The main point of this article is to make clear that only one path can lead the U.S. to a brighter future, one that ultimately lets us regain our former greatness. That path must start with the U.S. cooperating with China in a new monetary system in which gold replaces the dollar as the world’s reserve currency. To show why this has become an absolute necessity, I introduce a few new concepts and discuss some recent historical developments and events. I hope it will convincingly explain why a rejection of fiat currencies and a return to a monetary system centered around gold is so essential to our recovering the freedoms our Founding Fathers envisioned for us, freedoms that were long at the heart of what made this nation so great for so long.
In recent articles I’ve written about AI and I’ve written about gold. Here I want to tie those two topics together by looking at how AI and gold connect to two very different forms of intelligence. AI resembles the kind of intelligence commonly known as IQ, which is measured by tests such as the Stanford Binet and college SATs. These tests, which largely represent what is called “crystalline intelligence,” correlate well with college grades. But they bear little or no correlation with creativity, free thinking, and nonauthoritarian attitudes.
Creativity in many ways is the essence of our humanity, and while AI can achieve high levels of crystalline intelligence, it performs miserably on tests of creativity, which measure what is known as fluid intelligence. AI isn’t designed to be free-thinking. Indeed, according to Nobel prize-winning physicist Roger Penrose and others, it would require, at a minimum, major advances in physics for AI to achieve creativity. That points to why expecting AI to lead us into a better future is so delusional: Creativity not only is at the heart of what it means to be human, it also is critical to the technological leaps we’ll need to ensure mankind’s future well-being and even survival.
Gold, on the other hand, is closely linked to free thinking, as I noted in an earlier article in which I cited the writings of Warren Buffett’s father, Howard Buffett. A four-term congressman from Nebraska, he was a staunch believer in the need for a gold-backed monetary system, which he argued was necessary for freedom of thought. That jibes with my own thinking (and also, perhaps, adds plausibility to my speculation that Warren Buffett recently may have made a huge, secret investment in gold).
Gold isn’t just another metal. Its innate beauty and indestructibility convey a spiritual quality that has been revered by religions throughout the world. Its connection to freedom of thought and creativity is shown by how the U.S. began to decline once we abandoned the gold standard in 1971. That marked a U-turn from freedom of ideas to the prevalence today of closed-minded authoritarian thinking. One consequence has been that our technologies, once the envy of the world, today are vastly overshadowed, by countries we stereotype as authoritarian but that in reality have cultures that are deeply spiritual and in which gold has deep spiritual significance.
Thomas Jefferson believed technology should advance human well-being, not be an end in itself. Our current deification of AI is perhaps the clearest sign of how we’ve lost sight of a critical phrase in the Declaration of Independence: Jefferson’s distinction between “nature’s laws” and “nature’s God.”
Cooperation with China is essential
I’ve made no secret of hoping we return to some form of gold standard. In the short run, it might make clear the loss of U.S. hegemony. But it would open the way for America to once again walk a path of freedom that lets us regain our former greatness by choosing to cooperate with the rest of the world. AI will play a role, but it will be a supporting one to creativity and free thinking.
Cooperation—most notably with China—is the critical word here. Trying to punish China will only end up destroying the U.S. economy, along with threatening the well-being of much of the world. But cooperating with China could get us back on the path our founding fathers laid down for us. And as we continue to emphasize, that path must be paved with gold.
To understand why U.S.-China cooperation is so important, and what it will take to achieve it, some historical context may help. A seminal concept comes from the ancient Chinese military treatise The Art of War by Sun Tzu, who advised that a country should hide its strengths and display its weaknesses. In the modern era, and until around 2022, China followed this advice and was intent on hiding its strengths.
But over the past few years, starting slowly but then picking up pace, the Chinese have become more willing to show their strengths while playing down their weaknesses. For the U.S., that’s an ominous turn that we shouldn’t have ignored. Seemingly, as China gained confidence in its ability to manage its weaknesses, it has pushed its strengths—including gains that, as shown below, would let it easily triumph over us in a major conflict—ever more in our face, as if to force the issue of cooperation, and not just for China’s own sake but for the sake of the entire world.
As China’s progress has become increasingly evident, almost overnight our once-cooperative relationship with China has morphed into a full-fledged existential crisis—a crisis for us, as China demonstrates its clear superiority in virtually all major technological areas, ranging from AI to military technologies.
In 2015 China kicked off its Made in China 2025 (MIC) campaign. This largely internal goal was meant to send a message to China’s populace that the country was aiming to become less dependent on others. But the U.S. viewed it as more than an internal long-term initiative. Rather, we saw it as threatening U.S. hegemony.
The futility of our sanctions
Thus, the first Trump administration reacted with trade actions designed to slow or even destroy Chinese technological progress. In particular it targeted Huawei, whose existence was threatened by limited and in some cases no access to critical hardware and software. MIC, which had been mistakenly interpreted as China wanting to draw attention to its strengths, disappeared from Chinese public rhetoric.
The Trump sanctions had a dual effect. China understandably felt threatened by the U.S. actions and responded by doubling down on developing its own technologies and supply chains. At the same time, it remained intent on disguising its strengths and so kept these efforts under wraps.
The Biden administration, if anything, was even tougher in piling on sanctions. By 2021-22, several powerful signs of Chinese success were too obvious to completely hide. The Biden response was to ignore them—even pretend they never happened—while continuing a multi-hundred-billion-dollar proxy war with Russia. This was in stunning contrast to how in the 1950s, responding to the Soviet Union’s launch of Sputnik, the U.S. committed to an all-out effort to develop the technologies for success in outer space.
Early in the decade, major Western countries were intent on developing an exascale computer. An exascale computer is unfathomably fast, capable of performing a million times a trillion calculations in a second. The assumption was that only the major Western countries had a chance of success. Indeed, in 2021, the U.S. announced the first exascale computer, Frontier; all that remained was to verify its capabilities and introduce it officially, which occurred in 2022.
Against this background, in late 2021, several Chinese scientists published an article on another technology, quantum computing. They reported having a quantum computer that performed a task that was orders of magnitude faster than a rival Google quantum computer. The article drew yawns. Quantum computing was widely regarded—and still is today—as tomorrow’s technology, with that tomorrow likely decades off.
But a careful reading of the article revealed a big surprise: To verify the results of the quantum calculations, the Chinese relied on a standard computer that used chips that companies had been forbidden to sell to China. Computer scientists realized that the calculations performed by the conventional computer were so complex that the computer had to be exascale.
Moreover, further digging revealed that the Chinese had not just one exascale computer but three—laying the foundation for an industry of super-fast computers. One undeniable implication was that the chips China used were home grown. You don’t build an entire industry around chips whose supply you don’t control.
Chinese success in developing home-grown chips and creating an entire industry based on state-of-the-art computing never made big news here and soon disappeared altogether from the radar. Today, you can scour Google and still find no mention of China’s initial success in exascale computers.
More warning signs
At about the same time, however, there was a second warning sign: the resignation of a major civilian official at the Pentagon. Nicolas Chaillan, a French-born computer whiz who started his first high-tech business at age 15, had served three years as the Pentagon’s first chief software officer or first official chief of cyber security. Initially he offered his reasons for resigning in a long LinkedIn post in which he was mostly gracious to his colleagues. His criticism of the Pentagon’s unwillingness to make the sacrifices necessary to develop technology were buried deep within the post.
About three weeks later, though, when interviewed by a British journalist, Katrina Manson, the real reasons for his resignation became clear. Manson’s article, published in The Financial Times, quotes Chaillan as saying: “We have no competing fighting chance against China …. Right now it is already a done deal, it is already over in my opinion.” The article made plain Chaillan’s view that China is set to dominate the future of the world. A complacent, disorganized, and poorly educated America was no longer willing to make the necessary short-term sacrifice for long-term gain. He went so far as to say that “the failure of the US to respond to Chinese cyber and other threats was putting his children’s future at risk.”
Our third example is a real doozy, an undeniable message from China about its strengths that reveals China’s looming dominance in both industrial and military areas. In October 2021, the head of the U.S. Joint Chiefs of Staff, Mark Milley, called China’s recent test of a hypersonic missile alarming. “I don’t know if it’s quite a Sputnik moment, but I think it’s very close to that…It has all of our attention.” The Washington Post and others noted that just as surprising as China having technology well beyond anything the U.S. has was the fact that China chose to display it.
To give you an idea of how advanced the technology is, the Pentagon previously had said hypersonic missiles were not feasible beyond 12,000 kilometers. China’s hypersonic missile traveled 40,000 kilometers circling the globe and landed within 25 miles of its target. Today, nearly four years later, the U.S. still not perfected hypersonic technology, while hints of China’s further advances border on the fantastic. The same can be said of China’s defensive capabilities.
Since the missile test there have been many other examples of Chinese superiority, ranging from recently introduced tools that cut the deepest ocean cables that provide communication links among continents to far more efficient AI.
Despite all this evidence, the U.S. clings to a black-and-white world view of its own exceptionalism. Holding views beyond reason is characteristic of, and wholly consistent with, authoritarian thinking. America and its culture have developed a severe personality disorder. Personality disorders can be cured but it takes time and can be painful.
Agreeing to cooperate with China in a new global order with a monetary system centered around gold, while perhaps not sufficient to cure us, is a necessary condition. Ridding ourselves of fiat currencies and returning to a gold standard on a worldwide basis would be a win-win for everyone on the planet. Even gold would benefit enormously from a peaceful world in which a safe haven is no longer needed. Projected targets for gold become much higher when the entire planet is on the same page. There are no downsides to increased spirituality. Gold, with its universal beauty and prominent role throughout the world as a spiritual metal, is the only way to harness mankind’s inherent creativity so as to discover how to develop the material technologies needed to solve today’s existential global problems.
For the foreseeable future, all the factors I’ve touched on—gold, authoritarianism, creativity, fluid intelligence, AI, and, perhaps most important, freedom of mind—will continue to bear on any progress we can make in science, technology, and even financial development. We will continue to discuss these topics, which are so crucial to what kind of future lies in store.
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