platonic conclusion. Regardless, gold has been recognized as a currency since the days of kings and queens.
Silver, too, should be a massive participant because it’s going to be in scarce supply. The world is not going to have widespread solar technology without using silver. When you take into consideration the amount of solar photovoltaic required to transition the planet into a totally renewable, sustainable society… We’re going to have a devil of a time accomplishing that without silver. And if you believe the world will continue to grow sustainably at an exponential rate, silver could actually perform better than gold.
When I discuss this topic, there’s a certain level of frustration when I think about the societal downfall America has suffered since Nixon took us off the gold standard.
A majority of the modern technologies were invented in America- by Americans over the past century! These inventions came out of Bell Labs. And it was Bell Labs that created the internet, created the laser, created the transistor. Have we completely forgotten about the transistor- which is the basis of umpteen other inventions?
Not to mention… The tech company Intel was founded in America by an American citizen. All computer technology from the 1980s to early 2000s centered around Intel. That’s why today, advanced micro devices (technologically speaking) are light years ahead of Intel. American technology has been usurped by companies like Taiwan Semiconductors… How in the world did we allow this kind of thing to happen?
Sadly, we allowed it to happen because we became obsessed with money and power. And that leads to complacency, total utter complacency.
Ironically, the values that we share and want to protect are freedom and virtue. These are exactly the values that we’re losing as a result of this overwhelming complacency that we have, at least in this country right now. We need to get our mojo back. Americans, if left to their own devices, are extraordinarily creative and innovative.
If you look back at history- the West basically founded modern technology. Present day, the East does not yet have the total upper hand from a technological standpoint, but they’re sure on their way to achieving it! The only viable way for Americans to reclaim our innovative edge is through discipline and we might have a fighting chance.