Gold As The New World CurrencyA good read:
Gold Will Eventually Replace Floating Fiat Currency Trade Regime
By Elaine Meinel
The tsunami of sovereign debt in the G7 and allied countries is now beginning to overwhelm global banking capacity. Understanding how this works is difficult for many people who think, all governments have to do is…add zeros to paper money and debase the coins even further, perhaps, issue wooden nickels or use sea shells, and this will fix all our economic problems. This is, of course, very childish. But alluring. Meanwhile, the dance between the heavily in debt G7 and creditor power, Communist China, continues to amuse and amaze me. The Chinese, at least, understand what is going on here..
First, some interesting news from heavy gold-producer, Russia. As I predicted some time ago, Money Matters: Gold As Regulator, Gold As Libra, eventually, once a new world power nexus arises, it will do this by forcing all others to operate on the older system of trade resolution, that is, using a gold-restricted currency as the golden standard for judging relative values of all other, non-gold based currencies.
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Shockingly, gold has risen by 35X over 35 years ever since the US, the world ruling empire, dumped the gold standard entirely. Virtually no one made any money speculating about gold or the value of the dollar or what the interest rates would be in the future. After Nixon severed this Golden Gordian Knot, the financial system has unravelled. At all times, we struggle against hidden financial hazards. For example, during the fake ‘low inflation’ years, we thought we could produce money and play games that created money out of thin air, yet there was no inflation.
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But anyone with curiosity and a brain could see that the fun times were due not to inflation being banished but rather, roosting temporarily at the Bank of Japan! Who, along with China, kept inflation at bay in order to undermine US industries. Now that the colonization of the US is nearly done, both are toying with releasing all these captive inflationary dollars. If they want something, all they have to do it talk about launching ‘Sovereign Wealth Funds’ and have this money return to the US in the form of buying out the last of our infrastructure and commodity resources! OOPS.
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OOThe sense that we are seeing ‘deflation’ is false. The US has been howling like a banshee for China to devalue the dollar severely, for example. This, in turn, should make most of our manufactured goods purchases much more expensive and thus, will cause significant ‘inflation’ here in the US. Instead, the US corporations hope to pull out of China and remove their factory production to poorer, weaker nations and thus, keep the ball rolling downhill some more. That is, the US dollar will buy cheap goods due entirely and totally to cheap foreign labor while domestic production prices continue to climb as well as the value of any raw materials.
OOThe way inflation is killed off when raw materials shoot up in price, being by nature, limited by definition, is to kill working wages and to cause a collapse in the rewards for being labor. Japan has been doing this quite brutally for the last 20 years and due to this, the quality of the Japanese living standards have been falling to Soviet Union levels during the last years of communism. The birthrate has collapsed and the population is imploding which is also what happened to the dying Soviet Union, too. Russia is no longer falling into the deflation via crushing labor hole and is now rising like a Phoenix due to its huge raw materials hoard.
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Medvedev Shows Off Sample Coin of New ‘World Currency’ at G-8 – Bloomberg.com (July 2009)
https://www.bloomberg.com/apps/news?pid=newsarchive&sid=aeFVNYQpByU4
Russian President Dmitry Medvedev illustrated his call for a supranational currency to replace the dollar by pulling from his pocket a sample coin of a “united future world currency.”
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“Here it is,” Medvedev told reporters today in L’Aquila, Italy, after a summit of the Group of Eight nations.
“You can see it and touch it.”
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The coin, which bears the words “unity in diversity,” was minted in Belgium and presented to the heads of G-8 delegations, Medvedev said.
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OONote that Russia’s President did not pull out a paper bill with zeros on it! He obviously was holding something of high value so even though the story made no mention of this, I am assuming, knowing Russia, this was a gold coin. The US sells gold coins but only as collectibles. It makes money off of this game by attaching a fee for minting these coins which is the profit factor for the government.
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Gold Price History
OOThe present golden bull market is due entirely to the G7 deflation game that is going on: certain trade rivals have taken to holding vast amounts of government debts so as to artificially prop up rival currencies so they can undercut the competition in foreign lands. China and Japan have been the top dogs in this FOREX-driven gaming and are, along with Germany, superpowers in international trade profits.
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OOWe see very clearly the real state of inflation in the gold graphs. Ever since the US went on a debt/cheap borrowing binge, the lower the interest rates due to ‘no inflation’ the higher the price of gold. Individuals saving money ceased buying bonds and other paper products and have generally rushed into gold markets to protect their savings. The true worthlessness of paper fiat currencies is increasingly obvious outside of the paper issue world, that is, in the realm of hard reality.
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OOOf course, all the money hoarded in gold will be tapped by desperate governments if Russia and China suddenly force everyone on the planet to attach the value of their currencies to gold. The G7 fears this very much. They hope to roll the huge fiat currency ball all the way to Zimbabwe. The idea behind this is, like all monetary ideas, laughably simple: all the fiat currency global countries that are the top 50% of world trade (the G12) conspire to gage currency values with only each other, not silver, gold or even copper. This way, they can work a machine in tandem so that it has lots of hidden inflation but won’t show up in the paper money world due to everyone playing the same game, gaging things only against paper that is rapidly losing value.
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OOI call this, ‘Falling down the White Rabbit’s hole’ and it is like Alice in Wonderland: she falls and falls, quite gently. She notices something is rather wrong with this! Then she is trapped in this dark hall with a tiny door and a huge table which has the grow big/grow small medicine. She then tries and tries to be the right size for the right activity and fails miserably and ends up crying and thus, flooding the hall and washing her out of it. So it is with fiat floating currencies: the fraud this creates can be hidden for a long, long time but only so long as the players in this game don’t attach the total value of ALL currencies to anything solid.
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gold_10_year_o_jpy.png 450×311 pixels
OOGold, when valued in Japanese yen, has nearly tripled in value in the last decade. While the US dollar versus gold has more than quadrupled. This means overall, the US dollar buys much less than the Japanese yen. That is, it saw more inflation during this decade. Of course, the US interest rate shows virtually no inflation at all, it is now around zero inflation but gold has taken off like the Angel of Death during our little ZIRP interlude.
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OOAs gold also rose greatly against the yen! There is inflation in Japan, just not in things requiring lots of human labor to run or produce! Now, on to the sovereign debt issue, big news from China. China has decided to raise the value of the yuan which means they can buy a lot more gold than the US which will be forced to chase after cheaper and cheaper labor to balance the loss of value of the dollar.
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China Backs Obama With Debt Holdings to $900 Billion (Update2) – Bloomberg.com
https://www.bloomberg.com/news/2010-06-20/china-backs-obama-with-u-s-treasury-securities-rising-3-to-900-billion.html
A year after criticizing U.S. fiscal policy as “irresponsible,”
China’s leaders are showing increasing confidence in President Barack Obama’s leadership of the American economy.
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HAHAHAHA. I swear, I will laugh to death and someone will have to go to the hospital and pull the plug on my corpse! How insane is this opening line? Obama and the entire US corporate entity structure including the GOP has been howling for China to bankroll our mess. And so China has chosen to do this at this point in time, the same week their good, good friend, Russia, has held a gold coin between the fingers and said the obvious. China is preparing for a gold standard world, I suspect.
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.I assure everyone, China has zero confidence the US will act sanely. They pray we stay insane! Their entire 50 Year Plan which I watched them hatch (gads!) is based on the US being very stupid and debasing the currency while playing the fiat trade game very badly with all trade rivals. China just happens to be the most successful trade rival to play this game.
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China boosted holdings of Treasury notes and bonds by 2.6 percent to $900.2 billion in March and April, after reducing its stake by 6.5 percent from November through February, the longest consecutive monthly declines in a decade, U.S. data released June 15 showed. The People’s Bank of China said June 19 that it will relax its 23-month lock on the yuan.
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HAHAHA…so, they are heading back to holding a trillion dollar sword over our stupid heads!!!! Wow, victory is so not ours! On the other hand, we could ape Nazi Germany and dump our debts, pay no one and go on a very violent global war seeking slaves and loot! China hasn’t been buying our debased dollar debts at the degree they did a year ago. They are still buying 4.1% less! HAHAHA. Victory is ours. Oops.
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U.S. Senator Charles Schumer and Congressional leaders say the new foreign-exchange policy doesn’t go far enough to keep them from seeking laws to punish China for what they say are unfair trade practices. Regardless of the currency rate, China will continue to be a net buyer of U.S. debt, according to George Goncalves, head of interest-rate strategy at primary dealer Nomura Holdings Inc.
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HAHAHA. So, China buys our bad debts and is kicked in the teeth! How droll. As I keep saying, all the damn US has to do is very simple: buy lots and lots of yuan. And even smarter would be to put up trade barriers to ALL foreign trade and stop the net outflows that are killing us in EVERY direction across the entire planet. Stopping China will do nothing to stop the flood of imports destroying our own economy.
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….Purchases in recent months have focused on longer-term debt, unlike in 2008, when most of the cash went into Treasury bills. China boosted its holdings by 18 percent in the 12 months through this April, with notes and bonds due in two years or more surging 46 percent.
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By purchasing longer-term securities, China is helping keep U.S. borrowing costs near record lows, aiding companies and individuals as the U.S. economic recovery strengthens.
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HAHAHA….nope. The economy is not strengthening, I see no resurgence in US manufacturing except for weapons, of course. And guess what? More, not fewer, corporations here are removing jobs and sending production overseas and this includes office work, too. Everything continues to drain out of our economy and the only growth sector is government-paid healthcare programs and the Pentagon business.
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Long-term U.S. rates would be about a percentage point higher without foreign government and central bank buyers, according to studies done in 2006 and 2009 by Professors Francis and Veronica Warnock at the University of Virginia in Charlottesville, who researched the matter for the Federal Reserve.
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OOThat is, the Chinese and (seldom mentioned by any of our media) Japan buying our wretched debts is one of several reasons we have no overt ‘inflation’. But we have it, in spades. The split second Japan and China cease buying and worse, dump trillions in FOREX dollars and trillions in US government debts on the open markets, we shall become Zimbabwe in a flash. Not slowly, but very, very suddenly.
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Greenspan Says U.S. May Soon Reach Borrowing Limit (Update1) – Bloomberg.com
https://www.bloomberg.com/news/2010-06-18/greenspan-says-u-s-nearing-limits-on-borrowing-capacity-restraint-needed.html
“Perceptions of a large U.S. borrowing capacity are misleading,” and current long-term bond yields are masking America’s debt challenge, Greenspan wrote in an opinion piece posted on the Wall Street Journal’s website.
“Long-term rate increases can emerge with unexpected suddenness,” such as the 4 percentage point surge over four months in 1979-80, he said.
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Greenspan rebutted “misplaced” concern that reducing the deficit would put the economic recovery in danger, entering a debate among global policy makers about how quickly to exit from stimulus measures adopted during the financial crisis. U.S. Treasury Secretary Timothy F. Geithner said this month that while fiscal tightening is needed over the “medium term,” governments must reinforce the recovery in private demand.
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“The United States, and most of the rest of the developed world, is in need of a tectonic shift in fiscal policy,” said Greenspan, 84, who served at the Fed’s helm from 1987 to 2006.
“Incremental change will not be adequate.”
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OOWe could try to squeeze our government spending to zero and begin paying off our debts but we are talking about trillions in debt that has to be paid off. Even at ZIRP rates, the principal balance is simply huge and the only way to pay it off is to default or to sell off all our own possessions such as ports, bridges, roads, government buildings…oops. That is already very much underway and we may as well sell the White House to the highest bidders, let BP buy it or maybe hand it off to the communist Chinese who can then occupy it and tell us how to do business.
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OOGreenspan is greatly responsible for the destruction of our currency and he loved Nixon and Burns and was very arrogant about governments restricting lending and presided over the creation of the Derivatives Beast and sat idle while the mega-bankers moved to pirate islands and began playing the Japanese carry trade game whereby they would borrow 1% loans from Japan and then use this to buy US government debts which Bermuda and the other islands now hold nearly as much as Japan or China, I think it is now about $300 billion? All these bonds were bought using Japanese loans, I fear. I don’t know since this is HIDDEN as even the Bank of International Settlements admitted last week.
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Asia Times Online :: China News, China Business News, Taiwan and Hong Kong News and Business.
https://www.atimes.com/atimes/China/LF18Ad02.html
The last remaining physical gaps on the north-south roadway set to connect China to Thailand and further afield through Southeast Asia will soon be bridged, opening a new land route that promises to expand intra-regional trade. China has recently agreed to finance the construction of two bridges across the Mekong River inside Laos, which until now have represented the regional project’s missing links.
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Both bridges are key components of a grand infrastructure plan known as the Greater Mekong Subregion’s (GMS) North-South Corridor, which aims to create more efficient and rapid transport between China and Southeast Asia’s Cambodia, Laos, Myanmar, Thailand and Vietnam. The infrastructure is also key to the design of the Asian Development Bank (ADB)-funded Great Asian Highway, which has been a priority of the ADB’s regional development agenda since 1993.
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Lao state media reported on May 25 that China would provide a US$50 million loan for the construction of a bridge near the Lao town of Pakbeng, in the Southeast Asian country’s northern Oudomxay province and across from northern Thailand. The new bridge will link the two lane Route 2W with a new road extending from the Thai border to the river.
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OOAs the US sells off our own transportation hubs, China is building its own and using this to form a new Chinese imperial operation that uses no troops to compel alliances. As the US/Japan military occupation alliance falls flat and the US is going bankrupt, using our troops to hold support at gun point in many countries, China spends virtually nothing doing this. Historically, China much prefers to use trade and culture to heavily influence, like the moon influences the tides, what goes on around China’s orb.
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OOStrike Hits Toyota’s China Production as Honda Workers Return – Bloomberg.com:
https://www.bloomberg.com/news/2010-06-18/toyota-shuts-china-plant-honda-hit-by-fourth-affiliate-strike-in-china.html
The Chinese government is pressuring Japan to hand over sophisticated auto technology. Now, China is squeezing Japan’s factories and Japan can’t fight back because China will make it very, very hard for Japanese automakers to control Chinese auto markets in the future. Japanese cars will be expensive and Chinese cars will finally improve to be as good as more expensive Japanese cars, at least, this is the plan and I am betting it will succeed.
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OOBy forcing Japan to pay more, China is regaining control of its own economy! DUH. Here in the US, we let the Japanese open factories in the south which undercut and destroyed union wages in the north. So now, auto workers are getting poorer and poorer. Great. The profits from this squeeze operation flows to Tokyo, not to the US. China is going in the exact opposite direction. Deliberately so.
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OONow for the favorite female financial commentator on the left, the constantly clueless Ellen Brown: Deficit Terrorists Strike In The UK
"The financial sector has sometimes been accused of shrinking the money supply intentionally, in order to increase the demand for its own products."
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OK: this one sentence shows, in a nutshell, how stupid Ellen can be. This totally misunderstands how banking works and why interest rates go up or down. Banks care only about the SPREAD between interest they have to PAY versus what they get by LENDING. These are not the same at all. Sometimes, the interest rate can be high but the spread between lending and paying savers could be minute and thus, rotten as far as banks are concerned.
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That is, the need to hold some capital has too great costs to them so they don’t profit from lending! So they stop lending! Duh! When interest rates paid to savers drop, as it is now, to less than 0.50% while lending is a big fat 4.5%, the spread is enormous and thus, profitable!
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Bankers are in the debt business, and
if governments are allowed to create enough money to keep themselves and their constituents out of debt, lenders will be out of business. The central banks charged with maintaining the banking business therefore insist on a “stable currency” at all costs, even if it means slashing services, laying off workers, and soaring debt and interest burdens. For the financial business to continue to boom, governments must not be allowed to create money themselves, either by printing it outright or by borrowing it into existence from their own government-owned banks.
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This fool continues to spread the ideology that destroyed Zimbabwe. True, governments can briefly print money like mad and hand it out to the populace via helicopter or in the mail or whatever. Why not just suddenly put, electronically, a billion dollars in everyone’s private bank accounts? In minutes, all our debts will vanish. This, in turn, will trigger all our trade rivals to dump their hoards and world trade will cease except for when it is denominated in gold.
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In the US, we will cease to have any form of transportation except for the Amish. The government will be forced to use all available oil for itself and the rest of us will walk or ride horses. At least, I can do this, I have a carriage. America’s empire will vanish in a flash and our soldiers will have to find some way of floating home on rafts if their throats aren’t slashed, first.
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Today this financial goal has largely been achieved. In most countries, 95% or more of the money supply is created by banks as loans (or “credit”). The small portion issued by the government is usually created just to replace lost or worn out bills or coins, not to fund new government programs. Early in the twentieth century, about 30% of the British currency was issued by the government as pounds sterling or coins, versus only about 3% today. In the U.S., only coins are now issued by the government. Dollar bills (Federal Reserve Notes) are issued by the Federal Reserve, which is privately owned by a consortium of banks.
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Since Columbus’ day, most ‘money’ is loans. That is, Spain wanted lots of gold. And got record amounts. Immediately, Spain got embroiled in many vast and expensive wars and the excess ‘money’ caused hyperinflation in Spain and in less than 75 years, Spain was deep in debt and in 100 years, became a repeat-bankrupt, going into bankruptcy over and over and over again.
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Banks advance the principal but not the interest necessary to pay off their loans; and since bank loans are now virtually the only source of new money in the economy, the interest can only come from additional debt. For the banks, that means business continues to boom; while for the rest of the economy, it means cutbacks, belt-tightening and austerity. Since more must always be paid back than was advanced as credit, however, the system is inherently unstable. When the debt bubble becomes too large to be sustained, a recession or depression is precipitated, wiping out a major portion of the debt and allowing the whole process to begin again. This is called the “business cycle,” and it causes markets to vacillate wildly, allowing the monied interests that triggered the cycle to pick up real estate and other assets very cheaply on the down-swing.
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The Fed was supposed to stop the wild ‘business cycle’ of debt balloons followed by debt bankruptcies. This was an obvious failure and must be fixed. But…the banks are ‘booming’ right now are not ‘banks’ at all but INTERNATIONAL INVESTMENT BANKS operating mostly under cover of various pirate islands! And what is their magic?
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Why, the carry trade! The US has joined the Japanese in creating this huge wellspring of debts by running a ruinous ZIRP lending system hosted by the government and engineered by crushing working wages. This, in turn, is borrowed by these investment bankers and then relent to countries with rising currency values and higher interest rates.
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The financial sector, which controls the money supply and can easily capture the media, cajoles the populace into compliance by selling its agenda as a “balanced budget,” “fiscal responsibility,” and saving future generations from a massive debt burden by suffering austerity measures now. Bill Mitchell, Professor of Economics at the University of New Castle in Australia, calls this “deficit terrorism.” Bank-created debt becomes more important than schools, medical care or infrastructure. Rather than “providing for the general welfare,” the purpose of government becomes to maintain the value of the investments of the government’s creditors.
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The austerity cuts are to maintain ZIRP. The deeper in debt a government, the more they need ZIRP banking so they can limp along. Even if we try to pay off the debt, we have to do this via giving up spending! DUH! On the other hand, we can’t go eternally deeper and deeper into debt. Something breaks and we know what breaks: the currency collapses suddenly from a depression spiral into hyperinflation leading to the crash of all economic systems. The sense of shrinking money supply is about to end, it won’t shrink much more. Soon, it will swing into the opposite.
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Hyperinflation, however, is a bogus threat,…The Chinese have done better, expanding their economy at over 9% throughout the crisis by creating extra money that was mainly invested in public infrastructure.
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OOSo many people love Ellen Brown and since she is selling swill, I can understand this. Harsh reality is painful. Stupid stuff is fun. Why pay attention to reality when one can have fantasy? The Chinese economy expanded and China has inflation and China does NOT have ZIRP lending at all, the Chinese moved over and over again to restrict the flow of international funds based on ZIRP carry trade deals! China also raised to above 10%, the reserve ratio whereas the US dropped it to nearly 0% here! The goddess of inflation has golden wings and when she takes off, she is nearly impossible to catch again. Not until she totally destroys the currency and the victim of her vast powers has to start all over again, from scratch.
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OOChina has a lot of building to do and did it. Bravo to China. The US has a lot of infrastructure but increasingly sold it off (privatization!) and now has nothing left to build but rather, spends the money on foreign adventures, aid to Israel, medical care on people over the age of 85 years (!!!!) and other useless things that will make it worse for us when our economy finally implodes.
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OOWe have to first put up strong barriers to trade and stop consuming vast seas of imported oil. We tried, yet again, to pump our way out of our oil debts but this has been a roaring failure which may doom our entire sphere’s eco-conditions. We should have taxed oil the way Europe did for many years. Instead, we wanted cheap oil and lots of it and it is now destroying us and our infrastructure is set up for lots of oil-based motoring. Changing this will be immensely hard and we can’t do it by importing Chinese or German alternative energy systems.
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OOWe will still have this pesky trade deficit! And this is what nearly all ‘finance’ analysts of every type seem to relentlessly overlook! Trade is everything here! And trade deficits are much more dangerous than government deficits. Japan limps along with a 200% GDP government deficit thanks ONLY to its big trade surplus. Period!
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OOThe US can’t do this because we run a trade deficit. End of story.
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Trade war? Bill would ban government from buying Chinese | Raw Story
The US government would be barred from buying any Chinese goods or services under legislation unveiled Friday by US senators angry at Beijing’s policy of buying only from domestic sources.
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The prohibition would last until China, a World Trade Organization (WTO) member for nearly 10 years, signs on to the WTO’s “Agreement of Governmental Procurement,” enabling Washington to challenge Beijing’s procurement rules.
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OOThe trade war is still on. China will react to this news in a negative way we won’t like. They do take their time, though, while mulling over in secret, what to do next. They have a goal: bankrupt the US by 2020. They also know that we are in a trap with everyone. If the US chooses to attack only Chinese trade while ignoring Japan, China knows we are still very much doomed and will switch its attention to Japan which is close to China geographically and is a dying nation. We can’t do a thing about this, by the way. Eventually, the Chinese will colonize Japan for a third time.