Maxime Bernier
Capitalism & Morality Conference
Vancouver, August 23, 2025
Good morning!
Thank you Jayant for inviting me again to speak at your conference. This conference consistently brings together a serious and thoughtful group of people interested in ideas.
I must say, you have to be truly interested in ideas to be looking forward to my presentation on monetary policy! I’ve been talking about this subject for over 15 years. And one thing I’ve noticed is that most people don’t care about it at all, even those generally interested in economics.
They find it boring. Too technical and complicated. Or worse, irrelevant, with no real impact on their daily lives. And if you listen to the meaningless jargon-filled press conferences from Jerome Powell or Tiff Macklem, it’s perhaps understandable why many people come to that conclusion. But I see it differently. I find it fascinating. Monetary policy is central to a vast range of economic, political, social, and even geopolitical and military issues.
So, why do I, and many other commentators, believe that a monetary reset is coming? That is to say, a fundamental restructuring of our financial and monetary system. It’s because we are finally coming to the end of an era when, for the first time in history, the world operates on a fully fiat monetary system, with fiat currencies. A fiat currency relies solely on trust and is not backed by a physical commodity like gold or silver.
Most people believe that the current fiat monetary system is the normal one. They think the pieces of paper in our wallets are real money. But for thousands of years, money in most societies was gold and silver.
Until about a century ago, those pieces of paper were actually certificates, promises you could exchange at a bank for real money: gold or silver coins.
The main difference between real money and fiat paper money is that there’s a limited amount of real money. But you can print as much fiat paper money as you want. Central banks can now create unlimited sums of money with little more than a keystroke.
There’s one group that very much enjoys this power: Yes, politicians! It allows them to spend more without having to impose unpopular taxes. But of course, this devalues the currency. The more currency in circulation chasing a given amount of goods and services, the more prices rise. Inflation is a hidden, indirect tax that impoverishes everyone.
Throughout history, governments have debased currencies by reducing the precious metal content in coins, mixing in less valuable metals like copper to mint more. Today, central banks create money out of thin air and buy government bonds to fund their deficits. The mechanism is different, but the result is the same: Inflation and the loss of our purchasing power.
After the Second World War, the U.S. dollar became the world’s reserve currency under the Bretton Woods agreement.
The Bretton Woods agreement was not a pure gold standard like in the 19th century. Only the dollar was partially backed by gold, at $35 an ounce. Other currencies had fixed exchange rates to the dollar, and only foreign governments could exchange dollars for gold, not individual. But it still imposed some restraints on money printing.
However, in the 1960s, the U.S. printed a lot of money to fund its Great Society programs and the Vietnam War. European countries, in particular, began exchanging their surplus dollars for gold. And Fort Knox's reserves were shrinking rapidly. So, on August 15, 1971, President Richard Nixon closed the gold window. He suspended the dollar's convertibility into gold, abolishing the final vestiges of the gold standard.
National currencies began to float against each other, and the limits on money printing vanished. Since Nixon closed the gold window, major Western countries have funded unsustainable spending with fiat money and are now drowning in debt, especially the United States. Contrary to Nixon’s assurance that the dollar would be “worth just as much tomorrow as it is today,” it has lost about 86% of its purchasing power since 1971. What cost $1 then costs about $8 today.
What’s unique about U.S. money printing is that it doesn't only cause inflation domestically. Thanks to the dollar’s status as the world’s reserve currency, the U.S. exports inflation to other countries.
With most international trade conducted in dollars, and central banks worldwide holding U.S. Treasury bonds as foreign reserves, there is immense, structural demand for dollars. This strong demand tends to overvalue the dollar, making imports cheaper for Americans. The world produces goods, sells them cheaply to U.S. consumers, and then uses the dollars earned to buy oil or more U.S. treasury bonds.
This arrangement has allowed the U.S. government to run permanent large budget deficits, funding a global military empire and a high standard of living by abusing the privilege of the dollar being the world’s reserve currency.
But like all unsustainable systems, this one has downsides, and the good times cannot last indefinitely. This is the essence of the “Triffin Dilemma,” named after economist Robert Triffin, who identified the problem in the 1960s.
Triffin noted that a country whose currency is the world’s reserve currency must constantly supply more of its currency to the world in order to meet international demand. And that means inevitably running permanent trade deficits.
One consequence is that industries relocate to cheaper countries, hollowing out the domestic manufacturing base. While other countries focus on production, the reserve currency economy specializes on moving money around and becomes financialized.
It’s nice for Americans to be able to get lots of cheap goods from abroad in exchange for money that doesn’t cost anything to produce. But if your economy becomes less and less competitive and productive as a result, how long can you remain a major power? It’s also nice to have foreigners willing to finance U.S. huge budget deficits. But, how long can debt accumulate before it becomes unsustainable?
Furthermore, the more dollars are created and circulated around the world, the more confidence in its long-term value erodes. And other countries begin to question the advantage of using and holding dollars. And that’s happening now.
Money printing, trade and budget deficits, that can work for decades. But after fifty years, the side effects - jobs lost, inflation - become overwhelming. And what you get is… the Trump presidency!
While communication from Trump’s social media and the White House may appear totally chaotic, I believe there is a strategic direction underlying it all. A plan to protect the U.S. economy from the negative effects of being the world’s reserve currency while retaining its benefits. This plan may involve bringing back gold as a neutral word’s reserve asset to replace the dollar. The great challenge is managing this transition without triggering a major depression or financial crisis.
When we look at the economic and geopolitical situation; it becomes clear that a monetary reset is on the horizon. There are many clues that this is what’s coming.
The first and most controversial measure to stop the hollowing out of American manufacturing industry is Trump bringing back tariffs to make imports more expensive. Although he claims foreigners will pay them, that’s just his typical BS. Tariffs are a tax that Americans pay.
That’s not going to solve the problem though. A lot more is needed. Another step is engineering a lower dollar value relative to other currencies to make U.S. exports cheaper and imports more expensive. The trade tariffs turmoil has contributed to this; the dollar is down about 10% this year.
Trump said a few weeks ago that a weak dollar is a good thing.
He also named his economic advisor Stephen Miran to the board of the Federal Reserve. Miran wrote a paper last year explaining how to weaken the dollar to make this transition.
The tricky part is the $37 trillion debt, which will cost $1.2 trillion in interest this year alone. The debt is still growing and may spiral out of control.
How do you finance huge deficits when foreigners earn fewer dollars because they export less to the U.S. and a devalued dollar makes Treasury bonds less attractive? This could force the United States to pay higher interest rates on its treasury bonds or a return to money-printing by the Fed to buy treasury bonds, provoking even higher inflation.
Key members of the Trump administration are hinting at change. Vice President JD Vance has spoken about the disadvantages for the U.S. of having the dollar as the world’s reserve currency.
Treasury Secretary Scott Bessent said before joining the administration that we are in the midst of a Bretton Woods realignment that he would like to be part of. He also admitted to being a gold bug. President Trump himself tweeted in April that “He who has the gold makes the rules.”
And have you noticed how Trump seems obsessed with gold? He promised a “golden era for America.” He wants a “golden dome” against missiles. He offered “gold card” visas to foreign investors. And he’s redecorated the Oval Office by putting gold everywhere!
Meanwhile, record amounts of gold were moved from London to New York earlier this year, sparking speculation about replenishing reserves at Fort Knox.
I believe a key move being considered is the revaluation of U.S. gold reserves. They are still officially valued at $42 per ounce. This price was established in 1973. By revaluing its gold reserves, the United States is not selling it gold. The revaluation would create a paper profit that could be used to reduce its debt.
By a simple accounting trick, they could revalue these gold reserves to today’s market price of around $3,300, and the Fed could create nearly $850 billion for the Treasury. That covers about six months of deficit, significant, but not enough to make a big difference.
But what if gold were revalued to $10,000 or $15,000? That would create, out of thin air, trillions of dollars and could be highly inflationary. This isn't a conspiracy theory. Just two weeks ago, the Federal Reserve published a paper discussing other countries' experiences with gold revaluation.
This monetary reset may be formalized in a new international conference like Bretton Woods, especially since much of the world now has an interest in moving beyond the current system dominated by the dollar.
BRICS countries and emerging countries are fed up with importing inflation from the U.S. and helping fund American social programs and imperial wars by using the dollar.
China stopped buying Treasury bonds over a decade ago, instead accumulating huge gold reserves. It is also using gold to internationalize the use of its currency, the yuan.
Russia did the same and bought a lot of gold. They are a good reason to want to dedollarize after the Americans weaponized the dollar and Western countries seized, or stole, their dollar assets following the invasion of Ukraine in 2022. These sanctions were a powerful warning to every other country about the risks of holding dollar assets.
Central banks worldwide are now buying gold at record rates, to the detriment of the dollar. Gold is now the second-largest international reserve asset ahead of the euro.
Every week, there are new agreements between countries to bypass the dollar in trade. New platforms are being developed, including by the BRICS+ nations, to facilitate non-dollar transactions, potentially using gold. What I’m telling you is: The dedollarization is happening.
A further step could be a return to a form of gold standard where currencies are pegged to gold. That would place the world economy on a more solid foundation, given that all major countries have been printing money like crazy and have unsustainable debts, including Canada.
This transition will be painful for many people. Americans will likely be poorer due to more expensive imports and higher inflation, except, of course, for the minority who hold gold.
It's regrettable we have to go through this. Throughout the centuries, governments have always resorted to currency debasement and inflation to get out of debt and refill their coffers. I would much prefer another way to get rid of deficits and bring back productivity, like drastic cuts to spending and lower taxes. But it won’t happen. We saw how little Elon Musk was able to accomplish with his DOGE.
Canadians will also be in a tough situation because Canada is not at all prepared for this. Although we mine and export a lot of gold, Canada is the only G20 country that has no official gold reserves. We sold most of it between the 1980s to the 2000s, and Trudeau sold off the last of it in 2016.
Former Bank of Canada governor David Dodge explained in an interview that they got rid of the gold because it was an “antique” with no returns, and it didn’t make any sense to hold it. How disconnected from reality can you be!
Most of our reserves to support the Canadian dollar consist of US treasury bonds. When a monetary reset does happen, and the value of those bonds collapses, while the value of gold skyrockets, we will find ourselves in a very tricky situation. My advice to our government: start selling those bonds and building a gold reserve now. And drastically cut spending to balance the budget in one year, then cut taxes.
But the Liberals in Ottawa are doing nothing. And the Conservatives remain silent. Doing nothing means: The devaluation of our dollar, higher inflation, and the loss of our purchasing power. Nothing good!
To conclude: The world is rapidly dedollarizing. Behind the headlines and chaos, all the conditions are now in place. A fundamental reset of the global monetary system is underway, with the depreciation of the dollar and the revaluation of gold.
Gold is being remonetized as the only trusted, neutral store of value. Its role as a hedge against currency devaluation, inflation, and economic and geopolitical instability has only strengthened over time.
Major changes are coming in the months and years ahead. It is crucial to understand these forces and prepare yourself accordingly.
Thank you.
