The Mises Institute has released the second part of an exclusive interview between its President Jeff Deist and Patrick Barron, a private banking industry consultant. Find the first part of this engrossing interview here. In this second half, Deist and Barron discuss:

• How US dollar supremacy might come to an end with a whimper, instead of a bang.
• How the Bundesbank is a potential savior for the world monetary order, while the IMF is a paper tiger.
• How elites will have an increasingly hard time denying gold its role in the global monetary system.
• How America’s fiat dollar corrupts cultures, as well as economies.

Here’s a partial transcript of Barron’s responses:

If there is some kind of a shock – and it could be something that we don’t think is all that important at the time… Whatever breaks the confidence in the monetary order, it could resort in an attempt at financial fascism. The IMF would order us around and the Fed and the Bank of England and the European Central Bank would go along with this. But that would not really be an answer. It might push us down the road even further, but it would not really solve any fundamental problems. It would just mean that we push the whole inflation problem from a handful of central banks that are inflating their own currencies to one international central bank that engages in complete, worldwide monetary inflation. That’s not an answer. That is just continuing the same rot. I don’t think that will solve anything, but it could happen that would be the next step instead of returning to a more liberal (with a small “l”) order of sound money, sound national currencies that are exchanged for gold and or silver. That, to me, is the answer…

…Ron Paul was telling us all along that we were going down the wrong path, and that we have to return to sound money. It’s only sound money that can allow us to have a sound economy. And that’s what we all want – peace and prosperity. We can’t have peace and prosperity if we don’t have sound money. That’s what we’re seeing right now…

A likely scenario is that China decides it’s not going to hold dollars anymore… They say, “We’re no longer going to take these dollars and buy Treasury bills. We’re going to take these dollars that we’re getting and we’re going to buy American goods.” People may say [that’s great]. Well, at any given point in time, America is only producing so much… So if the Chinese say, “We’re not going to roll over our treasury bills. We want dollars that we can spend,” then the United States government would have two options at that point. They could say, “Well, we could print money.” [They’d] just print money with the Treasury bills and give it to the Chinese. The Chinese will spend those dollar in the United States and cause a great inflation in the US… Or [the government] could allow interest rates to rise so that Americans would start buying more Treasury bills voluntarily. Interest rates would rise, which would throw the United States into a recession. I think they would probably just print money, because that’s what they’ve done all along.

I think a likely scenario is that central banks of the world decide to get the heck out of dollars. Just like the central banks in the world, over a period of four or five years in the late 60s into the early 70s, decided that they wanted to trade in their dollars for gold at the Fed. And that drove America off the gold standard. The same kind of thing could happen with central banks deciding they do not want to hold American Treasury bills, which represent dollars, as a reserve currency anymore, because they just don’t trust it. That could cause a gathering storm, so to speak, of like-minded central banks. All the sudden there is a run to get rid of your dollars and buy something with real value…

This is one thing that keeps the dollar monetary imperialism going, is that there is no one else who has really stepped forward who is more trustworthy. But I get back to the country that I think is really trustworthy, [which is] Germany… If you read what German central bankers are saying, they’re not in favor of inflating the euro. They want a sound, hard money. They want honest in banking. Frankly, I would trust the Bundesbank more than I would trust the Fed. Right now, there is sort of an unofficial war between the Bundesbank and the European Central Bank over whether the ECB is going to be allowed to continue to inflate the euro at a higher and higher rate… My prediction is that the Bundesbank is going to win that war. I don’t think they’re going to allow the ECB to inflate the euro. But it looks like the ECB might do it anyway. At that point, Germany, if they’re smart, would leave the euro… That would be a good thing for the world, because it would start this virtuous cycle of other central banks being forced to strengthen their currency, because a major trading nation in the world has its own currency and is not going to depreciate its currency as much as the rest of the world…

I think [financial elite of the world] could be forced by political forces [to accept a role for gold in the world]… [The Swiss are going to vote on November 30th] on whether their central bank should repatriate all of its gold that is being supposedly held in central banks around the world. I say supposedly, because no one will allow an audit… Let’s assume that it is there. I think this referendum is the kind of thing where the people are going to have their say. I can’t imagine a Swiss government that would ignore this referendum if the Swiss people voted in favor of this referendum… Maybe this is international incident that triggers the whole collapse of the monetary imperialism of the dollar and the inflation of the euro and the yuan and all the other international currencies. This might be something that would force the central banks to start looking to their gold reserves…

From time immemorial, gold has been used as money. It’s accepted anywhere. We are not used to dealing in physical gold, but we did up until the early 20th century. People knew gold when they saw it. They knew what it felt like, they knew what its weight was, they knew what it sounded like… It has not only decorative uses, but there’s also industrial uses. There’s only a certain amount of gold in the world. Gold is mined every year, but in a very small amount… This is why gold, over the millennia, has been accepted as a unit of exchange… The only way to destroy gold, apparently, is to burn it…

This is what we really need to return to… a gold standard… I wouldn’t recommend that a government impose a gold standard, but if there were a free market in money production, [then] the people would recognize gold as a major currency…

[The dollar] is used to corrupt people. It’s used to corrupt Americans, and Americans use the dollar to corrupt the rest of the world. The dollar is used to corrupt Americans by our welfare system. It’s just terrible what we’ve done in America by trapping several generations of people in a welfare system that is possible only because of the printing of the dollar in massive amounts. It has ruined families in America, and I’m sure as its used as a reserve currency overseas it has the same pernicious effect all over the world…