There has been a lot of talk in hard money circles about a supposedly coming “Great Reset.” It is being discussed to such an extent that this week Hillsdale College here in Michigan held a four-day conference on the subject.
Before talking about the prospect of such an event coming to pass, it is necessary to define what is meant by the term.
For some, it refers to the time when governments have so extensively inflated their fiat (paper) currencies that all of the existing currencies fail close to the same time. Thereafter, the monetary systems with a multi-thousand-year track record without failure, physical gold and silver, become the de facto global currency.
But, there is another definition of “Great Reset” that is also envisioned.
Especially in conjunction with discussions at the World Economic Forum in Davos, Switzerland, the Great Reset could be the time when the world’s developed nations judge that their currencies are suffering from so much inflation of the money supply that they replace all of them with what would be a single global currency (along the lines of the Special Drawing Rights of the International Monetary Fund). This may or may not be an all-digital currency. There also may or may not be a transition period where people could exchange their nation’s currencies into this new money. There may or may not be a pretense that the new currency is at least partly anchored by gold.
A key element of this version of the Great Reset is that the new monetary system would enable governments to track all such denominated transactions by every single person and entity.
This version of the Great Reset is the one leading many governments to try to develop their own cryptocurrency. The nation of Italy is even offering its citizens cash incentives, with less than overwhelming success, to conduct their financial activities with full disclosure to that government.
If you were to predict which definition of the Great Reset was more likely to occur, which would you pick?
In my judgment, I think both will come to pass.
If the governments don’t “do something” to stop their respective inflations of their money supplies, these fiat currencies will eventually fail. At the rate of current inflation, widespread currency collapses keep getting closer to now than they were in the past. Therefore, I sadly think that some kind of global currency system will be foisted upon the planet, most likely within the next few years.
But, I also don’t think this will solve the problems wrought by government inflation of the money supply. Even in a world currency system (think back to the 1944 Bretton Woods Agreement where the U.S. dollar was pegged to gold and other world currencies were pegged to the US dollar), governments around the world will never simply accept the same standard level of inflation of a global currency. Just as the Bretton Woods Agreement was subject to stress and eventually collapsed, I think any attempt at a global currency would likewise be doomed to failure.
Once the global monetary system fails, I think people will be left to their own devices to create a currency that facilitates trade and commerce. Because of their incredibly long history as successful monies, I expect gold and silver, as measured by weight and purity, is likely to supplant the world’s global currency.
Still, today’s commerce involves parties who trade at great distances from each other. The transfer of physical gold and silver would be challenging, even under the best of circumstances. Consequently, I suspect there will eventually develop some form of cryptocurrency, tied in or backed by physical gold or silver, that will then displace the use of physical gold and silver in everyday commerce.
This whole scenario could take many years, perhaps decades, to come to pass. What other alternative monetary systems do you think might develop instead?
Patrick A. Heller was honored as a 2019 FUN Numismatic Ambassador. He is also the recipient of the American Numismatic Association 2018 Glenn Smedley Memorial Service Award, 2017 Exemplary Service Award, 2012 Harry Forman National Dealer of the Year Award, and 2008 Presidential Award. Over the years, he has also been honored by the Numismatic Literary Guild (including in 2021 for Best Investment Newsletter), Professional Numismatists Guild, Industry Council for Tangible Assets, and the Michigan State Numismatic Society. He is the communications officer of Liberty Coin Service in Lansing, Michigan and writes Liberty’s Outlook, a monthly newsletter on rare coins and precious. metals subjects. Past newsletter issues can be viewed at http://www.libertycoinservice.com. Some of his radio commentaries titled “Things You ‘Know’ That Just Aren’t So, And Important News You Need To Know” can be heard at 8:45 AM Wednesday and Friday mornings on 1320-AM WILS in Lansing (which streams live and becomes part of the audio archives posted at http://www.1320wils.com).