The Dollar Is Falling Apart—Why Gold Comes Next | Alan Hibbard

The Impending Shift in the Global Monetary System

Key Concepts:

• New Monetary Regime: A transition away from the current US dollar-dominated system towards a new global financial order.
• Gold Standard (Revisited): The potential re-establishment of gold as a backing for currency, or a significant component of a new monetary system.
• Petrodollar: The system where oil is priced and traded primarily in US dollars, giving the dollar significant global influence.
• QE (Quantitative Easing): A monetary policy where a central bank purchases government bonds or other assets to increase the money supply and lower interest rates.
• Cover Clause: A hypothetical requirement for central banks to hold a certain percentage of their reserves in gold.
• Swift: A global messaging network that financial institutions use to securely transmit information and instructions for payments.
• FX Reserves: Foreign exchange reserves, assets held by central banks in foreign currencies.

I. The Dollar’s Decline and the Rise of a New System

The discussion centers on the assertion that the US dollar is “falling apart” and that a new global monetary system is inevitable. This decline is attributed to three primary factors: the national deficit, the growing anti-dollar sentiment globally, and the actions of the Federal Reserve (the “big three”). The speaker argues that the price of gold and silver increasing rapidly is a direct reflection of the dollar’s decreasing value – essentially, an inverted chart.

Former President Trump has repeatedly expressed interest in backing the dollar with gold, and Treasury Secretary Scott Bent has indicated a desire to participate in a “new Bretton Woods” system, potentially within the next four years if Trump is re-elected. The speaker highlights geopolitical events like the situation in Venezuela (related to gold, oil, and bypassing SWIFT) and sanctions against Russia (including the freezing of Russian assets in 2022) as evidence of the US being “backed into a wall” and needing to take action.

II. The Federal Reserve’s Loss of Credibility & Inflation

The speaker identifies 2021 as a turning point in the Fed’s credibility. Specifically, the continuation of $120 billion in monthly Quantitative Easing (QE) despite a strong GDP growth of 6% and a significant drop in unemployment (from 14.8% to 5%) coupled with rising CPI (Consumer Price Index) signaled a loss of faith. The speaker states, “2021 was the end for me… I forgot that it has credibility.” The Fed’s lack of acknowledgement of its role in the subsequent inflationary outbreak further eroded trust. The speaker believes the dollar must be “inflated away” to facilitate a re-establishment of financial stability.

III. Gold as the Likely Foundation of the New System

The consensus is that gold is the most likely candidate to underpin the new monetary system. While a specific “cover clause” (e.g., 25% of central bank balance sheets denominated in gold) is discussed, the exact percentage remains unknown. However, the speaker notes that central banks have been steadily increasing their gold reserves, with purchases doubling to 800 tons per year, and that European central banks have been adjusting their gold holdings to align with their GDP levels, suggesting a coordinated effort. The speaker emphatically states, “It’s a certainty in my mind that gold will be involved.”

IV. The Geopolitical Dynamics and Trump’s Role

The transition to a new monetary system is complicated by geopolitical factors. The speaker points out that while Donald Trump appears eager to take credit for establishing a new system, he will need to negotiate with leaders like Putin and Xi Jinping, who are not under the same time constraints. This creates a potential scenario where Trump may be forced to accept a less favorable deal or risk having no deal at all.

The speaker also acknowledges the practical difficulties of simply backing the dollar with gold, citing the need to drastically cut government spending, potentially leading to social unrest or even conflict. The interconnectedness of the global financial system and the sheer volume of outstanding debt present significant challenges.

V. Why Bitcoin is Unlikely to be the Backbone (Currently)

Despite being a Bitcoin enthusiast (“I love Bitcoin and I actually have more Bitcoin than I have gold”), the speaker argues that Bitcoin is not currently suitable to serve as the foundation for a global monetary system. The reasons cited include:

• Immaturity: Bitcoin is still a relatively young asset.
• Volatility: Its price fluctuations are too significant for a stable monetary system.
• Market Cap: Its overall market capitalization is insufficient.
• Limited Central Bank Ownership: Central banks have limited exposure to Bitcoin.
• Branding Risk: A government endorsement of Bitcoin could trigger widespread public backlash and accusations of a Ponzi scheme. Gold, conversely, would be met with far less resistance.

The speaker believes Bitcoin may play a role in the future, but it will likely be decades away. The immediate need for stability points towards gold as the more viable option. He predicts that whatever system is implemented will likely last a generation, but could fall apart within 10 years if a poor deal is struck.

Notable Quotes:

• “The dollar is falling apart.”
• “You just flip the chart upside down and that’s that’s the price of the dollar or the value of the dollar depending how you want to how you want to label it.”
• “2021 was the end for me… I forgot that it has credibility.”
• “It’s a certainty in my mind that gold will be involved.”
• “If a country says we’re backing the dollar with gold nobody would be upset. You wouldn’t have riots.”

Conclusion:

The conversation paints a picture of a global financial system on the brink of significant change. The US dollar’s dominance is being challenged, and a new monetary order is likely to emerge. While the specifics remain uncertain, gold is widely considered the most probable foundation for this new system due to its historical stability and widespread acceptance. Bitcoin, despite its potential, is deemed too immature and volatile to play a central role in the near future. The transition will be complex, fraught with geopolitical challenges, and require careful negotiation to avoid economic and social disruption.