Who’s Got The Gold?

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Zero Hedge: In 1971, the US abruptly went off the gold standard, and in making the public announcement, US President Richard Nixon looked into the television camera and said, “We’re all Keynesians now.”

I was a young man at the time and had previously bought gold, albeit on a very small scale, but I recall looking into the face of this delusional man and thinking, “This is not good.”

However, the world at large apparently agreed with Mister Nixon, and within a few years, the other countries also went off the gold standard, which meant that, from that point on, no currency was backed by anything other than a promise. Read More …

Opinion: Sound as the dollar. Very safe.

There was a time when the American dollar was the cornerstone of the world’s economy, a dependable currency to be admired and aspired to by other nations. For almost 200 years following the founding of the United States, the value of the U.S. dollar was officially backed by gold.

Bretton Woods:

The US dollar became the world reserve currency in 1944.

Under the Bretton Woods system, the dollar was pegged to gold and most other currencies were pegged to the dollar. As a result of this arrangement, dollars were used as the lone world reserve currency.

President Richard Nixon closed the gold window in 1971 in order to address the country’s inflation problem and to discourage foreign governments from redeeming more and more dollars for gold. 

Party Time

“The rich rules over the poor, and the borrower is slave of the lender” Proverbs 2:7.

 

 

 

From the article: It didn’t take long before countries began playing with their currencies. At one time, the German mark, the French franc, the Italian lire, and the British shilling had all been roughly equivalent in value, and four or five of any one of them was worth about a dollar.

That had already begun to change prior to 1971, but following the decoupling from gold, the governments of the world really began to see the advantages of manipulating their own currencies against the currencies of other nations.

From that point on, a currency note from any country, which was already no more than an “I owe you,” was increasingly degraded to an “I owe you an undetermined and fluctuating amount.”

Fast forward 2009

The 2008-9 financial crisis that came very close to a global collapse saw the advent of quantitative easing (money printing). The plan was to bail out the global economy caused by progressive governments’ desire to make homes affordable for everyone.

Beginning in the 1970’s, the Community Reinvestment Act was passed under Jimmy Carter and turbo charged by Bill Clinton and George W. Bush. Home mortgage loans were granted to people with dubious forms of income at low variable interest rates, called sub-prime loans. Those mortgages were then packaged in US government agency bonds and sold to individual investors and banks all over the world.

When interest rates began to climb, massive defaults happened, and the global economy went into a tailspin.

Federal Reserve to the rescue

The first round of money printing (QE) to bail out domestic and foreign banks was $1 trillion. By 2013 a total of $4 trillion was printed. The flood of money did the trick and not only was Barack Obama able to crow about saving the world’s economy, the 1% grew obscenely wealthy as asset prices rose on counterfeit money.

I still believe that was the end of the US, and by extension, the global economy. Since then, at least another 10 trillion has been created, although it could be more, and despite what the Fed says it will never stop.

Want proof? Last Wednesday, Fed chairman Jay Powell admitted that raising interest 1/2 point to attempt to curb inflation was not going to happen. Instead 1/4 point would have to suffice. It won’t.

Is it any wonder then that gold, perhaps the last defense against inflation, is rising?

Not to me.