I heard an extraordinary comment from author Yuval Noah Harari last week.
He’s the bloke who wrote the best-selling Sapiens book.
You might’ve read it.
It’s basically a brief history of humankind and what makes us, well, ‘human’.
Anyway, recently on the Lex Fridman podcast, Harari had this to say about money:
‘…money is a complete fabrication of the human mind, rarely existing in a physical form anymore yet has become the most powerful structure upon which Homo Sapiens go about existing.
‘Because it is a story, a fabrication, the narrative remains within our control. We get to define the key components of the story: the characters, the journey, the rules and the outcomes.’
It’s worth noting in the same podcast, Harari also said humans would die off in about 100 years!
As someone dryly noted in the comments section about this particular prediction:
‘Short enough time to be scary but long enough to be able to avoid accountability. Brilliant!’
I’m not usually a cynical person, but I tend to agree with this commenter’s take.
It’s the kind of prediction that makes the headlines, but has little downside risk for the predictor.
To me, that’s a warning sign that someone is ‘crafty’ rather than intelligent.
But it’s his ideas on money that I think are more worrying than his doomsday predictions.
Let me explain why…
The most dangerous idea
The softly spoken Harari comes across as almost shy.
But don’t be fooled…
Thanks to Sapiens popularity, Harari now has the ear of powerful people at the likes of the UN and World Economic Forum.
They lap up all his takes, which align very closely to their own world view.
Namely, a world in imminent danger that needs the steady hand of authoritarian types to save it.
And his idea of money as something we get to control…well, it’s music to their ears!
Needless to say, I hate this idea.
But I’ll go even further…
I think his idea that money is simply ‘a narrative’ to be controlled is one of the most dangerous ideologies in existence.
It’s a return to the failed communist experiments of the 20th century. A system of command and control using control over money to direct capital.
And if you accept Harari’s view, the logic leads you to a dark place.
Money becomes a tool of control, a weapon to be wielded, and a means of social coercion.
In this world, wealth isn’t a reflection of effort or ingenuity, but of power and politics.
It’s not surprising perhaps then that this viewpoint is being celebrated in both the halls of academia and the corridors of power.
And we’ve seen plenty of examples of why this idea should scare you in recent years.
The big bank bail outs of the GFC of 2007, the protesting Canadian truckers who had their bank accounts frozen last year, the banning of donations to Wikileaks in 2011 by Visa and Mastercard, UK politician Nigel Farage having his bank account closed a month ago because of his politics…
This isn’t scaremongering, it’s a fast-emerging reality.
But it wasn’t always this way.
Once upon a time, money was independent and not subject to the whims of rulers, democratic or otherwise.
The good news?
There are signs we could be returning to such a world.
And it could result in a surge in value for one key asset.
Let me explain…
Back to gold
Before paper, money was gold.
It was accepted almost everywhere as a medium of exchange and a store of value.
Even national currencies were backed by gold in some way up until the second half of the 20th century.
Then, in 1971, the US used their immense military and political might to finally sever the link between money and gold.
There was nothing ‘independent’ about money anymore.
Since then, the 50 years of brainwashing people to accept ‘money by decree’ has been very successful.
I mean, ask any of your friends why the money in their pocket is valuable and they’ll respond along the lines of ‘because the government says so’.
‘Money by decree’ is literally what fiat means.
But today, this could be changing in some parts of the world.
You see, with its never-ending debt, faith in the credit of the US is waning. And as top dog in the fiat system, that means faith in ‘money’ is too.
As I mentioned last week, ratings agency Fitch has even cut US Government debt to AA+ from AAA rated.
Even without that signal, many countries have already been reducing their holdings of US debt for years now.
Over the past 25 years, foreign reserves held in US dollars have fallen from 75% to 58%.
With geopolitical tensions heating up, this trend is only likely to accelerate.
In fact, the BRICS block of countries (the emerging countries of Brazil, Russia, China, South Africa, and India) are in the process of moving back to gold as money.
Or, at least, that’s an idea they’ve been floating of late.
These countries are having a summit on 22–24 August in Johannesburg, and we should get more details on how a new BRICS-settlement currency could work then.
But gold is expected to be a key part of it.
If indeed the BRICS do turn their backs on the US dollar and move to gold, it could be a huge investment opportunity for you too.
While I’m personally more of a Bitcoin [BTC] advocate — I think decentralised money that individuals can spend digitally is the ‘new’ gold — I accept the fact a lot of countries like China, Russia, and India have significant gold holdings.
So I can see how they may turn back to gold in a big way to try and wean themselves off the US dollar.
It feels like a pivotal moment for gold…
The opportunity at hand
So how do you play it?
Well, my mate Brian Chu is our ‘go-to man’ on gold stocks here at Fat Tail Investment Research.
He runs his own family gold fund and has been in the space for well over a decade now.
Brian thinks the time is ideal to stake out a gold position in your portfolio. But how best to do this?
Explorers, producers, physical gold, gold ETFs?
Brian’s going to lay out his gold investing strategy later this week.
Keep an eye out for that.
Good investing,
 |
Ryan Dinse,
Editor, Money Morning
PS: Alas, it wasn’t to be! It appears the superconductor story I’ve been following recently has hit a bit of a dead end. So far, no reputable lab has managed to replicate the initial team’s findings on LK-99. I’ll let you know if there are any new developments, but for now, it seems the dream of a superconducting room-temperature material remains just that.
PPS: Follow me at @konfidinse on Twitter (X.com) for live updates on this and other investing topics.
