Guest Post by Hugo Salinas Price
Way back in 1995, when Mexico was in the throes of another financial crisis, I figured out the problem of the existing world’s monetary system, based on the paper dollar as the fundamental currency of the world.
In my ignorance, I did not know that a man named Triffin had already pointed out that problem, which became known as “Triffin’s Dilemma”.
The problem is really very simple:
Continue reading “Donald Trump’s “Madness””
Guest Post by Hugo Salinas Price
Nicolas Oresme, a Catholic bishop (1320-1382), studied human behavior with regard to money, which in his time consisted of gold and silver coinage; he was perhaps the first to observe that humans attribute varying valuations to the money that comes into their hands. He stated that holders of gold and silver coins prefer to tender their most deteriorated coins in payments, and retain the most bright, shiny and perfect of their coins. Thus, he was the true originator of what has come to be known as “Gresham’s Law”, long before the Englishman Thomas Gresham made a similar observation during the reign of Queen Elizabeth I (1558-1603).
By Gerold
The road to hell is paved with good intentions. Even the best of intentions often have unintended consequences. Although few people have bad intentions, many of our problems are caused by good intentions gone awry. And, this applies in particular to Westerners.
Note: I use the term ‘Westerner’ for people whose ancestors originated in Western and Northern Europe. And, I use the term non-Westerner for people whose ancestors originated elsewhere. This narrow definition makes it easier to understand the link that connects pathological altruism and Westerner (‘White’) guilt to the Western European Marriage Pattern (WEMP) which I will explain below. First, let’s get some definitions out of the way.
Guest Post by Hugo Salinas Price
History does not repeat, but certain patterns of events do recur in political life.
Of course, it is impossible to predict political events with any hope of accuracy. However, we can observe how societies of the past have dealt with the problem of maintaining order in public life. Perhaps we shall see that similar problems of the past, will turn out to be dealt with by similar measures, applied in the present.
Three cases of great social disorder in the past hundred years:
Guest Post by Martin Armstrong
Hugo Salinas Price raised the introduction of silver as a duel currency in Mexico. The 1 ounce coin with no number of pesos listed on it (possible no date either) would be a dual currency. The value, like gold and silver bullion, would be listed each day so everyone would know the value. If the paper peso decreased in value, the value of the silver coin would rise, as it would be worth more paper pesos. The government should not be allowed to control its value. Is there any value to this?
Continue reading “Money or Government – Which is the Problem?”
It was 1790 and the revolutionary National Assembly in Paris was worried.
Complaints were reaching the Assembly from all over France, that business was stagnant, sales were down, people were without work, and there was a great scarcity of money.
This was quite natural, because all business slows down when the prevailing source of Authority is under question. The Bastille prison had been taken the prior year by a revolutionary crowd and all sorts of ugly things were being said about King Louis XVI and his pretty young Queen, Marie Antoinette.
But this was the “Age of Reason” and the most educated, intelligent and reasonable people in France were members of the revolutionary National Assembly, which gathered daily in Paris.
The Assembly put their highly educated heads together and came to the conclusion that a scarcity of money was quite intolerable and that the Assembly must really do something about it.
“What do we have highly educated brains for, if we can’t solve the problem of a scarcity of money? Without a doubt, Reason can overcome this problem.”
So the members of the National Assembly thought about the problem of the scarcity of money, and came up with a splendid idea: “Let us create the necessary money, and things will go swimmingly.”
The current melt-down of the world’s debt bubble is likely to continue in the course of the next months. The secular trend to expansion of credit has morphed into contraction and liquidation. It is my opinion that the new trend is now established and no action by any of the Central Banks (CB) that issue reserve currencies will do anything at all to reverse that trend.
Sandeep Jaitly thinks that the desperate reserve-issuing CBs – the US Fed, the ECB, the Bank of England and the Japanese CB – may resort to programs of QEP, by which he means “Quantitative Easing for the People”. This quantitative easing will mean putting money into the hands of the populations by rebates on taxes, invented make-work schemes or any other excuse to furnish the people with the famous “helicopter money”, to get them to spend.
As the present crisis deepens and given our experience with the way our so-called “economists” think, we can reasonably expect such programs to be launched. Nevertheless, the present trend of world economic contraction will not be reversed by any ad hoc program. The world’s expectations – positive for growth since WW II – have turned negative. This is an event of such magnitude that no “QE” will have any effect upon the final outcome: debt collapse.
In the last fifteen months, from August 1, 2104 to November 27, 2015, International Reserves, as calculated by Bloomberg, have fallen three-quarters of a trillion ($752 billion) dollars, or 6.52%. International Reserves peaked at $12.032 Trillion on August 1, 2014, and have fallen since then to $11.28 Trillion on November 27, 2105.
Central Banks increase their Reserves by purchasing Government Bonds – denominated in Dollars, Euros, Pounds or Yen – when those currencies come into their hands as a result of a surplus of exports over imports; all countries strive to have such surpluses, because if they are not able to export more than they import, then they are condemned to devalue their currencies in order to make their exports more attractive; they are also burdened with higher interest rates on their borrowings, as a result of the threat of further devaluation. Higher interest rates in turn, exacerbate the outflow of Reserve currencies and make devaluation all the more necessary.
The fact is that countries holding Reserves have not been paid for the totality of their export surpluses. To hold Reserves is to grant credit. The proof is that Reserves held by the exporting countries are Bonds, that is to say, certificates of debt. The last figure for International Reserves, as of November 27, is $11,280,000,000,000 Dollars – $11.28 Trillion Dollars. The figure nicely documents the total value of what the exporters of the world have sold to the countries which issue Reserve Currencies, and for which they have not been paid, since August 15, 1971.
Continue reading “The Crumbling World Order and Who Will Pick Up the Crumbs?”
Suppose someone wished to sell his house, way back in the 1890’s when gold was used as money, and somebody came to that person and said, “I’ll give you “x” ounces of gold for your house”, and suppose the offer was accepted. This was a commercial operation, where goods traded hands – the owner of a house sold a house, and received gold; the other party delivered some gold and purchased a house.
When, in bygone days, a house was sold for gold coins, all that the seller had to regard was the quantity of gold in the coins offered and whether that quantity was satisfactory or not. Gold was recognized as money!
Now suppose you wish to sell your house today, and someone offers to pay for it in “x” number of Bitcoins. The quantity of Bitcoins – unlike a quantity of gold in yesteryear – would mean absolutely nothing to you. You would have to relate the Bitcoins to something else, namely the dollar. You would want to know for how many dollars you could exchange your Bitcoins. The answer would determine whether or not you sold your house.
It is quite clear that the Bitcoin can only aspire to be a derivative of the dollar. It cannot aspire to anything greater: to have an independent, sovereign value, since, unlike gold, it is not something – something that has a physical existence.
The dollar is presently rising in its exchange value against all other currencies. But no one can deny that the dollar is itself a fiat currency, and that in all history, absolutely all fiat currencies have ended in the total collapse of their value in exchange.
A “Bitcoin” is a molecular magnetic field on a computer memory. The “Bitcoin System” allows a person to purchase one or more Bitcoins for fiat money and to move the purchased Bitcoins around the world, from one computer to another, free of interference by any governmental agency and independent of all banking systems.
Those who promote the Bitcoin System sing the Bitcoin’s praises as being a money that is free of any interference or influence by any government agency or monetary authority, and the owner’s Bitcoin property is known to no one but the owner. Secrecy and privacy are the Bitcoin’s great merits.
To enhance the desirability of the Bitcoin, its promoters have engaged in fraudulent advertising. They present the totally imaginary Bitcoin on the Internet as a pile of shiny gold-colored coins labeled “Bitcoin”.
The deception is calculated to have prospective buyers of Bitcoins and actual “owners” of Bitcoin balances think of these brassy, gold-colored coins when dealing in Bitcoins, thus confusing them with images of non-existent coins. The promoters want the public to associate the imaginary digital Bitcons with something tangible. This is most certainly fraudulent advertising.
Hat tip Indentured Servant
Mexico City, July 25, 2012.
Mr. Alexis Tsipras
SYRIZA Party
Dear Mr. Tsipras:
Greetings! My name is Hugo Salinas Price; I am a Mexican citizen and retired entrepreneur who lives in Mexico City. In 1996, during my retirement, I founded the Mexican Civic Association Pro Silver, of which I am President.
Since 2002 this Association has been lobbying the Mexican Congress for approval of a law to introduce into circulation a silver coin which the population might use as money, in parallel with the Peso – our current money. Later on, I shall mention the fundamental bases for this plan and the reasons for which I consider that this plan might be of great utility for you and for Greece.
This proposal gathered much support on the part of Mexicans and legislators of all political parties in the Mexican Congress, during three successive legislative periods since 2002; several times we were near to its approval, although in the last moments the project was turned down – without ever coming to a vote – due to opposition from the Mexican Central Bank.
During the first days of June this year, while on a trip to Europe, I travelled to Athens with Mr. Max Keiser and his colleague, Ms. Stacy Herbert. The purpose of our visit to Greece, which was unplanned, was to speak with you on a subject which we consider important for your country; unfortunately, it was not possible to meet with you, because you were occupied with affairs regarding national elections at hand.
If we had had the opportunity to speak with you, Max and I would have told you that we thought it quite evident that Greece would have to declare itself in bankruptcy and abandon the Euro system. Max and I spoke with several Greek friends who are well-informed regarding the situation, and they told us that you could not express such an opinion at that time, because of the approaching elections.
However, now I see that you have publicly declared that the return of the Drachma is inevitable, and that is why I write.
This is what I wish to communicate to you:
Mr. Tsipras, the desperate situation of Greece offers you a unique opportunity to do something fundamentally great for Greece and to establish yourself as a great national leader. You are a young man and thanks to this, you have a brilliant opportunity to build a long career as a Statesman – not as a politician, but as a Statesman.
En effect, the return of the Drachma would allow Greece to pull itself together once more. It would definitely not make matters worse, for the present situation is so bad that the Drachma will give Greece an immediate respite.
Thus, the monetary heart of Greece would once again begin to beat and furnish the necessary liquidity to get the economy “moving” again.
However, this measure will inevitably entail monetary inflation through the creation of increasing amounts of Drachma to cover the budget deficits of the Greek government for some time, and the inflation will bring about the constant devaluation of the Drachma.
Continue reading “One Man’s Daring Proposal to Restore Greek Sovereignty”
International monetary reserves set a new high mark early this month: they now amount to a bit more that $12,000,000,000,000 dollars. ($12 trillion dollars, when we calculate the value of all the reserves in dollars. The largest part of reserves is in dollars; the rest is split up into euros, pounds sterling, yen and Swiss francs.)
What does this colossal number mean?
Reserves measure the quantity of credit which the exporting countries of the world have granted to countries (and the EMU – the European Monetary Union ) that issue currencies considered as adequate to act as reserves for the central banks of the world. That this is credit is quite clear, because the $12 trillion of reserves in dollars, euros, etc., are invested in bonds, which are promises to pay on the part of the US, the EMU or others, and the holders of bonds are creditors, that is to say they have extended credit.
The monetary reserves of the Mexican central bank are included in the above-mentioned sum; which means that Mexico extends credit, mainly to the US, because the majority of reserves in Banco de Mexico are invested in dollar bonds.
In turn, extending credit means that Mexico has not been paid what it is owed. Mexicans are financing the US, Europe and others who issue reserve currencies, to the extent to which the Mexican central bank holds reserves in bonds denominated in dollars, euros and other currencies.
Since August 1971, when the countries of the World ceased to have the option of receiving gold in payment of their favorable balances of trade, or of extending credit by receiving dollars, the quantity of monetary reserves in world central banks has grown monstrously. Since there was no more payment in gold, the world had no option but to grant credit while it waited for the real payment – which has not arrived, and never will arrive.
The bald truth is that $12 trillion dollars is the imperial tribute extracted from all the countries that do not issue a reserve currency, and delivered to the countries that issue the reserve currencies, in the course of the last 43 years. It cannot be anything other than imperial tribute, because those funds represent bonds that will never be paid. Exports exchanged for bonds that will never be paid are tribute which the exporting world has delivered to the United States and Europe.
When Caesar invaded Britain in 54 B.C. his legions had to cut to pieces several thousand Britons. After the Britons surrendered, he imposed upon Britain a yearly tribute or stipendia, to be delivered in the form of assorted valuable goods. This tribute the Britons paid for the next four hundred years. Tribute is what sustains and feeds an Empire.
However, never in history has there been any collection of imperial tribute on the scale of the present financial scheme, of paying for imports with bonds that will never be paid. The devilish thing about it is that hardly anyone understands it.
Only payment in gold can cancel international debts.
As long as gold is not used to settle international debts, as used to be the case up until 1971, then the world will continue to pay tribute to the countries that issue reserve currencies; exporting countries will be handing- over part of their wealth – for nothing in exchange. Such is the essence of TRIBUTE.
Richard Cantillon is worth remembering. An Irishman, Cantillon was born in 1680 and died in 1734.
He went into banking in Paris and witnessed the rise and fall of John Law’s huge speculative business in all its glory, which ruined France. The business included saving the finances of the French Crown with a mythical investment in Louisiana, combined with the right to issue fiat money which the Regent of France granted to Law’s company.
Cantillon was a man of extraordinary intelligence. He detected the fraud which John Law was committing under the senseless protection of the Regent, and clearly understood its terrible and inevitable consequences.
During the period of the great boom in Law’s business the public gathered in crowds before John Law’s house in the Rue Quincampoix, in the feverish hope of acquiring shares.
Cantillon’s relatives came to see him, beseeching him to get some shares for them in John Law’s Enterprise. He told them he did not recommend that investment at all, but his relatives insisted he purchase shares for them.
Cantillon purchased the shares they wanted, with their money; as a banker, he had the shares in his power and could do with them what he wished, so long as they did not ask for delivery or give him instructions to sell. He immediately sold the shares of his relatives in exchange for gold. He also liquidated his own shares, in exchange for gold.
John Law’s financial Project soon went into a spectacular bankruptcy. Cantillon repurchased his relatives’ shares for pennies.
Cantillon put all his gold into a cart filled with hay and quietly left for Holland. From Holland he went over into England.
His relatives asked for their money back, but Cantillon delivered to them the shares they had insisted on purchasing, now worth nothing. He had purchased the shares they wanted, and delivered to them said shares, as specified under contract. His relatives sued him, but Cantillon’s case prevailed.
There are few men like Cantillon. Many millions of investors will be totally ruined when the present version of John Law’s fraud – the Stock Exchanges of the whole world, based on fiat money – go to the garbage can of History, as will have to happen.
Guest Post by Hugo Salinas Price
The Powers That Be in the US and its allies seem to be committed to keeping the price of gold below $1320US/oz.
Is the US control of the price of gold bad for China? It would appear that since China is purchasing large amounts of gold, keeping the price from rising is in the interest of the Chinese.
Is the US control of the price of gold bad for Russia? It would appear that Russia has no urgent reason to see a higher price of gold.
Is control of the price of gold considered as a damaging policy by the Rest of the World? The Rest of the World does not seem to be particularly upset by the control of the price of gold.
Who is upset that the price of gold is so clearly kept down below $1320US/oz? Answer: the gold miners of the world and those who own gold as financial protection, as well as those who have long positions in the futures markets. All of these actors are limited in number, as contrasted with a world population of some 7.5 billion humans.
So it is evident that in reality there are relatively few parties – individuals and corporations – who care about the price of gold. For the vast majority of people in The West, the price of gold is of no concern whatsoever. Wealthy Chinese are buying gold, but they know better than to say anything about it, let alone complain about the low price.
Gold has been banished from everyday use, and can only be hoarded unproductively. Gold is going into hiding, as Professor Antal E. Fekete has pointed out. (See www.professorfekete.com)
This is not the first time gold has gone into hiding; gold went into hiding in the days of the collapse of the Roman Empire of the West. It is going into hiding again, in the present slow-motion financial collapse of the world.
The price of gold will enter a rising trend, no matter how violent the official interventions to control its price, because at the present low prices it will be impossible for the gold market to satisfy demand for gold from a largely silent minority of mankind that wants to own gold. When this happens, we can expect the criminalization of gold ownership, at least in some quarters of the world.
At some point, impossible to predict, the demand for physical gold will only be satisfied at increasingly higher prices.
Gold today has really only one enemy: the Federal Reserve of the US.
At about $1307US/oz, one US Dollar is worth 0.0238 grams of gold. That is to say, a little more than two-hundredths of a gram: 2.38/100 of a gram. At 0.02 gram per Dollar, the price of gold would be $1,555US/oz. (31.103 gr per ounce/0.02 = $1,555.15US/oz)
The Federal Reserve – and the US Establishment – are naturally worried that as the dollar becomes worth less gold, there may be a loss of confidence in the dollar in the world’s financial markets. That is a horrifying prospect for the Federal Reserve and the US Government, as the American Empire rests on two pillars, each of which supports the other: the Military and the Dollar.
If the Dollar loses prestige in the world and declines in value against other currencies, the Military loses force. If the Military loses force, the Dollar loses acceptance. If they go, the American Empire is over.
Russia and China are ambivalent about the Dollar. The health of their economies – such as they are – depends on a Dollar which maintains its value. So they are not going to challenge the Dollar by fiddling with the price of gold.
On the other hand, the American Empire is not behaving towards them in a friendly manner. For that reason, they will not be collaborating actively to suppress the price of gold.
Russia will not demand gold for its oil and gas; Russia does not wish to upset the apple-cart. China will not push for a higher price of gold, because it owns over $4 trillion in Bonds denominated in both Dollars and Euros (with minor amounts in other currencies.) China wants to use those Bonds to buy up resources all over the world, and has no interest in destroying their value.
So Russia and China are just going to sit back and watch the gold markets do their work, which will be inexorable.
Will Russia and China collaborate to establish a new Gold Standard for the world? Highly unlikely. The structure of their economies is built upon banking systems which carry out fractional banking and which are loaded to the gills with maturity imbalances: short massive amounts of deposits and long massive amounts of long-term loans. They will not change this system until it suffers a total collapse, and then they will strive to resurrect the same flawed system, because that is all they know how to do.
Russia and China are attempting to set up a rival to the IMF. To the IMF mess will be added the BRICS mess, with all the same wasteful “development loans”. I repeat: that is all they know how to do.
Gold and silver will never lose the powerful attraction which they hold for humans.
However, the use of gold and silver in a productive, free society based on property rights, and in its financial system, is a body of theory which is unknown to today’s rulers. The necessary knowledge was put aside to deal with the exigencies of WW I, which started just 100 years ago, and was never put to work again when that war was over.
At this point, it is as impossible to recover that knowledge and the spirit what went with it, as it is impossible to recover the spirit which created the Parthenon and the other marvels of antiquity.
“You are lost and gone forever,
Oh my darling, Clementine!”
I bid you welcome to The New Dark Age.
Guest Post by Hugo Salinas Price
Ambrose Evans-Pritchard in “The Telegraph” (www.telegraph.co.uk, April 2, 2014) is quite worried about deflation in the Eurozone; he says it may become entrenched, which would lead to economic disaster for Europe.
What we are seeing is a repeat performance, on the world stage, of a previous failed experiment with fiat money, as documented by Andrew Dickson White, in his classic book: “Fiat Money Inflation in France 1790 -1797”, reprinted in 1933, when a great believer in monetary tinkering was just getting started.
In Revolutionary France, the French National Assembly gathered together the best and brightest men in France. They were the leading lights of the time. As worshippers of the goddess Reason, they could not for the life of them understand why human reason should not be able to devise an artificial money which would make the French economy function to perfection.
At the time, there were opponents to the idea of floating a new, artificial currency, to be named the “Assignat”. They pointed out the disastrous consequences of the prior French experiment with artificial money, launched in 1720 by the highly intelligent Scottish adventurer, John Law. But like those of us today, who are convinced that the present monetary dispensation will end in a huge world disaster, they were out-debated by those who represented the dominant spirit of the time.
Just like our Bernankes and that ilk, the Revolutionary Frenchmen that promoted the Assignat experiment were committed to its success. When problems arose, such as the Assignat’s persistent fall in value against gold, they proceeded to punish gold-holders.
When commerce failed to revive and the population began to go hungry, all that those behind the Assignat project could do is what Ambrose Evans-Pritchard recommends for the masters of the Euro: “Print more, quickly!”
The French Revolutionaries printed, and printed, and printed.
When the whole ridiculous but death-dealing experiment failed, and the printing presses and the piles of un-circulated Assignats finally went up in flames in what is now the Place Vendome of Paris, who ended up on top?
The great beneficiaries of the massive inflation were – the wealthy, who became even wealthier.
During the Assignat inflation, insiders had taken on enormous debts in Assignats; the end of the Assignat wiped out their debts. With borrowed Assignats they had purchased vast tracts of land which the State had put up for sale – land which Catholic Bishop Talleyrand had proposed should be expropriated from the Church by the State.
With Assignats, the knowledgeable wealthy had also bought up all the valuable stuff they could lay their hands on.
Who was left holding the bag? The common people of France, who had saved piles of Assignats because they trusted the best and brightest of France, the Revolutionaries of the National Assembly.
Not one of these intelligent and highly educated men ever apologized to the French for the disaster they caused.
Ambrose Evans-Pritchard will see the conclusion of the world’s infatuation with fiat money, if he lives long enough, and provided the conclusion is just simply a total collapse of the world’s monetary and financial system. It may turn out to be something much worse.
I shall perhaps not be around by then. But do not expect that any of those who think that fiat money is the only money that can ever exist in this world from now on will ever, ever, apologize for their arrogance and their fatal mistake.
Excellent article from Hugo Salinas Price about the debased dollar, gold and the suicidal bankers who will destroy the world.
“If the U.S. inflates and devalues the dollar, gold will go much higher in price” Jim Rickards. (See here).
The last dollar devaluation took place under President Roosevelt in 1934, when from being worth 1/20.67th of an ounce of gold in 1933, the dollar was devalued to 1/35th of an ounce of gold.
The last opportunity for devaluing the dollar took place in August 1971, when the dollar was still pegged at 1/35th of an ounce of gold. Nixon took the advice of Milton Friedman and made the worst mistake in history; Nixon did not devalue the dollar as he should have done, but simply took the US off the gold standard, such as it was, and thence forth the US refused to redeem dollars held by Central Banks around the world at any price.
Since August 15, 1971, the dollar can no longer be devalued.
Since the dollar is the reserve currency of all Central Banks in the world, all other currencies – the euro included – are only derivatives of the dollar. The proof of this statement is that the value of each and every currency in the world is calculated in dollars,
The world’s currencies are devalued or revalued against the dollar in the world’s currency markets every day of the year.
There is a “Dollar Index” which shows a value of the dollar against a basket of other currencies. However, the currencies selected for the basket are arbitrarily selected and some relatively important currencies are not included in the basket. Besides this, the movement of the dollar in the “Dollar Index” cannot signify either devaluation or revaluation of the dollar, because the currencies in the Index are themselves undergoing either depreciation or appreciation in dollar terms, due to their own national circumstances.
The US cannot declare an official devaluation of the dollar because there is nothing against which it may devalue, or rather, it does not wish to recognize the existence of gold as money, against which it might devalue.
In order for the US to devalue the dollar effectively, it would first be absolutely necessary for the US government to establish gold as the referent for its value. The US government would have to declare that the value of the dollar is equivalent to a given amount of gold, and solemnly promise that that value will be upheld and made good by offering to buy any amount of gold tendered to it, and pay for it in dollars at a price slightly below the officially established price of gold in dollars, as well as offering to sell any amount of gold paid for in dollars, at a price slightly above the officially established price of gold in dollars.
Once an official value of the dollar in gold were established, it would then once again be possible for the US government to renege on its promise and devalue the dollar by establishing a new and lower value of the dollar in gold. In other words, the dollar must first of all be freely convertible into gold at an official rate, before any devaluation can take place.
As things now stand, it is impossible to devalue the dollar.
A rising price of gold does not devalue the dollar, because there is no official link between gold and the dollar. The world’s monetary and financial systems have no link to gold. Gold can be any price without causing any effect upon those systems. We have seen gold at $1900 dollars per ounce, and things were running just as they were when gold was $300 dollars per ounce.
However, the rising price of gold is a huge embarrassment to the US government not because it devalues the dollar (it does not do this) but because it provokes a loss of confidence in the dollar. When the dollar is seen as falling in value against gold, its fall causes investors to exchange dollars and other currencies for gold as a means of protecting wealth. The rising price of gold is a blot on the prestige of the US dollar and the prestige of the US itself.
The price of gold in dollars is therefore under strict government control. This fact, once derided as ridiculous, is increasingly accepted as truth by those interested in monetary matters around the world. The means for controlling the price of gold lies in the massive sales of “paper gold” which take place to suppress its price, as so many investigators have amply documented.
US monetary policy considers that the dollar is here to stay forever, and that gold is no longer – and never again will be – the world’s ultimate money.
The governments of several nations around the world do not share the same conviction with regard to the permanence of the dollar. China invented irredeemable paper money – which is what the whole world uses today – some one thousand years ago, and several dynasties of Chinese emperors learned to their cost that paper money always degenerates into simple trash.
The Chinese government knows that the dollar will not be around forever. China is purchasing enormous amounts of gold to add to their huge pile of US Bonds in the reserves of the Bank of China; the government of China is more enlightened than the government of the US, because it is encouraging the Chinese to purchase gold and silver.
The US government tells the world that it possesses some 8,000 tonnes of gold; the fact that it cannot deliver physical gold held for Germany’s account belies the assurances regarding the physical gold stock of the US.
The situation for the US – and for the world – is dangerous: the US is like a ship with no lifeboats, because it is presumed to be unsinkable.
The US and its allies are allowing the Chinese and Asia in general, to take possession of huge amounts of gold every year, while the US, the UK and Europe are drained of gold by shipments to the East.
The US evidently believes that the dollar is here to stay and that gold is just a passing fancy. This is classic hubris or arrogance.
When serious problems for the dollar surface – as they surely will – and the US has little or no gold to fall back on, the US with its back to the wall may become a very dangerous entity in the world. Would it be possible for those running the US to loose their heads and decide for a suicidal nuclear war in response to a desperate economic situation? Does the destruction of the whole world matter to men about to take their own lives? Do suicidal bankers worry about the fate of the world?