The Dying Dollar and the Rise of a New Currency Order
For years now, the collapse of the dollar has been in the cards. Recent developments show mounting pressure on the dollar’s reserve currency status. With a major international deflation going on, the threat of inflation through money printing is unreal. However, should the dollar’s reserve currency status end, the repatriation of trillions of petro- and eurodollars could lead to a strongly inflationary scenario.
The roles of a reserve currency are to finance international trade and to function as a store of value for Governments. Until the second world war it used to be the British pound, but with the demise of the British Empire, the pound lost its international relevance and was overtaken by the dollar. This was formalized in the 1944 Bretton Woods system. All other currencies were fiat currencies, but pegged to the dollar, which in turn was pegged to Gold at 40 dollars an ounce and redeemable for international trading partners.
The Eurodollar
With the dollar as the reserve currency, the US had to export dollars. In the early years after the war especially for Europe, the famous Eurodollars. This sounds great: print money and buy whatever you like. But with the Gold window it was also risky: overprinting could mean excess dollars would be exchanged back to Gold, depleting US Gold reserves.
This was also a weakness that those annoyed with American Hegemony could exploit. In 1967 the leftist press mogul Jean-Jacques Servan-Schreiber penned a famous screed called ‘le défi Américain’ (the American challenge’), arguing Europe was being colonized economically by superior American competition.
France, at the time, was run by de Gaulle, who never was impressed with Anglo-American supremacy. He made a point of exchanging every dollar he could lay his hands on as a means to undermine it.
In the late sixties the situation got badly out of hand because of the Great Society and the Vietnam war, very costly projects that were deficit financed, leading to serious inflationary pressures. Inflation that the US tried to export, leading to an excess of dollars abroad. Especially the resurging Deutschmark’s appreciation became untenable. The Europeans started pressuring the US to fix its deficits, provoking the US Treasury Secretary John Connally famous cry ‘the dollar is our currency and your problem’.
But the situation had become unsustainable and Nixon was forced to close the Gold window to stop the depletion of US gold. This was the end of the Bretton Woods system and from then on the major currencies were floated freely in the international currency markets.
The Petrodollar
But it did not end the dollar reserve currency status, as the Empire had been found another basis for it: they reached an agreement with the House of Saud, to accept only dollars for its oil. The Sauds agreed to invest their dollar wealth on Wall Street, making the deal even more powerful for the Empire. Saudi Arabia controlled OPEC and the dollar was saved: international oil trading is financed with dollar only. Since then we have been on an informal Black Gold standard, known as the petrodollar.
This situation was better than before, because overprinting of the dollar for international trade or to finance all sorts Empire projects could no longer be punished by depleting Gold reserves and would result only in rising prices.
In the last decade the problem of over printing was solved by artificially raising oil prices through the Peak Oil hoax, and ending Iraqi oil production. It must be understood that the Empire is not looking for more oil production. There is so much oil in the world that should it be drilled for freely, it would end the Money Power’s energy monopoly. The Iraq invasion and the quest for control of the Middle-East is to keep a lid on oil production. Saddam’s suicidal decision to accept euro for his oil only hastened his demise.
Even today Iraqi oil production is not even half of what it was before 1991. With the Western Oil companies now in charge, it will most likely never fully recover.
By raising the price for oil, the oil market has mopped up excess dollar supplies, which are now needed for the oil trade. As a result, the dollar has remained relatively stable in its value. Of course, it fits well with the agenda of decapitating the middle classes and under this agreement higher oil prices also means ever more oil profits invested in Wall Street.
Of course, the great boon of this for the Empire is that it can pay with worthless paper for real goods. It can eternally finance a major trade deficit.
Trade deficits are incorrectly understood as problematic.
From a nation’s point of view, the goal of trade is not to export, but to import. We export to give back for what we need from others. If you run the reserve currency, you don’t need to export as much as you import, because you can partially finance your imports with money printing. For all other nations this is impossible and trade deficits are lethal in the long run, as it leads to net capital outflow.
But the US Empire is in trouble. Its infrastructure is crumbling, its manufacturing base gone, it’s badly over extended. It needs ever more virulent threats to coerce the nations into dollar submission and just like Connally failed in 1971, the US is failing today. The Money Power is done with the Empire and the dollar and it is moving to the next phase. The dollar will have to step back and we are seeing a realignment.
The new currency order
China is moving towards a Gold backed yuan that will be very powerful in the international arena. Recently Australia, which is already completely dependent on China, with 30% of its exports going there, is preparing direct convertibility between the yuan and the Australian dollar, meaning they will no longer use US dollar to finance bilateral trade. This means less US dollars are needed in its reserve currency role.
In 2001 Goldman Sachs executive Jim O’Neill invented the BRIC’s. South Africa was later added, representing Africa and emphasizing its globalist agenda. Russia and China, as two powerful neighbors, obviously have long standing and important bilateral relations. But equally obviously, have little in common with Brazil, India and South Africa. India and China are actually sworn enemies. However, in 2009 they organized a first summit. Just a week ago we all of the sudden hear the BRICS are planning to open up a competitor to the IMF. They’re still working out the details and it’s not a done deal yet, but the move looks very serious.
And there is of course the euro, which, make no mistake, is in great shape. True, Eurocrat legitimacy is suffering because of the euro crisis, even in Germany the currency is losing support. But the euro crisis is purely for internal consumption, to sucker the nations into surrendering budget responsibility to Brussels. This is the final frontier for a full blown EU federalist Super State. While the euro is deeply hated, this is not really a problem for the Money Power: it isn’t in this business to make friends and it does not mind a big fight. It only fears real alternatives and these are nowhere to be seen. There is nobody proposing anything real, people are just letting off steam. Once they get their fiscal union, the crisis will quickly end. People have a short memory.
The euro was designed to be eventually backed by Gold and the ECB has enough of the stuff to be ready for the coming transition.
Conclusion
We are seeing the advent of the new currency order. There will be a number of more or less equal blocks: a dollar zone, a Yuan/BRICS zone and the euro, with the Yen and the Pound as lesser entities. These will later be able to converge to even more ‘cooperation’, in the Money Power’s relentless march towards World Currency.
These units will be at least partially Gold backed, implying long term deflationary pressures. Central Banks are buying Gold in major quantities, creating the interesting question why Gold prices have not risen in the last 18 months.
The problem for the United States will be to manage the transition. Trillions of dollars that will no longer be needed will have to be repatriated and this will lead to very strong inflationary pressures at home. It is unclear how the Fed is going to deal with that. It probably can’t. Furthermore, the US is probably in the worst of positions to deal with a new Gold standard. They claim to have 8,000 tonnes of Gold in Fort Knox, but nobody really believes that.
The hyperinflation scare that the Austrians have been promoting because of ‘money printing’ is ridiculous: we are in a stagflationary depression and prices are rising because of speculation, not because of excess money. But when the dollar loses its current status, long term price rises will become the norm.
The Greatest Depression has only just started.
Afterthought
Here’s a highly recommended post by Roberts, the Assault on Gold. It makes a plausible case for massive Fed bullion busting. As discussed in ‘why is Gold not Rising?‘, the ascent of Gold was a carefully orchestrated operation, but it probably got out of hand in 2011. Since then the Fed has been very active on COMEX again. With CB’s and market players buying massive amounts, it’s the only logical explanation for stalling bullion. The fall of COMEX and the fall of the Dollar are basically an evil twin, they will happen simultaneously and because of each other.
Related:
Why are we hearing of the ‘Triffin Dilemma’ all of the sudden?
Why is Gold not rising?
Is China part of the New World Order?
The US Empire is Not the Money Power!
The Euro Crisis
Phoenix Rising, the Return of the Gold Standard
Shortly after the dollar lost its gold backing in 1971, international confidence was all but lost in the currency. With a need to restore or supplement that confidence, agreements were reached with the House of Saud. The United States would lend support (militarily and politically) to Saudi Arabia, in exchange for the assurance that the sale of oil would be conducted in US dollars. Once again, the world had a reason to possess and invest in the Unites States currency. The Petrodollar is THE reason the US dollar still holds global reserve currency status.
Brian McKenna explores The Secret World of Gold
http://www.montrealgazette.com/news/Brian+McKenna+explores+Secret+World+Gold/8255149/story.html#ixzz2QqqdfcAw
Documentarian reveals the drama and danger behind one of the world’s oldest currencies
MONTREAL – Brian McKenna didn’t predict the recent nosedive in gold prices, but he knows someone who did.
“Andy sent me an email early Friday morning,” recounted the Montreal director. “He said, ‘There’s a big event happening. Someone’s dumping 500 tons of gold into the market.’ That ended up driving the price down by $78 an ounce. And 500 tons is 16 million ounces — we’re talking about a serious intervention here. Who’s got that kind of money?”“Andy” is Andrew Maguire, a key source in McKenna’s fascinating new film The Secret World of Gold, which premières Thursday at 9 p.m. on CBC-TV. The hour-long documentary plunges into the dramatically rich narrative of gold, unveiling some shocking facts along the way.
“I was just going to do a history piece, until I stumbled over a whistleblower,” McKenna said.
A veteran gold and silver trader, Maguire denounces the shady tactics of the industry, breaking down the ways in which precious metal prices are manipulated using insider trading.
“He was tremendous,” McKenna said. “It took me eight months to persuade him to come on camera, but I was willing to wait. I knew he was critical to the film. It turns out he was burned by the BBC. He spent seven months showing them everything, going online and showing them the way things worked. Then after all that, they said, ‘The show’s been killed.’
“Word on the street is that Tony Blair, who is on a retainer to JPMorgan for $2 million a year, made a call (and the story was dropped). Did that happen? I don’t know. It’s an opinion that people hold; it doesn’t make it so. But something made the BBC stop an important investigation into which they had probably invested three-quarters of a million dollars.”
McKenna’s film also explores the secretive smuggling of European gold reserves during the Second World War, and how gold has gone from a reliable physical currency to an abstract concept, bought and sold in the blink of an eye on the stock market, taking on all the baggage of modern global finance in the process.
An investigative journalist and historian, McKenna estimates he has made 100 films over his career, including many provocative documentaries on war and politics. The topic of gold presented itself to him in the form of a rumour.
“A long time ago, I heard a story which I which I wasn’t sure was true,” he said, “about all this gold coming to the Sun Life Building’s vaults, far below the surface at the height of the Second World War. I thought, ‘That’s curious,’ but it turned out to be a critical moment in the war: if that gold had ended up at the bottom of the ocean, England wouldn’t have had the money to buy arms from the U.S., which was operating on a cash-and-carry basis, and fight off Hitler.”
Vast amounts of French and English gold were shipped to North America to avoid being claimed by the Nazis, McKenna reveals, with Montreal and Ottawa becoming important for storage. It’s but one example among millions of gold being moved, hidden, stolen, reclaimed and sunk to the bottom of the sea through the ages, making and breaking many a nation along the way.
Those expecting an escapist narrative about the enduring allure of one of the world’s oldest currencies don’t know McKenna. A founding producer of The Fifth Estate, he’s like the anti-Midas: he can’t help but dig up the dirt on anything he touches.
His 1992 CBC documentary The Valour and the Horror received five Gemini Awards, while sparking a CRTC investigation, a senate inquiry and a $500 million lawsuit by Air Force veterans, which was dismissed. All to say, the man is used to ruffling feathers. In keeping with tradition, The Secret World of Gold is far from a puff piece.
“It’s the toughest documentary I’ve ever made,” McKenna said. “It took over a year, and led me down so many corridors. Once you go down one corridor, two doors open, and you don’t know which one to take. This happened over and over. It’s virgin territory. No one has been down this path before, to report it.”
Though his film reveals amazing things about humanity’s conflicted relationship with gold, McKenna was most excited by the human story at its centre. Maguire may well have put his life on the line by speaking out, the director explained.
“We weren’t able to include it in the film, because it’s still a mystery, but it looks like somebody tried to kill him. Two days after he blew the whistle (to the Gold Anti-Trust Action Committee, in 2010), out of nowhere a van rammed and almost demolished his car. And there was almost no investigation.
“Andrew Maguire standing up as a gold and silver trader and saying, ‘This is wrong’ — that’s the kind of courage I like to capture in my documentaries. Whether it’s p
Very good info – not surprising that the documentary was killed – if they had continued, they would have been goners for sure.
Obviously it is too important a point for the future.
Who has that kind of money to dump 22 bio. $ worth of gold? Well – that is not really that much to the money power. They can do that even in the spot market, though mostly prices are manipulated on the derivatives markets.
Also funny are the comments below the article – gold and silver are the true wonderful real currencies – we have to ditch the rotten fiat money system bla. bla. bla….. I am afraid mankind will have to step into the golden hell again to realize how good a gold-based system truly is.
Very interesting article! I’m very glad I stumbled upon your blog!
Great response also on henrymakow.com concerning the article by Thomas Beecham http://henrymakow.com/2013/04/Goldbugs-Can-Expect-More-Losses.html
People have to realize that successful traders are not know-it-alls (if Thomas Beecham is one). They usually understand certain market fluctuations and use them according to their individual psychological makeup and succeed mainly due to very exact money management – meaning – the successful ones cut their losses quickly and let the wins run. Some of the best ones are only right 30% of the time. That is how they succeed.
You are absolutely right in stating that the money power does not fear gold, while owning most of it and close to 100% of the gold mines (including those which are not even mined – there are plenty of those – even proven ones to be in possession of the Rothschilds i.e. in Canada since over 100 years!).
Beecham might be right of course with the trade – they let Gold and other precious metals fall. However other traders are on the same trade – technical ones, intuitive ones – without any rationalizations for the motive of the money power. There can be ample reasons for the fall – simple money trade, suckering in the “patriots” to impoverish them even more, then of course all-out-purchase at the bottem when most will be selling. They could play that game several times in the decades before the potential gold-based-world-currencies.
Re: Great response also on henrymakow.com
>>>>Goldbugs Can Expect More Losses
Goldbugs are not as stupid as the guy who came up with above title
People who would not buy gold for $200.00 in 2002, purchased gold for $1600.00.
People who would not put money into stocks in December now look much confused.
The goldbugs made their money by the end of 2012, and positioned themselves in the market; the U.S. government pumps 80,000million interest-free money into the hands of speculators every month; where else can the market go but up (and the sucker who exchanged $300,000.00 cash for coin in November is wondereing whether it would have been much cheaper just to travel to Phuket for a sodomy)
When the time comes, goldbugs will exchange their stocks (at sizeable profit)
>>>>> Joel Skousen is probably the most astute man I have come across regarding the New World Order. I agree with his assessment that this financial Ponzi scheme can be maintained for at least another 3-4 years, and war will be averted until the end of the decade. This will be the war that will provide the US Treasury with its force majeure to cancel debt.
the moral of the story:
the indian rain dancers were succesful because they did not stop dancing until it started raining…..
In May 1998 (two weaks after Gary North first appeared with Art Bell) Joel announced on Coast to Coast that there will be a war, an all out nuclear attack by Russia in 2003 (later, of course, he adjusted his prediction)
In December 2004 Joel told everyone who was listening to Radio Liberty that the full scale U.S. attack against Iran would commence in the Spring of 2005
Joel spent his entire life (he is now over 60) selling bunkers, and he made a good living off it; so far none of the people who purchased his product had a chance to use it
With trading – the most people will buy right at the very top and most people will sell at the very bottom as the market turns around. Of course being an insider or powerful enough to sway the markets as a money-power-agent trading is completely risk free. Even the lower-level minions get fleeced quite often trying to get the better over each other – banks, hedge funds and billionaires. Nevermind the public and “their” investment funds they invest in – those are just financial cannon fodder.
Besides – there is no guarantee that the public will be able to sell gold at a huge profit before a gold-standard. Forced confiscations via “generous buy-backs-or-else-schemes” have happend before and why should they not happen again when the depression is really deep again? Since most people will not own gold and will be dirt-poor by then, they will not care about the couple percent of non-insider owners who get their gold conifscated.
Great point with the rain dancers – global warming will be right from time to time as well.
As far as some dire predictions go – everyone has to think for himself and best study what THEY say themselves about the future – CFR publications, Carroll Quigley, Jacques Attali, High Level Military docs etc. They expect no global thermonuclear war, only mini-nukes on the protesting public (both military docs and Jacques Attali mention that). It is useful to put yourself in THEIR shoes and find out what they are thinking and doing and then those things are not that difficult to judge correctly in fact.
Another fantastic article, Anthony, thank you very much for your enlightening words. You have been on a roll, lately. I think you are correct in your analyses that the threat of a complete collapse of the economic system is mainly illusionary. The powers that be have no interest in collapsing the economy, their interest lies in bankrupting individuals and companies which are expendable. Their interest lies in extracting wealth from the population, without collapsing the system, and if the system is collapsed having a new system, a new method of wealth extraction ready. Your assessment that a new system with the gold standard has been in preparation behind the scenes to enter centre stage for years, And in the final analysis, yes, it is possible that this process may spiral out of control even for those who have engineered the collapse … yet that will not happen within a few months or a few years, but to be honest, I have no idea what the timing of these ‘end times’ is exactly. And of course their is a large group of usefull idiots and middle management who think they are profiting but who are in fact being used by their superiors and will be discarded and abandoned when they’ve outlived their usefullness.
In the short term future I see poverty and dispair spreading among more and more people, even in countries like the Netherlands and Germany who have had a relatively well functioning economy up to now.
The middle class is being destroyed, purposely, in all Western nations. I believe that you are correct in asserting the big lies which have been spread to lull the masses into accepting their future predicament planned for them by people who are planning to profit from their plundering and pillaging.
An example of what is waiting for us may be found in the Russian revolution of nearly 100 years ago. A great source is “In the Shadow of Hermes” [ https://www.youtube.com/watch?v=Hb4FaYT6jkU ] who documents the real business of that communist revolution, which is plunder and murder. Also Anthony Sutton has explained who planned, financed supported this event by bankers in London and New York. [ See for example https://www.youtube.com/watch?v=J3nDbJooPu0 ]. The events of 1917-1922, which kept continuing until the 50′s and after, have shown that even if society is largely destroyed and on the brink of collapse, it still may take 70 years for people to shake of their oppression. And in the end in Russia one method of oppression was traded in for another, perhaps more subtle and more effective.
The crimes of this systematic plunder continues hidden by mass media and scientific distraction. Usury is the main method of wealth transfer, and it is effectively assisted by other methods of extracting wealth from the population including the use of poisonous medicine (vaccines), created shortages (peak oil), false or created threats (islamic terrorism), etc, etc.
Perhaps things have to get much worse before they get better. I believe that the human race can awaken from this nightmare if it realizes how deep the illusion goes. In the end I believe only a spiritual awakening can save us from our predicament. Time is short. It’s getting shorter fast, and I hope and pray that more people will come to your blog to let some truth shine in their lives and act as a disinfectant against the toxic lies that warped our reality in our prestent situation. Through uniting in spiritual realization we can end our current dark age and united in harmony and peace.
God bless the earth and all the souls that inhabit it.
Buss
PS Let me end this with an interesting link revealing more truth about the true state of the debt situation here in Holland:
http://www.spiegel.de/international/europe/economic-crisis-hits-the-netherlands-a-891919.html
(quote) “No nation in the euro zone is as deeply in debt as the Netherlands, where banks have a total of about €650 billion in mortgage loans on their books.
Consumer debt amounts to about 250 percent of available income. By comparison, in 2011 even the Spaniards only reached a debt ratio of 125 percent.”