Note: I make a distinction between being wise and smart. I wrote about wise leaders and citizens here. Today I am talking about smart leaders of citizens in denial.
Imagine you are a smart leader with a good understanding of science and engineering, like many Chinese leaders, and unlike our idiot Western economists and lawyers.
You know cheap money policies have created the largest bubble in history.
You know there is not enough affordable energy left to grow out of the problem.
You know that austerity policies will cause a depression, at best, and will cause you to lose your job.
You know that thermodynamics and mathematics guarantees an economic reset in the not too distant future.
You know that there will be much less energy and other critical resources like food available after the reset.
You know that there will be much less credit available to purchase anything with after the reset.
You know that you will not be able to feed your people, and keep your job, without access to energy, food, and other critical resources.
You know that you cannot afford a massive military build-up to forcibly secure resources, and even if you could, the future shortage of energy to power it makes a big military an unwise investment.
You know that a few cheap nuclear weapons are probably sufficient to prevent someone with a bigger military from taking your resources.
You know that fiat currencies, like those every country uses, have value because they are a claim on energy that is expected to be burned in the future.
You know that there will not be enough energy in the future to fulfill claims made by fiat currencies, and therefore they will lose most of their value after the reset and will not be useful for purchasing resources.
You know that gold’s value comes from the energy that was burned in the past to produce it, and therefore other countries may exchange energy and food for gold after the reset.
What would you do?
You would print money to purchase gold from other countries with leaders that are too stupid and/or too deeply in denial to understand what is going on.
Australia and the U.S. continue to export the majority of its gold to Hong Kong and China. For example, Australia and the United States exported 121 mt of gold to Hong Kong and China during the first quarter of 2017. Australia exported 57.4 mt, while the U.S. exported 63.3 mt. Thus, Hong Kong and China received 55% of all Australian and U.S. gold exports Q1 2017.