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-Caveat Lector- A dollar crash followed by a terrible economic meltdown is increasingly feared, as reflected in the below two essays. With a euro backed in part by gold (with this metal backing increasing year on year), it is gradually dawning on commentators that in the event of a massive loss of faith in the US dollar, the euro wil become the global currency of choice.However, no one but no one ever, EVER, mentions the vast horde of black gold -- bullion plundered during WWII and then "recovered" by the US - that is sitting in Swiss bank vaults and elsewhere. For whatever reason, GATA, the precious metals pressure group, pointedly refuse to even consider the subject of black gold. Why? Why will no one consent to discuss this increasingly significant factor?I think it likely that public opinion is being rather cleverly shaped and "smoothed."All that black gold is going to feature in the not too distant future.
> "Economic Meltdown, Secessionist Crackup?"
> Nelson Hultberg
> December 15, 2003
>
> I had not thought about our perilous future for some time. But a question from a reader started me contemplating again the terrible dangers lurking up ahead because our government has spent the 20th century wallpapering the world with flim-flam dollars. He asked, "What likelihood was there that the U.S. and other foreign governments would sell off significant portions of their gold reserves in order to reduce their debt, should the price of gold become tempting enough to do so?"
>
> This would never happen, of course. America's current national debt is $6.9 trillion and its upcoming liabilities are approximately $44 trillion. So the $140 billion worth of gold in the U.S. Treasury's vault would be but a drop in the bucket in comparison. Even if gold would skyrocket to $3000 per ounce (which it could well do), it still would give us only $1 trillion to dispense toward $50 trillion in government debt. So selling off gold at higher prices would never be a workable solution to our catastrophic problems.
>
> But the governments of the West are definitely selling off portions of their gold -- just not to pay their debts. They are doing so to try and "manage" the price of gold for as long as they can. The Fed and the U.S. Treasury know that they have no chance of keeping gold under $400 per ounce while they devalue the dollar down into the 60's on the USDX charts. But they hope that through their secret machinations with the mega-bank cartel in New York, they can keep a slowly rising lid on the price of gold and prevent a price explosion that would set off a panic amidst the world's investors. This is of crucial importance, for such an unbridled explosion would send the bond vigilantes into overdrive. U.S. Treasuries would be cast over the rail like so much flotsam at sea. Interest rates would scream. The Dow would crash. Asians would head for the lifeboats. Arabs would demand Euros for their oil. America would cease to be a superpower. The economic meltdown would flatten the world's economies like flower gardens in a hurricane.
>
> Such a move would doom America to second rate status among nations for decades to come. As much as our Fed tries to denigrate gold to the public, it realizes full well the profound importance gold plays in history and in investment psychology. Exactly how much credence the Fed gives to the Keynesian hogwash about gold being a "barbarous relic" is hard to say. But it surely knows that without gold in its vault, the world would have even less faith in the dollar than is now developing. Without faith in the dollar, America's standard of living would plummet.
>
> How then will the Fed's "price capping" tactics affect the price of gold in the long run? Mike Bolser of Le Metropole Cafe made a most astute observation the other day in explaining that since the Fed is running out of metal, we can be sure that they will be frantic to try and conserve their rapidly diminishing supply so as to control the price of gold for as long as they can. This will prohibit them from any kind of heavy suppression that crashes the price. In other words, they can no longer reverse the price escalation with their manipulative sales. They can only try to bring about an orderly price rise in an attempt to slow down the price volcano threatening to erupt and take down their rotted system. This is what cornered rats do when they have no successful way out. They choose what they perceive to be the least injurious path. [cont'd]
> http://www.afr.org/Hultberg/meltdown.html****
TURNING LEAD INTO GOLD
The primary reasons behind the dollar’s foreign exchange value movements are no longer monetary. Since the creation and launch of the euro currency, they have become geopolitical.
The dollar used to be "the only game in town." Traditionally, other countries’ central banks were forced to support it when a dollar crisis came along, because there was no alternative. Now, it’s different.
Since the launch of the euro, there IS an alternative, and countries around the world are reaching for it with both arms - warts and all. That means the dollar, being an un-backed paper-currency like all others, has lost its fundamental, strategic, support.
Now, there is only temporary "tactical" support by Asian exporters whose price competitiveness for their products depends on keeping their currencies low versus the dollar. There is also a certain level of tactical support from the EU countries, who cannot afford to let the euro rise too far too fast for pretty much the same reasons.
But the fact that the euro alternative now exists has enabled geopolitical opponents of the United States to play out their trump card: they can wager their holdings of US treasury debt and forex reserves in a deadly game of "chicken."
Most notable among these are China and the Muslim countries. The Muslim countries’ enmity toward the United States is legend, and does not need to be elaborated on. China is billed even by US politicians as a friendly "trading partner" of the US - but in truth it is anything but. In the same camp is Russia.
These three power blocs are now playing their trade-surplus and treasury debt cards against the US. In addition, all three of them invest heavily in gold, knowing that the dollar is structurally dependent on a low price of gold. Europe (lead by Germany and France) is playing alongside them (not heavily investing in gold itself, but limiting its gold sales - which has the same effect)..
This leaves the dollar-forces in a situation where they can only count on a smattering of economic featherweights around the world, and on the Asian exporters mentioned above, to support their currency.
As a result, we see steadily rising gold prices and falling dollar values despite a considerable economic rebound in the States - an historical economic anomaly which ordinary Keynesian economic analysis in at a total loss to explain.
The question becomes: can the pro-dollar forces in this game possibly be strong enough to thwart the ambitions of the anti-dollar forces?
As shown, only a few economic no-names, plus the Asian exporters, currently underpin the dollar. That means: the Asian exporters minus China, the elephant among the minnows.
China occupies a special status because its currency is pegged low to the dollar, ensuring export price-competitiveness no matter how low the dollar falls. China is therefore in the enviable strategic position to be able to sell the dollar into oblivion and still make a pretty good export-buck. It can do this all the way to the point where the US economy comes to a screeching halt and US consumers can no longer buy anything.
This, in turn, represents the only technical constraint of China’s present ability to sell the dollar into the ground.
But this dilemma is not such a big one, really. Because of all of the above factors, on top of the jaw-popping US trade deficit, the US dollar system along with the economy it underpins is in the process of self-destructing, anyway.
Even without this "Anti-Dollar Axis"s strategic efforts, central banks around the world are predisposed to holding euros instead of dollars as their currency reserves. This is so because the euro has no debt-load (actually, a surplus), compared to total US indebtedness (externally and internally), of some 32 Trillion dollars - twice the amount of actual dollars existing in the world!
Meanwhile the US consumer’s ability to spend money, buy imports, and invest in stocks rests on nothing other than a continuation of excruciatingly low interest rates combined with an exorbitant amount of individual indebtedness. If interest rates were raised at this point, the consumer’s ability to go deeper into hock in order to keep up his spending habits -- habits that currently sustain the Asian exporters and much of the rest of the world -- would simply evaporate.
When the US consumer stops borrowing and spending, the world-wide "free trade" party will be over.
Lights out!
So, can the dutiful American cash-cow (uhh, I’m sorry: consumer) keep it going, then?
In one word: No.
Not with a perpetually falling dollar. Not with international selling (or refusal to keep buying at present rates) of US treasury debt. Not with climbing world-wide natural resources prices, including precious metals and oil. Not with real estate prices at historic peaks, threatening a collapse of home values. Not with being hocked up to the hilt with home equity debt. Not with a looming retirement funds crisis. Not with a supposedly conservative administration whose answer to the Democrats’ traditional "tax and spend" policy is a hair-raising "tax less and spend even more" policy ...
,,, and the list goes on.
Bottom line: the dollar has lost all concrete, dependable, verifiable support. Being itself unbacked by anything other than politicians’ promises, it is - in its current unbacked form - simply doomed. There’s no point in mincing words.
That’s why you need to invest in gold to protect your wealth. Turn literally worthless paper-dollars, dollars whose value is dropping like lead, into always-valued gold. In other words:
Be an alchemist!
Got gold?
Alex Wallenwein
Editor, PublisherThe EURO VS DOLLAR CURRENCY WAR MONITOR
www.a1-guide-to-gold-investments.com/euro-vs-dollar2.html- What do you do when all your investments are doing great, when you have a high-paying job or successful business, but the dollars you earn are dropping and dropping in value?
- Despite recent forex set-backs, the euro continues to advance on the dollar's reserve-currency function (and therefore on your pocketbook) and there is no end in sight. How will this affect your money, your job/business, your retirement, and your kids' education? What can you DO about it?
- You owe it to yourself, your family, and your future to find out.Find out NOW. Fr~ee Report:
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