Montreal, Canada

Is the global exchange rate system as we know coming to an end? The events in the United States and Europe recently suggest the next global crisis will be a currency-based fiasco.

I remember vividly interviewing my mentor in this business, Jim Rogers, back in the spring of 1995 when I asked him about the global exchange rate mechanism and the future of the dollar.

Jim was spot on about currencies fifteen years ago, claiming they were “all a bunch of drunks” in a bar. That statement has stuck in my head for years and has served me well as I remain a steadfast Gold-Bug in every sense of the term.

What Jim was referring to – and still believes – is that the U.S. dollar’s reserve status is closer to the end than the beginning. I think most investors would have to agree. To be bullish on the dollar longer term is to suggest you might need reading glasses.

The United States has lost control of her finances and deficits are skyrocketing with no end in sight. More than ever, Americans are looking to leave “Baseball and Apple Pie” behind for greener pastures abroad where wages are rising faster and incomes are growing ahead of inflation.

But it’s not just the United States that faces an acceleration of its financial decline since 2008.

Europe is in the same boat, with only the Germans and the Dutch in the eurozone harboring fiscal prudence; everyone else is ranked fair-to-horrid as it pertains to a financial grade. Throw in Japan, and you have a heavily indebted mish-mash of drunken, debt-laden currencies among the largest industrialized economies.

The European single currency, in my opinion, won’t survive in its current form as one or more members of monetary union eventually default.

If I had to bet, I’d say Greece will be the first domino to fall as she runs out of money over the next 24-48 months. As Greece collapses, we’ll witness the end of the historical French-German éntente that has served the European Union brilliantly since the advent of the Treaty of Rome in 1957. As that alliance falters, so will weaker members in the eurozone. What you’ll have left is just a few currencies spearheaded by Germany.

In all likelihood, we might even see the reintroduction of national currencies again at some point.

I think nothing would make the German Bundesbank happier.