Tag Archives: undermining the dollar

All that Glitters: Gold hits $1600 an Ounce as People Lose Faith in the Western Governments and Western Currencies

As the socialist democrats play chicken with the debt crisis in Washington DC and as the governments of Europe split on how to deal with their debt fiasco its becoming increasingly clear that our western governments have failed in dealing with the financial crisis. As much as the rest of the world is loath to admit it; our western financial mess will tank the world economy when we reach critical mass and sovereign debt begins to be defaulted on. In America, a two party system, it’s a fact that one of the two party’s is entirely dependent on providing ever more extravagant social programs and so if you take spending away from the socialist democrats they have no party left. Democrats have abandoned their principles years ago in favor of a strictly “bring home the bacon” world view and their politics of division means that they now view patriotism and any good feeling about this country as “republican propaganda.” Democrats maintain their supplicants by dividing the nation into controllable voting groups, convincing them that they are a persecuted minority; con their leaders into accepting Democrat legislative protection and then they harvest the vote while never actually solving the problems.

This works great until you have a problem, like the financial crisis, that actually needs a real solution. We need the spending spigot to be turned off, now, and for the foreseeable future. The socialist governments of Europe don’t have the money to pay for their lavish social benefits and are facing default on their ever increasing debt and here in America we’re doing our best to pretend that we don’t have a spending problem at all. The sane people, who remain, around the world, are looking at our government’s failure to solve the financial crisis and they’re turning increasingly to Gold because neither the Euro nor the Dollar seems to be worth much these days. As Western Governments are increasingly revealed as too weak to fix the financial woes of the world: it’s only natural that the world’s wealth will find its way into units of value that are not dependent on government to maintain that value. Hence we’re seeing Gold take off like a rocket, again, as faith in our politicians craters once again. Our elected representatives are unable to take unpopular but necessary actions for the good of the country but instead while away the hours figuring out how to fix the blame on the other party.

The Debt Crisis is like Marley’s Ghost, with chains clanking, and the unearthly groans of the utterly dammed, trying in vain to get our attention. At least Ebenezer Scrooge opened a dialog with the Ghost; he faced the apparition and worked the problem to the salvation of his soul. Our Ghost is, in fact, Franklin D. Roosevelt’s Ghost who now wears the crazy Marxist programs he forged in life; as he watches the nation he lead come apart at the seams because it’s no longer administering the social programs——- the social programs are governing us. As Marley and Scrooge sold their soles to the quest for profit; the Marxist Democrats have sold their soul to redistribution of wealth as a means of maintaining power and extending control over the people. As the Ghost of Roosevelt stands in the center of the Oval Office groaning and clanking its chains while the cancerous programs it spawned threatens to kill the United States: Obama sits in the oval office, oblivious to the cancerous spending, unwilling to compromise with evil capitalists, ghosts of presidents past, or anyone else, because he’s too engrossed on planning yet another vacation.

Sixteen Hundred Dollars for an Ounce of Gold! As the Congress abdicates is responsibility for love of the cowardly McConnel plan and as Obama lays the foundation for blaming the Republicans when the debt talks fail and as the hapless Germans stand alone in Europe for fiscal sanity gold is on a tare. As our governments continue to fail us look for more and more people and organization around the world to turn to gold for wealth preservation. Sixteen Hundred Bucks an ounce with no end in sight! For more on Gold consider this article from Bloomberg.com:
http://www.bloomberg.com/news/2011-07-18/gold-rallies-to-record-in-best-run-since-1980.html

India Joins the Dollar Bashing Club: Getting Out of the US Dollar a Growing Priority for the World.

 

 

 

It seems to be an unspoken reality, as one country after the other expresses its horror at US monetary and economic policy, that nations are trying to divest themselves of the US Dollar before it collapses entirely.  The dollar is being treated like salt water, as if it can be forever printed to cover our outrageous debt and crazed spending and magically we’ll suffer no consequences.  India has looked at the dollar and concluded that they need much fewer of them and that the world trading markets can’t be based on a US dollar because our national debt and spending policies  are clearly unsustainable and insane.  India is an important emerging economy representing a huge market, and labor force, but they’ve seen the light that the dollar is on its way out.  All the nations concerned about the stability of the dollar and who have made it a priority to get rid of the dollar holdings will, as their number and unease grows, eventually trigger a dollar selling spree that will destroy the dollar as a viable currency.

Now India has joined with Europe, Russia, China and various South American Governments that don’t like us very much to raise their voice in protest for our financial malfeasance and to demand, correctly, that a new reserve currency be established that’s not dependant on a single nation.  More straws on the camel’s back for us; and eventually it will be one straw too many, and the camel will break its back just as our dollar will be destroyed; unless we depart from the crazy government policies that are propelling us toward disaster.

Who’s next to join the public display of unease and announce their intentions to divest from our currency, in hushed tones, lest the market get spooked, before they can extract value from our dime-a-dozen dollars?  Japan?  The Arab and Gulf States?  Will the Saudi’s be far behind as they see everyone else getting out and they’re holding an empty bag and half their oil recourses gone?  So is the fact of India joining the dump-the-dollar choir really a big thing? 

You bet it is.  If many more nations take this course a run on the dollar will be inevitable and we’ll be generations trying to repair the damage, if, in fact, it can be repaired.

Consider this article from Bloomberg:

Russia, India Question Dollar Reliance Before Summit (Update2)

 

By Mark Deen and Simon Kennedy

July 6 (Bloomberg) — Russia and India said the world economy is too reliant on the U.S. dollar and called for changes in how $6.5 trillion in currency reserves are managed, as Group of Eight leaders prepare to meet this week.

“The dollar system or the system based on the dollar and euro have shown that they are flawed,” Russian President Dmitry Medvedev said in an interview with Corriere della Sera, repeating his proposal for a new international reserve currency.

Suresh Tendulkar, an economic adviser to Indian Prime Minister Manmohan Singh, said in a July 3 interview that he is urging his nation to diversify its foreign holdings away from the dollar.

The challenge to the dollar, a linchpin of world finance and trade since 1945, underlines the shift in relative economic power toward emerging markets and away from the developed nations that spawned the global crisis.

French Finance Minister Christine Lagarde, speaking yesterday at a conference in Aix en Provence, France, said that “we must explore better coordination of exchange-rate policy.”

Questions need to be asked about “the balance of currencies and the role of currencies in a world that has changed because of the crisis and the growing role of emerging countries,” she told reporters.

Bank of France Governor Christian Noyer said at the same conference, “We really need to make sure there is a greater stability between the big currencies in the period to come.”

Dollar Share Grows

“People know that it won’t happen overnight, but the dollar will take the brunt of growing calls by such developing countries as China and Russia for a review of the single reserve currency system,” said Akira Takeuchi, a Tokyo-based currency dealer at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest banking group.

The dollar traded at $1.3974 per euro as of 10:12 a.m. in Tokyo from $1.3980 in New York on July 3. The U.S. currency declined to 95.72 yen from 96.04 yen. The euro fell to 133.75 yen from 134.26 yen.

For all the concerns about the dollar’s role, emerging markets such as China and India remain dependent on the currency. The International Monetary Fund said June 30 the share of dollars in allocated global foreign-exchange reserves increased to 65 percent, or $2.6 trillion, in the first three months of this year, the highest since 2007.

‘Years to Come’

The creation of a supranational reserve currency has been discussed in academic circles and isn’t the Chinese government’s position, Deputy Foreign Minister He Yafei told reporters in Rome yesterday. China expects the U.S. dollar to maintain its role for “many years to come,” He said.

While Medvedev said he sees “no alternative” to the dollar or euro now, he repeated his proposal that “regional reserve currencies” be developed and again questioned the wisdom of relying on the dollar.

“In the long term, we must also think about a single unit of payment such as the International Monetary Fund’s Special Drawing Rights,” a unit of an account linked to a basket of currencies, he told the Italian newspaper. “We cannot be hostages to the economic situation of a single country, as is happening today with the United States.”

Russia has support. India’s Tendulkar said he is advising Singh to diversify India’s $264.6 billion in foreign-exchange reserves and hold fewer dollars.

‘Prisoner’s Dilemma’

“The major part of Indian reserves are in dollars — that is something that’s a problem for us,” he said in Aix en Provence. He said big dollar holders face a “prisoner’s dilemma,” a reference to a problem in game theory in which a rational choice for an individual has negative consequences for a group.

The People’s Bank of China, that country’s central bank, said June 26 that the IMF should manage more of its members’ reserves. China said July 2 that it will allow companies to use the yuan to settle cross-border trade and let them keep their entitlement to export tax rebates, seeking to reduce the reliance of importers and exporters on the U.S. dollar.

The dollar’s role as a safe haven was highlighted last week when the currency advanced 0.5 percent against the euro, to $1.3894, on speculation the global economic recovery is faltering.

Emerging Countries

“Some emerging countries have decided to deal more in their respective currencies and trust each other,” Lagarde said in an interview yesterday. “That doesn’t stop other countries from seeing the dollar, and to a lesser extent the euro, as currencies of trading if not reserve currencies.”

Lagarde said that any discussion of currencies needs to encompass the dollar, the euro, the yuan and the yen and that the meetings of the Group of 20 are the right forum.

“The appropriate platform is the one in which all the major currencies are represented,” she said.

Asked in Aix en Provence about currencies, European Central Bank President Jean-Claude Trichet said it is “extremely important” that U.S. officials remain committed to their policy of supporting a strong dollar.

To contact the reporter on this story: Mark Deen in Aix en Provence, France at markdeen@bloomberg.net; Francine Lacqua in Aix en Provence, France at flacqua@bloomberg.net

The Bullet that Kills the United States: More and More Nations are shooting at the Dollar and as the Dollar Goes—- So goes the Country

 

 

The big economic crisis to look for is the worldwide dumping of the United States Dollar.  Technically, (and soon to be formerly) the US Dollar was the world’s reserve currency but ever since the Nefarious Federal Reserve began to print them irresponsibly and to keep interest rates unnaturally low many nations have seen the US dollar as a poor investment. The spending spree of the socialist democrats of the Obama Administration has made the crisis exponentially worse.  The dollar continues to weaken and monetary policy seems to be steering us toward a hyperinflation event not unlike what Argentina experienced.  The Weimar Republic of pre World War II Germany acted just like we are now: and the result was a destroyed economy featuring a German Mark that was so valueless that you needed wheelbarrow full of them to buy a loaf of bread.  Am I saying that we could be coming to the end of the dollar?  Am I saying that we’re coming up on an economic event that will make the Great Depression of the 1930’s look like a folk dance?  Am I saying that our economic dominance of the world is at an end? 

Yes.  I am.

Every sane nation in the world is looking toward what will replace the US Dollar and how to convert their ever more valueless dollars into the new world currency.  Meetings are being held, and continue to be held, in Europe for a new world order financial system: and in this quest they are supported by the Russians and the Communist Chinese.  The Chinese have a huge holding of US Dollars and now they laugh openly at our Treasury Secretary when he lectures at a Beijing University; and they comment weakly on the mismanagement and moral depravity of the Dollar and the US Government.  The Communist Chinese are lecturing us on government spending, monetary policy, trade policy, energy policy and its abundantly clear to the world that the Chinese will be our successor as the dominant nation on earth. Leadership of the western world will return to Europe as I think the Euro will emerge victorious when the dollar dies. The Bible says that in the last days the world will be led by Europe and I suspect that when the dust settles the new global conventions of currency and trade will be drafted largely by and for Europe. The world is looking toward the day when the United State dominance of the global financial system will be over.

 It’s taking place right now in Washington as the disastrous Cap and Trade Bill passes in the House of Representatives and if passed by the Senate will, all by itself, destroy the American Economy.  This is not to mention the insane Socialized Medicine Bill that the White House is ramming through congress, or the talk of more “stimulus” for the economy, or the bankruptcy of our state and local governments.  The Chinese look at this and clearly are amazed at the rate at which we’re committing suicide as a nation, and as a culture. They need a way to get rid of their dollars while extracting as much value as they can, to convert into a new world order currency.  Every nation knows that if they start selling too many dollars too quickly they can spook the market and it would be like a run at the bank.  Every nation would be selling dollars, driving down the value of the dollar and the costs of commodities sky high, while no one would be buying dollars, nor financing our debt, and the USA would be in economic and political anarchy.

When the Weimar Republic went through this they became, to say the least, politically unstable and finally stabilized under a system of corporatism that the world came to know as Fascism and Nazism under a little guy with a funny mustache named Adolf Hitler.  When there’s no jobs, no food at the store, no meaningful money, bread lines and no hope it’s amazing the kinds of people citizens will listen to if they promise them food and jobs in exchange for an all powerful corporate government. People get so grateful to eat and work that they hardly notice the loss of their liberty, unless of course you happen to be in the group that the government has decided to make “the enemy.”  The world has always said that it couldn’t happen in America but don’t be fooled.  It can happen here: Indeed it is happening here, right now, as the government simply takes over everything without opposition.  The key to opening the door to Neo-fascism and economic hell is the destruction of the US Dollar: and the momentum to dump the dollar continues to gain strength daily in Europe, Russia and China.  At any moment, one or more of these nations could set off a selling spree of the dollar that would destroy it as a currency forever.  Our way of life, and capitalism, and our children’s future, hang in the balance while our politicians spend us into receivership, the Fed prints worthless dollars, and the person are parelized with uncertainty as Obama smiles and promises the moon while stealing all our money, in addition to the money of unborn generations.

Who is going to say no to the first Black President as he changes us from capitalism to socialism, or perhaps fascism, while the people face daily social and governmental changes of such staggering magnitude that most people simply can’t comprehend what’s going on. We, the formerly free people of the United States, may not be cognizant of the changes he’s making but that’s not the case with the rest of the world: and certainly not the case with the Chinese.

Keep watch for the fall of the US Dollar——- That’s when the post American world will begin in earnest.  We aren’t going to like living in it.

Consider this article from Bloomberg.com on the Chinese:

Dollar Falls Most in Month as China Urges New Reserve Currency

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By Oliver Biggadike and Ye Xie

June 27 (Bloomberg) — The dollar declined the most against the euro in a month and dropped versus the yen after China repeated its call for a new global currency.

The Swiss franc declined against the euro and dollar this week as foreign-exchange analysts said the central bank sold its currency three times to support the economy. The greenback fell against most of its major counterparts after the People’s Bank of China said yesterday the International Monetary Fund should manage more of members’ foreign-exchange reserves.

“The dollar’s status as a reserve currency is being questioned,” said Benedikt Germanier, a foreign-exchange strategist in Stamford, Connecticut at UBS AG, the second- largest currency trader. “There are reasons to sell the dollar.”

The U.S. currency fell 0.9 percent to $1.4056 per euro this week from $1.3937 on June 19, the swiftest depreciation since the five days ended May 29. The dollar fell 1.1 percent to 95.18 yen from 96.27, its third consecutive weekly drop. The euro decreased 0.3 percent to 133.85 yen from 134.18.

Federal Reserve policy makers said on June 24 inflation “will remain subdued for some time” and that the economy warrants an “extended period” of low rates.

The 10-year Treasury yield fell the most since March as investors bet the Fed will keep interest rates close to zero for the rest of the year. The difference in yield, or spread, between 2- and 10-year yields decreased this week to 2.43 percentage points, near the narrowest level since May 20.

Stronger Real

Brazil’s real gained 2 percent to 1.9363 versus the greenback, its biggest weekly increase in June, as the sale of shares in Visa Inc.’s local credit-card processing affiliate attracted foreign investors to the world’s biggest initial public offering in more than a year.

The dollar depreciated 2.6 percent to 7.8926 South African rand and 1.4 percent to 7.8002 Swedish krona as the People’s Bank of China said in its 2008 review there’s a need for a global reserve currency “delinked from sovereign nations.”

The Swiss franc declined against the euro and dollar as strategists said the Swiss National Bank sold its currency twice on June 24 and once more a day later to support the economy. Nicolas Haymoz, an SNB spokesman, declined to comment on June 25 on whether the bank acted in foreign-exchange markets.

‘Unwelcome’ Strength

“The SNB has to convince markets that it considers a strong franc as unwelcome,” Unicredit SpA analysts Armin Mekelburg in Munich and Roberto Mialich in Milan wrote in a report yesterday. “We fear that franc bulls will start further attempts to wipe out the line in the sand of 1.50.”

The franc fell 1 percent to 1.5230 against the euro and 0.2 percent to 1.0834 compared with the dollar this week. The Swiss currency declined on June 24 to 1.5380 versus the euro, the weakest level since the mid-March period when the SNB said it intervened to weaken the franc.

The ICE’s Dollar Index fell below 80 on the call from China for an alternative to the dollar as the world’s main reserve currency. The gauge tracking the greenback versus the currencies of six leading trading partners decreased 0.5 percent to 79.90.

“To prevent the deficiencies in the main reserve currency, there’s a need to create a new currency that’s delinked from the economies of the issuers,” the People’s Bank of China, or PBOC, said. China is the biggest foreign holder of U.S. Treasuries, with $763.5 billion in April.

Russia’s Stance

Russian Finance Minister Alexei Kudrin said on June 13 after the Group of Eight meeting in Italy that his country had full confidence in the dollar and that it’s “too early” to speak of alternative reserve currencies. Japan has “unshakable” trust in the strong-dollar policy of the U.S., Finance Minister Kaoru Yosano said in Tokyo yesterday.

China called on the U.S. to guarantee the safety of its assets in March, when Premier Wen Jiabao said the nation was “worried” about its holdings of Treasuries.

People’s Bank Governor Zhou Xiaochuan urged the IMF that month to expand the functions of its unit of account and move toward a “super-sovereign reserve currency.” Russian President Dmitry Medvedev proposed on June 5 that nations use a mix of regional reserve currencies to reduce reliance on the dollar.

“There may be signs here of tensions mounting between the PBOC’s economic concerns over China’s holdings of dollars and the Chinese government’s diplomatic reasons for doing so,” Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London, wrote in an e-mail.

Venezuela’s bolivar plunged yesterday to a seven-week low in unregulated trading after the government said investors won’t be able to use a new $3 billion corporate bond offering to obtain dollars until 2011.

The bolivar fell 4.1 percent to 6.90 bolivars per dollar in the parallel market, traders said. The currency tumbled 20 percent this year in the unregulated market as the government pared dollar sales at the official exchange rate of 2.15 after oil, which accounts for 93 percent of the country’s exports, plunged from last year’s record high.

To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net

Last Updated: June 27, 2009 08:00 EDT

The Superpower of the Twenty First Century: China

 

 

 

As the United States contemplates the bankruptcy of several of our states, all democrat run, and how best to bail out states whose hallmark is profligate social spending; the Chinese are forming alliances with any sound currency they can find. China and Brazil have begun in earnest to remove the dollar as an entanglement in international trade. Both China and Brazil have economies and currency that’s in much better shape than the beleaguered US Dollar and the path is being cleared for an alliance of the most stable currencies on earth, first among them china, to create new channels of trade and finance based on its own currency and those of the best world currencies. Deals are being struck in currency’s other than the US Dollar and its clear that this trend is likely to accelerate to China’s benefit and at our expense.  The loss of the US Dollar and the reserve currency of the world will be quite a blow to American prestige and it will have negative ramification in geo politics around the globe.  As the world finds alternatives to the dollar it opens us up to a form of economic warfare that will destroy our economy and turn us into an economic joke as the world sends all their dollars back to us as trillions of dollars become worthless overnight.

Last summer we saw the effects of gas as a weapon against our economy as gas prices triggered the popping of the “Mortgage Bubble” which in turn took out the entire banking and finance system, insurance and the Automakers.  This summer as gas prices again turn north, over $60 a barrel as of this writing, we should be treated to the popping of the retail real estate bubble and perhaps the worst of all the return of trillions of valueless dollars to our shores resulting in an inflationary tsunami even as we make matters worse by guaranteeing the crazy liberal debt generated by states like California, New Jersey, New York, Massachusetts and so on.  The popping of the commercial real-estate bubble would be bad enough but when the world sees the insanity of how Obama will bail out huge democrat states like California by looting all the republican states until these United States find equality at last in bankruptcy. This is where the world just says NO to the US dollar.

But the Stock Market is up!  Barak is our savior!  The world won’t take a real retributive glee in sticking it to the United State for all our crimes real or imagined!  Yeah?  I got a bridge in Brooklyn I want to sell you!

As we pass through this fairly benign economic reprieve, before the next big bubbles burst, it would behoove us to consider the problems economic, foreign, and social, that are arrayed against us and prepare for a long hot summer as some fool ,somewhere, drops the match and our economy goes up in a blaze of foreign bought gasoline. The final bullet to end our economic supremacy will be the implosion of the US dollar.  It’s the dollars destruction that will truly do us in and that’s what’s being actively planned for in the story below.  This isn’t a theoretical threat to our currency: this is active planning to conduct business without the US Dollar because the world is realizing that our problems are an order of magnitude beyond our ability to correct.

Stronger currencies won’t be taken down by the stupidity of weaker currency. Look for a growing international movement of stronger currencies that will make some agreements with the IMF and that will supplant the US Dollar sometime soon.

 While the Obama Administration steals from Missouri to fund outrageously stupid spending in San Francisco; while they steal money from Montana and Texas to fund the outrageous corruption of New Jersey: they sign the death warrant of all the states.  China and Brazil are not going down with the dollar they’re blazing a new trail that don’t include dependency, in any way, on the USA.

It’s going to be a long hot summer folks!  Consider this article from the Financial Times:

http://www.ft.com/cms/s/0/996b1af8-43ce-11de-a9be-00144feabdc0.html

Brazil and China eye plan to axe dollar

By Jonathan Wheatley in São Paulo

Published: May 18 2009 18:24 | Last updated: May 18 2009 23:31

Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.

The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.

Mr Lula da Silva, who is visiting Beijing this week, and Hu Jintao, China’s president, first discussed the idea of replacing the dollar with the renminbi and the real as trade currencies when they met at the G20 summit in London last month.

An official at Brazil’s central bank stressed that talks were at an early stage. He also said that what was under discussion was not a currency swap of the kind China recently agreed with Argentina and which the US had agreed with several countries, including Brazil.

“Currency swaps are not necessarily trade related,” the official said. “The funds can be drawn down for any use. What we are talking about now is Brazil paying for Chinese goods with reals and China paying for Brazilian goods with renminbi.”

Henrique Meirelles and Zhou Xiaochuan, governors of the two countries’ central banks, were expected to meet soon to discuss the matter, the official said.

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In an essay posted on the People’s Bank of China’s website, Mr Zhou said the goal would be to create a reserve currency “that is disconnected from individual nations”.

In September, Brazil and Argentina signed an agreement under which importers and exporters in the two countries may make and receive payments in pesos and reals, although they may also continue to use the US dollar if they prefer.

An aide to Mr Lula da Silva on his visit to Beijing said the political will to enact a similar deal with China was clearly present. “Something that would have been unthinkable 10 years ago is a real possibility today,” he said. “Strong currencies like the real and the renminbi are perfectly capable of being used as trade currencies, as is the case between Brazil and Argentina.”

In what was interpreted as a sign of Chinese concern about the future of the dollar, the governor of China’s central bank proposed in March that the US dollar be replaced as the world’s de-facto reserve currency.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency ”that is disconnected from individual nations” and modelled on the International Monetary Fund’s special drawing rights, or SDRs.

Economists have argued that while the SDR plan is unfeasible now, bilateral deals between Beijing and its trading partners could act as pieces in a jigsaw designed to promote wider international use of the ­renminbi.

Any move to make the renminbi more acceptable for international trade, or to help establish it as a regional reserve currency in Asia, could enhance China’s political clout around the world.

 

The Return of the Gold Standard: Russia will propose this to Discipline the World Financial Systems

 

 

 

Russia and China and others have called for a new currency standard separate and apart from the US Dollar.  The recent economic storms have shown the weakness of our fiat dollar as the Federal Reserve prints money at an alarming rate and our Treasury Department spends it faster than it can be printed!  The people who are stuck holding the bag are the American People who see their savings made valueless by government malfeasance and creeping socialism.  The Chinese, the Arabs, the Russians, the Japanese and every other government on earth who holds much wealth in our ever deprecating dollar are fit to be tied as our policies devalue their wealth.  They were assured that the dollar would remain stable and the government would never take the steps we’ve now taken, and continue to take, to debase the value of our currency.  China has expressed alarm in recent weeks and the United Nations panel has openly called for a new world currency.  Europe has been making plans along similar lines but we continue to pursue a course that can only end badly for our nation and our dollar.

The only sane thing to do is to find an international unit of wealth, like gold, or perhaps some other combination of commodities that will force discipline on a currency and force governments to live within their means. Having the dollar backed by the thin air has given too much power to the Federal Reserve and Congress to follow their own agenda by siphoning off the wealth of the people who believed in the dollar and the integrity of the American System. It may well be the case that investing in the US Government becomes indistinguishable from investing with Bernie Madoff because the result is the same.

There are many problems with trying to go back to a gold standard and Russia is the first major nation to suggest it.  This will be a trend to watch because the world is quite serious about getting off the dollar and as our nation continues to debase our currency the world will change to something else.  Here’s an article from the Telegraph.co.uk and its URL:

http://www.telegraph.co.uk/finance/financetopics/g20-summit/5072484/Russia-backs-return-to-Gold-Standard-to-solve-financial-crisis.html

 

Russia backs return to Gold Standard to solve financial crisis

Russia has become the first major country to call for a partial restoration of the Gold Standard to uphold discipline in the world financial system.

 

By Ambrose Evans-Pritchard
Last Updated: 8:23AM BST 30 Mar 2009

 

Arkady Dvorkevich, the Kremlin’s chief economic adviser, said Russia would favour the inclusion of gold bullion in the basket-weighting of a new world currency based on Special Drawing Rights issued by the International Monetary Fund.

Chinese and Russian leaders both plan to open debate on an SDR-based reserve currency as an alternative to the US dollar at the G20 summit in London this week, although the world may not yet be ready for such a radical proposal.

Mr Dvorkevich said it was “logical” that the new currency should include the rouble and the yuan, adding that “we could also think about more effective use of gold in this system”.

The Gold Standard was the anchor of world finance in the 19th Century but began breaking down during the First World War as governments engaged in unprecedented spending. It collapsed in the 1930s when the British Empire, the US, and France all abandoned their parities.

It was revived as part of fixed dollar system until US inflation caused by the Vietnam War and “Great Society” social spending forced President Richard Nixon to close the gold window in 1971.

The world’s fiat paper currencies have lacked any external anchor ever since. It is widely argued that the financial excesses and extreme debt leverage of the last quarter century would have been impossible – or less likely – under the discipline of gold.

Russia is a major gold producer with large untapped reserves of ore so it has a clear interest in promoting the idea. The Kremlin has already instructed the central bank of gradually raise the gold share of foreign reserves to 10pc.

China’s government has floated a variant of this idea, suggesting a currency based on 30 commodities along the lines of the “Bancor” proposed by John Maynard Keynes in 1944.

United Nations Panel Calls for a New World Reserve Currency: They Want to Scrap the Dollar

 

Next week a UN panel will make a recommendation that the world switch to a new reserve currency because the US Dollar may be scaled down in the holdings of the major central banks as concerns about its stability persists.  The United States has pursued one of the greatest spending sprees; perhaps the biggest spending spree in the known history of this planet, and the combination of debt and monetized debt has nations holding the dollar concerned that its value may sharply drop.  It’s a basic law of supply and demand, when the world is flooded with trillions of dollars it’s not very scarce and the demand for it as a currency falls.  The United States continues to borrow and print more money and in recent days it’s become clear that the Chinese hate us for our monetary policy, Russia plans to ask for a new world currency in the upcoming G20 meeting, Europe is looking for a new world currency and now the UN is jumping on the bandwagon.

The once mighty dollar was led to its demise not by Wall Street, but by Washington, as a combination of Congressional Corruption and the machinations of the nefarious Federal Reserve System forced mortgages to be written based on political correctness while the interest rates were maintained too low for too long.  You can’t force banks to make loans based on what Barney Frank and Nancy Pelosi think is fair instead of basing your decisions on the person’s ability to pay back the loan.  You can’t create massive Quasi-Governmental Golems like Fannie Mae and Freddie Mac, who are neither government agencies nor profit making corporations, to fund a bizarre social ideal in which financial sanity is replaced by Democrat Ideology.  It didn’t work: and the result tanked the mortgage industry that then tanked the banks and the credit froze up and now it’s out of control and spreading to every sector of the economy.

While it’s true that our constitution says we were all created equally it has been construed by half the population, thru an insidious campaign of political correctness, to mean that we must have an equality of outcome to be a just society.  It’s a theory that believes the government should redistribute wealth from those who have earned it to those who have not.  It’s what Eugene McCarthy warned us about in the fifty’s, and was subsequently vilified for, and yet his concerns about leftist colonization of key industries like higher education, entertainment, media and journalism seem downright prescient in early 2009. All the attempts to point out over the years the fundamental unsoundness of our mortgage lending was shouted down by cries of racism and angry accusations that one lacked compassion if he would not be browbeaten into supporting mortgages to the poor that they could not possibly repay.

While the Congress of the United States continues its witch hunt inquisition of Wall Street CEO’s, like Mr. Stewart of AIG, it makes clear that Congress couldn’t run a pay toilet.  All the AIG upper management should be out the door as fast as they can: as laws are unconstitutionally crafted by a lynch mob congress to personally attack them for Congresses’ own folly. Now the world wants a new currency and when it happens the United States of America will be finished as a superpower as we go the way of the USSR.  The world doesn’t care about democrats trying to extort mortgages for client groups who can’t afford them: they just want a stable unit of value that can’t be looted by a bunch of American Professional Politicians who screwed up bad and are continuing to make it worse in an effort to cover their tracks.  I can’t say that I blame them.

The word will go forward that Capitalism failed and is an inherently evil and an unfair economic theory. That’s a shame because it wasn’t capitalism that failed: It was the Incumbent System of Congress that failed us.  Professional Politicians with entrenched interests no longer represents liberals and conservatives in the American Electorate they simply represent themselves.  The American People want good and wise laws reflecting the majority; and the Professional Politicians’ want perpetual reelection and power., For all intents and purposes the interests of the people and our own government  are now diametrically opposed.  We need term limits on Congress, and we need them now. This UN panel that wants to drop the dollar is representative of where the world is going, it’s just a matter of time, and it’s going to hurt our kids and grandkids a lot.  Consider this Article from Reuters:

http://www.reuters.com/article/newsOne/idUSTRE52H2CY20090318

U.N. panel says world should ditch dollar

A shared reserve currency might negate this move, he said, but he believed that China would still like to take on the role.

Persaud has long argued that the dollar would give way to the Chinese yuan as a global reserve currency within decades.

The other reason, he said, was the success of the euro, which incorporated a number of currencies but roughly speaking held on to the stability of the old German deutschemark compared with, say, the Greek drachma.

Wed Mar 18, 2009 11:16am EDT

By Jeremy Gaunt, European Investment Correspondent

LUXEMBOURG (Reuters) – A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket.

Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.

“It is a good moment to move to a shared reserve currency,” he said.

Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value — though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits.

Some analysts said news of the U.N. panel’s recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.

“Speculation that major central banks would begin rebalancing their FX reserves has risen since the intensification of the dollar’s slide between 2002 and mid-2008,” CMC Markets said in a note.

Russia is also planning to propose the creation of a new reserve currency, to be issued by international financial institutions, at the April G20 meeting, according to the text of its proposals published on Monday.

It has significantly reduced the dollar’s share in its own reserves in recent years.

GOOD TIME

Persaud said that the United States was concerned that holding the reserve currency made it impossible to run policy, while the rest of world was also unhappy with the generally declining dollar.

“There is a moment that can be grasped for change,” he said.

“Today the Americans complain that when the world wants to save, it means a deficit. A shared (reserve) would reduce the possibility of global imbalances.”

Persaud said the panel had been looking at using something like an expanded Special Drawing Right, originally created by the International Monetary Fund in 1969 but now used mainly as an accounting unit within similar organizations.

The SDR and the old Ecu are essentially combinations of currencies, weighted to a constituent’s economic clout, which can be valued against other currencies and indeed against those inside the basket.

Persaud said there were two main reasons why policymakers might consider such a move, one being the current desire for a change from the dollar.

USA Trying to Save a System the World is Rejecting: Capitalism’s Last Days

While the United States of America struggles valiantly to restore our economic engine the rest of the world looks for a way to jettison the hated US Dollar in favor of a new world reserve currency.  The crisis has become a crisis of faith in capitalism itself and no nation on earth personifies the kind of unbridled capitalism that the world is rejecting so much as the United States.  Stories of American Wall Street firms taking billions from the government and giving themselves huge bonus’s and golden parachutes while the crisis deepen across the globe is a study of evil the world can’t ignore.  The Flood of Dollars unleashed by the Federal Reserve is destroying the confidence in the Dollar and in America itself and the world is looking for a life raft as the American Ship of State sinks.  Our system is seen as fundamentally immoral and as we furiously print more dollars and try to borrow more from other nations the world is seeing through our denial and foolhardiness and is forming a plan.  It’s still very much under the radar but the number of nations getting on the “dump American Currency” wagon is growing like the number of governments facing civil unrest and the protestors at labor rallies in Paris.

It was one thing to have French President Sarkozy call for a new reserve currency and it was something of a shock to see China agree in principle.  It was one thing for the Russians and some of the third world call for a new reserve currency and a new banking, investment and trade apparatus that would be global in scope and free of American domination but when Australia calls for a new reserve currency it’s time to worry. The first story below is from a newspaper in Sydney Australia and like the others that follow is uncut.  Read carefully what the new Australian PM is saying about our current financial system and what he envisions taking its place.  This is quite serious folks because the momentum for the world to pull the rug out from under the dollar is growing each day and if it happens it’ll take the USA a generation or more to climb out of the hole we’ve dug for ourselves and our great grandchildren. Everything the government is doing right now will magnify the damage if the world dumps its dollars.

The United States of America is not mentioned in Biblical End Times Prophesy and as you read the stories below about Putin’s view of the crisis, the deepening threat of civil unrest in Russia, Europe, and Iceland you’re looking perhaps at the reason why.  The United States of America is facing an economic holocaust that will make the Great Depression look like a Folk Dance and our corrupt efforts at a Stimulus Bill (A pork laden Christmas Tree) has no chance of reversing the slide.  The only think that might save us now is massive business tax cuts, combined with the low interest rates that might just put us back on track but we have one big impediment to that happening.  The Democrats have built a party on class warfare pitting worker against management, to such a degree, that they’re unable to take the only action that might save us all and the future of capitalism in the bargain.  Perhaps we’re not mentioned in End Times Prophesy because we tore ourselves apart by our class warfare, greed, and reliance on central banking to such a degree that we were rendered irrelevant in the last days.  The next few years will tell the story. 

Consider carefully the following stories and consider for yourself the significance of what Australia is saying in the backdrop of Davos and of Sarkozy’s and Putin’s remarks and ask yourself if the hundreds of millions of pork payments to democrat constituent groups makes the world’s point that were “too corrupt to continue.”  We came up with the “too big to fail” mantra and we’ve come to this point but what happens if the world decides the USA is “too corrupt to continue?” 

The end times seems to be a faceoff between power centers like Russia, the Arabs of the Middle East, China and the Kings of the East and Israel.  American leadership is absent in scripture and a careful consideration of the world economic thinking tells a very plausible story why that might be so. America must fall and Europe must rise; it’s not as unthinkable as once it was.

 

(From The  Sydney Morning Herald)

Time for a new world order: PM

Phillip Coorey Chief Political Correspondent
January 31, 2009

 

KEVIN RUDD has denounced the unfettered capitalism of the past three decades and called for a new era of “social capitalism” in which government intervention and regulation feature heavily.

In an essay to be published next week, the Prime Minister is scathing of the neo-liberals who began refashioning the market system in the 1970s, and ultimately brought about the global financial crisis.

“The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes,” he writes of those who placed their faith in the corrective powers of the market.

“Neo-liberalism and the free-market fundamentalism it has produced has been revealed as little more than personal greed dressed up as an economic philosophy. And, ironically, it now falls to social democracy to prevent liberal capitalism from cannibalising itself.”

Mr Rudd writes in The Monthly that just as Franklin Roosevelt rebuilt US capitalism after the Great Depression, modern-day “social democrats” such as himself and the US President, Barack Obama, must do the same again. But he argues that “minor tweakings of long-established orthodoxies will not do” and advocates a new system that reaches beyond the 70-year-old interventionist principles of John Maynard Keynes.

“A system of open markets, unambiguously regulated by an activist state, and one in which the state intervenes to reduce the greater inequalities that competitive markets will inevitably generate,” he writes.

He urges “a new contract for the future that eschews the extremism of both the left and right”.

He mocks neo-liberals “who now find themselves tied in ideological knots in being forced to rely on the state they fundamentally despise to save financial markets from collapse”.

He advocates tighter regulation and policing of global finances, and identifies the immediate challenge as restoring global growth by 3 per cent of gross domestic product, the amount it is expected to fall in 2009. Next week, as Parliament resumes, his Government will chip in with a second economic stimulus package.

Mr Rudd commits to keeping budgets in surplus “over the cycle”, meaning deficits should be temporary. In a further sign the Government is not contemplating additional tax cuts, which would deliver a permanent hit to revenue, he stresses that stimulus measures have to be paid for when the economy recovers.

Mr Rudd singles out Thatcherism as a culprit, as well as the former Howard government. His essay implicitly attacks the Opposition Leader, Malcolm Turnbull, who this week urged the free market be allowed to dictate commercial property values as he slammed a Government measure to prop them up.

Mr Rudd’s essay follows the blast Mr Obama gave Wall Street bankers yesterday for awarding themselves $28 billion in bonuses last year at the same time as they were being bailed out by taxpayers.

In a message to Mr Obama and the US Congress, Mr Rudd counselled against erecting trade barriers. “Soft or hard, protectionism is a sure-fire way of turning recession into depression as it exacerbates the collapse in global demand.”

The message was reinforced in Davos yesterday when the Trade Minister, Simon Crean, described the “buy American” provisions of the new Obama stimulus package as “very worrying”. “On the face of it, it looks like it contravenes commitments made to the World Trade Organisation,” he said.

with Paola Totaro

This story was found at: http://www.smh.com.au/articles/2009/01/30/1232818725574.html

 

(From the BBC)

Putin urges reserve currency move

Russian Prime Minister Vladimir Putin has told the Davos economic forum it is dangerous for the world to over-rely on the dollar as its reserve currency.

He called for a range of reserve currencies and said he envisaged the emergence of several strong regional currencies in the future.

He advised against isolationism and state economic control as ways out of a “perfect storm” in the world economy.

And he warned against military spending as a way to boost economic growth.

Mr Putin, who became prime minister last year after two presidential terms which saw rapid economic growth in Russia, was addressing the World Economic Forum on its first full day of business.

“Excessive dependence on what is essentially the only reserve currency is dangerous for the world economy, therefore it would be expedient to encourage an objective process for the emergence of several strong regional currencies in the future,” he said.

Countries issuing such currencies should, he argued, show more policy openness.

The US dollar continues to dominate official foreign exchange reserves, accounting for 63.9% in 2007 compared with 25.5% for the euro and 4.7% for sterling.

Mr Putin said some protectionism might be inevitable amid a global crisis but he urged against “isolationism and unrestrained economic selfishness”.

He said that Russia opposed spending more money on defence as a way to boost economic growth, as this only aggravated the problem.

Russia’s prime minister also called for a return to “balanced” world energy prices and a new international legal framework for energy security.

He wished US President Barack Obama’s new team “success”, hoping for constructive co-operation between Washington and Moscow.

Story from BBC NEWS:  http://news.bbc.co.uk/2/hi/business/davos/7857005.stm

 

 

(From the BBC)

 

Crisis may ‘spark social unrest’

Europe faces the risk of more social unrest unless measures are taken to quickly tackle the global economic crisis, France’s finance minister says.

Christine Lagarde said trust in the financial system needed to be restored.

Leaders needed to send a clear, understandable signal to ordinary people about how governments were intending to act, she added.

She said that action should be taken by the G20 summit taking place in London in April.

“We’re facing two major risks: one is social unrest and the second is protectionism,” she told the World Economic Forum in Davos.

“We need to restore confidence in the systems and confidence at large,” she added.

On Saturday, hundreds of people demonstrated in Geneva and Davos to protest against the World Economic Forum.

Carrying banners reading “you are the crisis” and throwing snowballs at security guards, the demonstrators said those at the forum were not qualified to fix the world’s problems.

Governments in France, Russia and Iceland have faced angry protests from citizens upset by their handling of the economic crisis.

French rail and air services were disrupted on Thursday as huge crowds took to the streets.

Iceland’s coalition government collapsed on Monday under the strain of the financial crisis.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/davos/7862679.stm

Published: 2009/01/31 16:39:36 GMT

© BBC MMIX

 

 

Something from Ron Paul just for fun

The World’s Reserve Currency

by Ron Paul

The financial press reported last week that the euro, the new currency created only five years ago and used by most European nations, has supplanted the U.S. dollar as the most widely used form of cash internationally. There are now more Euros in circulation worldwide than dollars.

This alone is not necessarily troubling, as the dollar remains the world’s most important reserve currency. About 65% of foreign central bank exchange reserves are still held in dollars, versus only about 25% in euros. And the European Central Bank faces the same inflationary pressures that our own Federal Reserve Bank Governors face, including a growing entitlement burden that threatens economic ruin as both societies age. European politicians want to spend money just as badly as American politicians, and undoubtedly will clamor to inflate – and thus devalue – the euro to fund their creaky social welfare systems.

Still, the rise of the Euro internationally is another sign that the U.S. dollar is not what it used to be. There is increasing pressure on nations to buy and sell oil in Euros, and anecdotal evidence suggests that drug dealers and money launderers now prefer Euros to dollars. Historically, the underground cash economy has always sought the most stable and valuable paper currency to conduct business.

More importantly, our greatest benefactors for the last twenty years – Asian central banks – have lost their appetite for holding U.S. dollars. China, Japan, and Asia in general have been happy to hold U.S. debt instruments in recent decades, but they will not prop up our spending habits forever. Foreign central banks understand that American leaders do not have the discipline to maintain a stable currency. When the rest of the world finally abandons the dollar as the global reserve currency, both Congress and American consumers will find borrowing money a more expensive proposition.

Remember, America can maintain a large trade deficit only if foreign banks continue to hold large numbers of dollars as their reserve currency. Our entire consumption economy is based on the willingness of foreigners to hold U.S. debt. We face a reordering of the entire world economy if the federal government cannot print, borrow, and spend money at a rate that satisfies its endless appetite for deficit spending.

At some point Americans must realize that Congress, and the Federal Reserve system that permits the creation of new money by fiat, are the real culprits in the erosion of your personal savings and buying power. Congress relentlessly spends more than the Treasury collects in taxes each year, which means the U.S. government must either borrow or print money to operate – both of which cause the value of the dollar to drop. When we borrow a billion dollars every day simply to run the government, and when the Federal Reserve increases the money supply by trillions of dollars in just 15 years, we hardly can expect our dollars to increase in value.

January 2, 2007

Dr. Ron Paul is a Republican member of Congress from Texas.

Click this link for the final nail in our coffin:  http://www.glennbeck.com/content/articles/article/198/20816/

Click the picture of glenn in front of a chart.  Its an amazing vidio