GOLD TO PREVAIL OVER USDOLLAR
The USDollar stands at tremendous risk from numerous factors, which conspire to displace it as global currency reserve. The Gold Standard is perfect, but its implementation requires great care, attention to sequence, and clever methods to supplant the King Dollar perched on its corrupted throne. The Gold Standard is being rolled out step by step, so as to install a remedy to the fatally fractured USD-based system defended by bond fraud, banking derivatives, and the war machine.
## TOP TEN USDOLLAR RISKS
◄$$$ TOP TEN USDOLLAR RISKS STAND OUT LIKE EXTREMES, WITH SYSTEMIC RISK IN NUMEROUS AREAS… A GLOBAL REJECTION IS IN PROGRESS… THE OBSCENITY OF THE KEYNESIAN EXPERIMENT IS COMING TO A VIOLENT END, AS THE USDOLLAR IS INCREASINGLY DEFENDED BY THE USMILITARY AND WAR, IN FULL VIEW UNDER THE THIN COVER OF TIRESOME PROPAGANDA… THE NEXT CHAPTER WILL CENTER ON GOLD, FOLLOWING THE FALL OF THE KING DOLLAR EMPIRE OF CHAOS. $$$
The USDollar has never been in greater danger for losing its dominant position as global reserve currency and payment standard. Challenges to its supremacy are many and with each passing month, more threats are put in place. While the volumes of trade payment in Chinese RMB grow slowly, and the banking reserves in non-USD bonds grow slowly, the risk for the USDollar to be marginalized has increased significantly in the last two to three years. Basically speaking, a fiat currency run by a corrupt, thieving, and dishonorable hegemonic regime for the sole purpose of exploiting the rest of the world cannot stand the test of time, and will be dismantled. The community of nations gathers momentum and organization with producing an alternative. It has taken time, and will require more time. The scenario is indeed possible of a dual universe has been raised, whereby the West continues under the USD-based system, and the East emerges under a new RMB-based system. However, the Eastern alternative is step by step to emerge with a gold foundation. The USDollar cannot compete with Gold in any way except through continued fraud, intimidation, extortion, and open war.
It has become crystal clear to those with an active brain stem, capable of critical thinking, that after nations oppose the King Dollar, avoid its usage, and seek more legitimate alternatives, those nations are branded as terrorist nations by the USGovt. The reality is that the Washington NeoCons are the champions of terrorism, with evidence mounting, despite their extensive efforts to hide their vast ISIS connections, alongside the British MI-6 and Israeli Mossad. Other links to Mossad and the Paris bombing, Mossad and the Brussels bombing, Mossad and the Nice bombing, have come to light, except those who drink the mainstream news like morons sipping on cheap beer and weak tea. The most recent gas attacks in Syria also have the same Washington, Mossad, and Saudi fingerprints.
The fall of the King Dollar Empire is near, as the Global Paradigm Shift proceeds without potential for interruption or much further delay. The galactic decay decline and demise is assured. It has been a brutal final chapter, marred by universal corruption and endless war. It has earned the Empire of Chaos label, for its many color revolutions which mask the brutal hegemony and theft of assets. The fall of the baseless USDollar occurs simultaneously with the rise of the solid Gold rockbed foundation. Below are the Top Ten risks to the USDollar, which will end the year 2017 in a significantly weaker position than it started. It should be noted that the vast bank derivative machinery is at great risk of fracture and failure, the machinery critical to the bond market, the banking system, the oil market, and the financial markets generally. The breakdown and rejection have begun. They will continue.
- USFed in QE inflation to monetize USGovt debt: The central bank operating the USDollar frauds is actually undermining all global banking systems with the hyper monetary inflation. The community of nations cannot permit the rot of their banking reserves from the USFed policy blessed with collusion by the USGovt. The primary purchaser of USGovt debt is derivative machinery, which produces fake demand for the USTreasury Bonds.
- Asian Infra-Structure Investment Bank (AIIB) threatens IMF/WB dominance: The standard infiltration of global debt facilitation has been interrupted. No longer are nations compelled to compromise their financial structures by means of debt arranged in USDollar favor, which permit tentacles of control from Washington via the International Monetary Fund and World Bank. Both agency offices are seeing the lights turned off, and even some prosecution for fraud.
- Cross-Border Inter-Bank Payment System (CIPS): The abuse by Washington in using SWIFT as a financial weapon will soon come to an end. The Eastern system CIPS is not only an alternative, but it is also quicker and executed with lower cost. The many sanctions by the USGovt have all backfired.
- China & Russia energy trade in RMB payment: As of 2014, in reaction to the Ukraine War and interruption of the Gazprom energy supply network, the two Asian superpowers have built a united front. Instead of damaging Russia, the Americans have enabled the two nations to forge a stronger financial bond, built upon the energy backbone. In doing so, they have essentially killed the Petro-Dollar on the eastern front.
- Refusal to accept USTBills in trade payment: The defiant movement grows. Several global corporations (not by any means the majority), have refused the USD in trade payment at ports. They are demanding payment in their native currency, or some other form like Gold. The movement will grow, especially as the energy trade takes the lead.
- Ukraine War to obstruct Russian trade & supply: The fascist NeoCons in Washington and Israel have created a Vietnam in Eastern Europe. Almost no obstruction of Russian natural gas will be realized, as alternative routes through Turkey are well along. The sanctions are an economic and political failure. Many EU member nations continue some trade, ignore the sanctions, seek bypass of the rules, and have set up subsidiaries inside Russia. The political repercussions for the fascist EU commissioners in Brussels is nasty and profound. These fascist princes will be put out.
- Syrian War to obstruct Iranian energy supply: The annexation of Syria by the United States failed. The links by Shiite factions to Iran are established. Iraq was a US disaster and site of war crimes and wealth pilferage. Syria will fall under Iranian control and with Russian connection to make the energy pipeline complete, but over time. Wars to obstruct economic ties will not succeed, as the mask has been ripped off. Besides, Israeli energy output will join with the Iranian energy output toward the Gazprom pipeline network in a grand irony.
- Theft of Saudi USTBond Holdings in USDept Treasury ESFund: The dirty backside to the Petro-Dollar accord struck in 1973 is the placement of a few odd $trillion of Saudi petro surplus reserves at the USGovt offices. It serves as the core to the Exchange Stabilization Fund, which controls many important financial markets. Maybe the Saudis agreed to contribute at least $3 trillion to the Washington scoundrels. Maybe the Saudis were told they would receive the credits later. Expect the $trillions to be stolen, while the Saudis are tossed under the bus. The 9/11 lawsuit bill appears to signal the betrayal.
- Gulf Arab oil payments in RMB terms: With each passing event where the Saudis pay visits to kiss the Chinese ring, the time draws near to the agreement to pay for Saudi oil output with RMB currency, bonds, or some form of the Gold Trade Note. That GTN instrument is gradually taking form on the Russian corridor, using the Shanghai outpost. The Saudi-Chinese link will find a way to build the RMB payment channels, centered on oil shipments.
- USEconomic implosion with Credit Market: The USGovt debt market is a massive asset bubble of several $trillion. The community of nations is abandoning it, dumping USTreasury Bonds at an alarming rate. They react both to lower oil revenues and to disgust over USGovt policy on trade, finance, and war. The USTBond market depends critically upon bond fraud and derivative controls. Neither can be sustained.
Many are the illicit and precarious risks which surround the unfolding platforms that support the USDollar. The Elite managers at the helm must control the bank derivative machinery, which cannot be exposed for its fake bond demand, the basis of all supposed bond rallies since 2011. The narcotics money laundering cannot be exposed for its stalwart support to sustain the US and British banking system, whose cutoff would bring huge consequences. The gigantic hidden budgets cannot be exposed for their grand diversion of funds toward secret space programs, secret weapon systems, and secret underground escape facilities. The enormous Chinese and Russian gold reserves cannot be exposed for their potential new foundation for a global monetary system. The foreign powers dumping of USGovt debt in greatly amplified volume cannot be exposed for its immediate threat to the USD foundation. The genocide programs (chemtrails for air, fracking for water, GMO for foods, viruses in vaccines) cannot be exposed for the widespread motive to murder the global population, for which the United States will be labeled the rogue nation, isolated, and possibly quarantined.
The loss of the pipelines for narcotics, drugs, human organs, and sex trafficking would hinder the flows that keep the kitty full of cash. The black budget CIA and Pentagon programs demands would spiral out of control if and when the drug trade pipeline is shut down. Some early steps have been completed in this direction. Secret breakaway society space program budgets might also go out of control for the same reasons. Ending other unspecified programs present further risks, which are largely off-book fronts that cover for huge payoffs necessary at high levels to maintain the economy. China and other huge debt holders can cause a rapid default whenever they want to, as they can make final the default by introducing gold-backed systems with a legitimacy not seen since 1971. They are actually waiting for the US-dominated system to fail on its own weight and decayed structures, so as to avoid blame and a possible nuclear war. No plausible plans exist by global banking institutions to evolve into the future using USD-based platforms in sufficient amounts to prevent their demise. Exposure of the real Fascist United States since WWII as a pariah nation might explain the true reason the rest of the world has not progressed naturally since then. Students must research Operation Paperclip, which after 1945 permitted a significant flow of several hundred Nazis into influential positions within the USGovt, US banks, US businesses, and US programs like NASA. They are the core NeoCons today.
◄$$$ THE VOICE RESPONDED TO THE 10 USDOLLAR RISKS, WITH FOCUS GIVEN TO THE AFTERMATH… THE ENTIRE GLOBAL LANDSCAPE WILL BE RESHAPED, INCLUDING STRUCTURAL SYSTEMS… MANY WILL BE THE VICTIMS, AND MANY THE SURVIVORS. $$$
The following are direct comments from the Voice, his thoughts, my edits for flow. All of your 10 points are relevant in one way or another. However, I am certain that it will be other events that will bring the system to a slowdown and eventual implosion. (In past conversations, he has often mentioned an Archduke Ferdinand type of event like what triggered World War I.) China and Russia have contingency plans in place, including payment systems that will go live at a push of a button. For the West to put sanctions on Russia was very big mistake if they intended to weaken Russia. Exactly the opposite was achieved. Russia did consolidate and did detach itself from most links that had been established since the 1990s. Also, Russia and China forged alliances on multiple levels that the West's inept strategists and arrogant power jockeys thought never possible from happening. America is much weaker and more vulnerable than most experts realize. The only one who seems to understand this point is Trump. The other Inner Beltway Boyz are totally clueless as to what is happening on the geopolitical stage.
Global trade in the Emerging Markets will continue, the same with certain countries such as Europe, Russia, and Asia. The Middle East will be brutally thinned out. South Africa and some of the other Gulf monarchies will be wiped out. The only emirate to remain standing will be Oman, due to its positive relationship with Persia and China. The world does not need high margin luxury goods and all the worthless stuff that comes with that business model. The world needs railroads, ports, industrial plants, sustainable food production, medicines, proper health care, good education, functioning courts, and well-mannered police, who protect and serve rather than to kill rob or harass citizens.
The Western industrial model has failed due to perversion and corruption. The corrective process will be happening over the next ten years. There will certainly be commodity backed money with precious metals at the core of that system. Payment systems will be more like a utility, which will not typically involve the corrupt banks. The system that will spring up overnight will be accessible to every human being to be used to deposit and make end-to-end financial transfers. What has been sold by the Western world as progress to the global community of nations is all Kabuki Theater. The future was yesterday. Humanity's path will be redefined in very profound ways. The Global Paradigm Shift will combine with the Global Currency RESET to reshape the world. The only difficult question is how much violence will occur.
◄$$$ THE RISK OF EVENTUAL IMPLOSION RISES EACH MONTH, FROM AN UNSUSTAINABLE SYSTEM DEEPLY INSOLVENT… THE GLOBAL FINANCIAL SYSTEM IS IN PRECARIOUS CONDITION… MANY ARE THE POTENTIAL AREAS WHERE THE KING DOLLAR THRONE WILL COLLAPSE… IT MIGHT REST ON JUST TWO LEGS, THE DERIVATIVE MACHINERY AND THE WAR PEDESTAL. $$$
Sanctions have strengthened the Eastern resistance in trade, finance, banking, politics, and security. America is much weaker and more vulnerable than most experts realize. The warmongering NeoCons of both red and blue vests seem incapable of comprehending the trend changes and wind shifts. Many former US allies will be thinned out and brought down, like the Gulf monarchies. Oman will remain standing due to its relationship with Persia and China. The world needs railroads, ports, industrial plants, sustainable food production, proper health care, effective education, functioning courts, and well-mannered police who protect and serve and not kill rob or harass citizens. These concepts are the basis of capital formation and civilized system, for which the West has lost touch. The Western industrial model has failed due to perversion and corruption.
The Bretton Woods Gold Standard was broken in 1971. The world record for a fiat paper currency is being extended, now in its 46th year. After such a very long enduring period, the adjustment period will be much longer than even most competent analysts believe. In fact, the transition is seen as so incredibly difficult that it is actively avoided, even with compounded corruption. The corrective process will be happening over the next 10 years, with profound reforms and new remedies put in place. What comes will be commodity backed money with precious metals at the core of the new system. Payment systems will be more like a utility without the participation of corrupt banks demanding ferryman fees with occasional obstructions to perceived enemy camps. The Keynesian system is coming to a violent end, along with its sick Kabuki Theater. Humanity's path will be redefined. Thanks to the Voice for summarizing the key elements of the great transition.
## IMPLEMENTATION OF THE GOLD STANDARD
◄$$$ GOLD STANDARD DEFENSE IS REQUIRED… CONSIDER A THOROUGH CRITIQUE OF SOME POOR ANALYSIS BY A USUALLY COMPETENT ANALYST… THE GOLD STANDARD INSTALLATION WILL REQUIRE A DIFFICULT ADJUSTMENT PERIOD… THE CURRENCY CONVERTIBILITY CAN BE ACCOMPLISHED BY MEANS OF A VARIABLE GOLD COVER CLAUSE… VAST IMBALANCES MUST BE ADDRESSED FROM DECADES OF DEBT ACCUMULATION… CREDIT CREATION CAN STILL BE DONE…
THE PAST PROFOUND ABUSE IN MONETARY EXPANSION CAN BE QUICKLY REMEDIED BY A FIVE-FOLD RISE IN THE GOLD PRICE… THE ADOPTERS AND PROMOTERS OF THE GOLD STANDARD MUST MEET A CRITICAL MASS REQUIREMENT IN ORDER TO WREST CONTROL OF THE GLOBAL MONETARY SYSTEM… THE KING DOLLAR SPHERE WILL BE PUT ON THE EXTREME DEFENSIVE. $$$
Scattered recent analysis has centered upon the Gold Standard and its viability within the global financial system. The topic is certainly very blurred and at times confusing. Consider a recent article by a competent analyst Charles Hugh Smith of the site OfTwoMinds on the practicality of gold used as a standard. The article is entitled “The Problem With Gold-Backed Currencies” (which is found HERE and also on Lew Rockwell site HERE). He makes several points, many good ones. In the Jackass opinion, his analysis avoids many potential solution features, is premature on focus of the currency (and not trade), and is unfortunately backwards in the logic. The main criticism to put on the work is that Smith confuses the extreme difficulties created from decades of fiat currencies, with the supposed problems of installation of gold-backed currency. The entire article is not well developed, seems sketchy, and misses numerous very important features which are being considered. He does put many critical issues on the table, valuable for discussion. He offers no solution to his stated problems.
The logic is askew. In modern parlance, the logic put forth would indicate that since a heroin addict has so much difficulty with kicking the deadly habit, ravaged by delirious tremens, beset by extreme health problems, that one should conclude movement toward a clean sober life would have problems and simply would not work. Thus the backwards logic. Unfortunately, CHSmith produces straw dogs in the face of absent solutions. Let us examine the points made. The following critique rebuttal touches on several key important aspects of the Gold Standard implementation, many of which are not well understood. The Jackass is somewhat brutal, but the critique is done in a competent professional manner. It serves as a valuable review.
The Gold Standard is near perfect, provides sound money, and requires modern tweaking to make it work. The transition period will not be six months, but more like six years. The transition is possible, is workable, but with tremendous disruption and arduous adjustment. The victim nations would be many, but they hold much of the banking and military power. The Global Currency RESET is essentially referred to, which will render deadbeat economic nations as extremely vulnerable to systemic breakdown. The definition of deadbeat is tied to huge trade deficits and oversized current account deficits, coupled by extremely unmanageable national debt. They tend to have bloated welfare states and diminished industry. The United States qualifies as the most at risk, the most out of balance, and the worst from a debt and an industrial standpoint.
The Gold Standard a la Bretton Woods was broken illicitly, illegally, and brutally to begin an American Dollar Hegemony in 1971. Here 46 years later, the distortions and imbalances are horrific. As forecasted in 2005 within the Hat Trick Letter, the King Dollar is being defended finally by war in the open. Obviously it is veiled cover for blocking the Russian supply chain and recently the Iran supply chain. The USEconomy operates on an invalid credit card, usurping the global currency reserve. The USFed monetary policy of Quantitative Easing has introduced a hyper-inflation injection into the global banking reserve capital foundation, for six years. The rot from wrecked money and rigged financial markets has forced an Eastern solution. It will be centered on gold, first in trade, then in banking, and finally in currency. CHSmith focuses on the last plank, rather than the requisite first two planks, in error for the sequence. Examine his main points, then dissect them, with a viable solution presented on the table. He cites the challenges of a gold-backed currency, not the problems which make it unworkable. He offers no path toward solution, whereas the Jackass will do precisely that.
The Gold Standard installation will require a difficult adjustment period. The alternative to installing the Gold Standard is not acceptable, not tenable, and not workable. It is the present course, toward a global systemic breakdown and wider war. It would be better to adjust in a rabid industrialization process and a nasty wave of debt defaults, which might be more orderly than imagined, if begun. The move toward gold reserves would have to be quick in transition. The constructive path toward solution will be difficult and requires creative thought. The entire consensus must discard Keynesian lunacy. Gold is the arbiter of fairness, equitability, balance, and forces a just system. The Gold Standard is arch-enemy of the globalist fascist state. It is possible that Gold smothers war. It puts war and dominance in check, while putting industry and trade in the forefront while seeking equilibrium.
The initial focus should be on the Gold Trade Note, which is the fiat armor piercing weapon, to be used for trade payment. It is coming into view, with its key components. The Eastern nations and Emerging Market nations have the trade advantage, from actual stronger industrial bases. They can direct traffic with a reform in trade payments. Charles Hugh Smith has a focus on the gold-backed currency that is premature. One does not put the crown on the new king before he is identified, then walks to the throne and sits in it. Focus should be on the Gold Trade Note as the trade mechanism. It kills fiat paper. Gold is urgently required as solution, in order to bring order, to seek balance, and to achieve peace on the globe.
The currency convertibility can be accomplished by means of a variable gold cover clause. CHSmith states that for any currency to be truly backed by gold, it must be convertible to gold. He claims this line of thinking is disconnected from the real-world mechanisms of capital flows, and the way money is created in our financial system. Such is not true. He claims the trade deficits from the 1970 decade would have forced the USGovt to forfeit its gold, leaving nothing to back the USDollar. The US Empire would have collapsed decades ago if it had not abandoned the Gold Standard. This is untrue and total nonsense. The USEconomy would have been forced, due to French President deGaulle demands, to fortify its industrial base immediately and to reduce its federal deficits. It would have forced Washington to reform quickly and immediately in a national emergency setting.
CHSmith offers no solutions. Even when deficits exist, a gold cover clause could provide a solution to avoid full drainage of gold reserves. The underlying basis is for a Gold Standard in the currency. For instance, a 5% cover clause would entitle a nation with a $1 billion surplus with the US to claim $50 million worth of gold. Such is hardly a ruinous proposition, since it comes to about 1.25 tons gold. The message would be delivered and heard, to rectify the imbalance quickly. This is a simple feedback mechanism, and not a disaster. Such mechanisms are not only healthy, but urgently needed. Nations could alter their cover clauses to weaken their currencies. Moving to a 10% or 20% cover clause would be viable for a nation with a sizeable trade surplus. Moving to a 3% cover clause would be necessary and prudent for a nation with a decent trade deficit. The US might attempt a 1% cover clause, given a return to a gold-backed USDollar, since ridiculously insolvent, deep in debt, and in far reach of remedy.
Vast imbalances must be addressed from decades of debt accumulation. The implication is for the Gold Standard to be evident in a hard currency, based in sound money, since convertible to gold itself. With the checks & balances gone, the US has therefore been permitted to accumulate a vast pile of debt. The USGovt debt has recently exceeded $20 trillion, which is roughly worth 500,000 tons gold bullion at current prices. Clearly conditions have gone way out of kilter. The debt doubled under the Obama Admin, for which he awarded himself a medal. To call him a charlatan is a grotesque under-statement, when marionette is more apt. The Langley narco crew have been in firm control of the White House, Wall Street banks, and the national press networks for 20 or more years.
The USGovt debt is unmanageable, seen in the graphic in the form of stacked $100 bills. The value of the extensive piled structure is only $1 trillion. The total USGovt debt is unfathomable to the common person. It is an absurdity, an obscenity, and proof positive of profound corruption and complete brokenness of the entire system. The 1$trillion shown is the federal deficit every year. It was $1.2 trillion in the last fiscal year. The Jackass forecasted in 2009 that the USGovt annual deficit would be a cool 1$trillion every single year. That is exactly what has happened, despite the lies on the volume of the deficit, using one-off gimmicks. If you as a person spent 1$million every day since the days of Caesar and the Roman Empire, you still would not have managed to spend a full $1 trillion. But your total spending would have reached the incredible figure of $700 billion, which is the amount of the TARP Fund bailout stolen by Wall Street banks in the post-Lehman chaos. It was designated for lending capital for the big banks, but they re-directed the massive funds (7/10-ths of what is displayed below) toward preferred stocks. Such stocks are dividend bearing stock owned primarily by the bank executives, their families, and other elite figures. Be sure to know that the huge deficits mean two things. At home the USEconomy operates on global a credit card whose limits have been reached. Overseas the USMilitary operates as an aggressive force to attack its creditors. Such cannot stand.
Harken back to the early 1970 decade, when the USGovt under the Nixon Admin broke the Gold Standard by force. No nation except for the United Kingdom seemed to approve the gesture steeped in hegemony. Later the French President Valerie Giscard d’Estaing called the US usurped global currency reserve an exorbitant privilege. The unspoken element contributing to the fast rise in the USGovt deficits was the costly Vietnam War. Smith wrote, “And any nation running large trade deficits will soon empty its gold reserves as international holders of the currency choose to convert their currency into gold, which is exactly what happened in the late 1960s in the United States.” The vicious meat grinder war was the cause of the first couple $trillion in debt, with hidden motive to advance the military industrial base in the US, and to capture the Cambodian Triangle for heroin. Again, the author abhors the corrective process which is essential within any healthy system seeking balance.
Indirectly, CHSmith tacitly defends the war spending and overlooks the industrial base issue entirely. If in 1971, the United States had forfeited $5 billion in gold to France and had set a precedent, the US nation would have immediately gone on an emergency status and rebuilt its industry, reduced its welfare system, and cut back in a big way its military budget (hardly defense). The trade deficit was far less than a quarter of what it is now, standing at $550 billion in the last fiscal year. Now the task is greater, given the lack of effort toward rebalance. War has become a constant feature. As George Orwell stated, “The war is not meant to be won; it is meant to be continuous.” He was the elite spokesman at the time, without such recognition. CHSmith cites a symptom of absent accountability as a justification for no accountability, an absurd premise.
The USGovt embarked on an additional decade of Star Wars military spending during the Reagan Admin, expanded its welfare state, and accelerated the trend of outsourcing industry to the Pacific Rim and later to Emerging Market nations. All these three movements proved to be disastrous. The Gold Standard imposition would have halted all three movements in their tracks. But the hegemon turned to financial engineering, raised Alan Greenspan to a semi-god, continued to shed industry, and relied upon financial asset bubbles to sustain the economies in an historical absurdity. All the US-based asset bubbles have burst, the wreckage clear, but the US has seen fit to re-expand the same asset bubbles. No discipline has been forced, since no officially recognized arbiter exists. The Gold Standard would have prevented financial engineering from going amok in the US, with an exclamation point.
Credit creation can still be done, thus dispelling a great credit creation ruse. CHSmith did not address any corrective mechanisms. He mentioned credit creation as being potentially inhibited in the modern era. The credit creation was a monster that fed the financial asset bubbles. It should not have been permitted to flow so freely in one carry trade after another, in unfettered debt, in unchecked military budgets, and recently in the uncontrollable Medicare/Medicaid bills. The entire underwriting process is totally out of control, and in dire need of a fair arbiter. Witness more debt blisters and festering bubbles in the car sector, the home sector, and the student sector, even still the energy sector from the shale fiasco. The entire credit engine has had no control mechanism for 30 years. Its wreckage is not justification to avoid a Gold Standard. It is precisely the reason for the Gold Standard, as firm arbiter. The author has it backwards.
The past profound abuse in monetary expansion can be quickly remedied by a five-fold rise in the gold price. A simple point must be made, often cited by other competent analysts. In the last several years, the money supply for the USDollar has expanded something like five-fold since the Lehman failure event. The official suppressed Gold price has retreated from its $1900 high. Such dual paths are opposite to what should normally occur. The bogus argument has been put forth that there is not enough gold to back the monetary system. Although CHSmith does not make this errant point, it is a surprise to the Jackass that he did not. Actually, the corrective mechanism would call for the Gold price to be five times higher, like around $6000 per ounce, in response to a massive increase in the recent money supply. There is plenty of gold to cover the monetary system, but the gold must be repriced an order of magnitude higher. Gold must be priced much higher, in accordance to the money growth. In future years, with still more legitimate monetary expansion, the gold cover clause could be an indispensable tool. This is utterly basic as a concept, and shatters easily the insufficiency argument.
The Triffin Paradox presents challenges for a reserve currency, rather than justify that the Gold Standard does not work. It presents a distraction. No nation should use as its domestic currency a global reserve asset. To do so it absurdly destructive. Triffin explains that a reserve currency has two distinct sets of users: domestic users and global users. Each has different needs, so a built-in conflict exists between the two sets of users. Global users of the USDollar need enormous quantities of dollars to use as reserves, to pay debts denominated in USD and to facilitate international trade. The only way the issuing nation can provide enough currency to meet this global demand is to run large, permanent trade deficits. It would in effect be exporting dollars in exchange for goods and services. The pressure would be run massive deficits in order to supply the world with adequate reserves that fill its banking system foundation. This is entirely backwards. Therefore, no nation should use the global reserve as domestic currency, such as the United States has done with horrendous abuse. Gold bullion would be much better in the function of global reserve asset type. Triffin’s Paradox is not a paradox at all. It is instead an argument for the Gold Standard, and never for a nation to use the global reserve asset in its domestic economy. CHSmith misses the argument entirely.
The absurdity of the fiat currency system is exemplified in two respects. First, the USDollar is implicitly backed by USTreasury Bonds, which is USGovt debt. For debt to serve as a basis for banking systems is backwards and insane. It guarantees a systemic failure, like what is seen today. It invites a calamity to the entire supply chains of the global economy. Implicitly CHSmith tacitly defends the fiat currency system since fixing its outcome is intractable and extraordinarily difficult. Again, the upside-down nature of the system, and its extreme challenges to correct it, is not justification for continuing the current broken system. A Gold Standard system that is right-side up is preferable, even if difficult to install, even tumultuous and initially disorderly. Secondly, Germany has in the past couple years displayed a flaw in the system. It has been running surpluses. The result has been inadequate debt with which to supply the bond market, and hence negative interest rates are the rule of the day. This is upside down. No nation should be subjected to the absurdity of negative rates when economically strong with a firm industrial base. The US floods the global financial system with debt, even fake production of debt via derivatives, in order to maintain its control and power. Its equilibrium is false and untenable.
The adopters and promoters of the Gold Standard must meet a critical mass requirement in order to wrest control of the global monetary system. For a Gold Standard to succeed, the Jackass has preached that the collection of gold-backed currencies must have critical mass. Giving a single hypothetical example of Slobovia and the quatloo currency is errant and off the mark. CHSmith offers a very absurd and weak example with such a supposed currency. No single nation, or even a group of a few nations, can succeed in setting a Gold Standard, since the forces are too great to absorb and to handle in the healthy feedback mechanisms. The important concept is critical mass, which is exactly what the Eurasian Trade Zone is attempting to achieve. They are gathering nations toward participation in a better system. They are building the non-USD platforms, building the non-USD market mechanisms, soon to reveal the gold role. They recently signed up Turkey as a potential gold provider for the all-important Gold Trade Note. It will be used in trade payment, kicking to the curb the USTreasury Bill.
Imagine the chaos when the Saudis sell gold to China, then to most of Asia, in RMB terms and later in Gold Trade Notes. When a much larger organization of nations, like the assembled mass from the Eurasian Trade Zone, the BRICS nations, with Emerging Market nations in tow, agree upon the Gold Standard in trade payments and in banking reserves and in currency formation, they have force. If they command the majority of trade, then they dictate the rules. The combined GDP of the stated group has been attracting attention, as they are forming the critical mass. Already Russia and China are in possession of at least 60,000 tons of gold. So they will soon make the rules.
Examine the errant final conclusion made by CHSmith, closing out some truly poor analysis worthy of a C grade in a Von Mises course in economics. “In a true gold-backed currency, every new $1 in currency must be backed by the addition of $1 of gold to reserves. If the gold supply remains constant but the supply of currency constantly expands, the value measured in gold of the outstanding currency declines accordingly. Any currency is only truly backed by gold if it is convertible to gold. Why hold a gold-backed currency that can be diluted 10-fold overnight by the issuing government/bank? Any nation issuing a gold-backed currency cannot control the global price of gold, and so that nation's currency is hostage to fluctuations beyond its control. If the issuing nation sets a peg to gold, that peg is subject to the whims of the central bank and state. In other words, the peg is simply another flavor of fiat currency. Simply put, there is no way to back a reserve currency or a fractional reserve banking system with gold. It is easy to say that a world with very little credit would be a good world, but it would be a world with limited debt-based consumption, i.e. a world with little growth. And without growth, the system implodes.” Almost nothing above is logical, factual, or correct. Cover them one by one.
The gold cover clause could render $1 billion dollars backed by $50 million in gold, or 1.25 tons gold bullion. The policy would be very manageable, and also flexible with an adaptable cover clause percentage. Export powers would have a higher cover clause, while deficit nations would have a lower percentage. The concept is already being circulated.
No nation would need to control the price of gold. This is backwards. The gold arbiter would control the value of competing currencies. Several gold-backed currencies would be on the table, varying in gold reserves, in surplus versus deficit status for their economies, in commodity & resource reserves, in wisdom of national leadership, in cooperative trade policy, even in military aggression, and others factors. Nations would not be hostage to gold price fluctuations. Gold is constant, while currencies would vary in value depending upon inherent conditions. The control of the individual currency would be the main focus, as CHSmith has it backwards.
The final point made by CHSmith is also errant. He claims that a currency pegged to gold is subject to whims of the central bank and state. The peg would not be simply another flavor of fiat currency, hardly the case. It would be part of a set of measures by which to gauge the value of a gold-backed currency. Make the setting of the gold-backed Arab Dinar stupid, and that currency would falter versus a prudently arranged gold-backed Nordic Euro. The fading Arab oil monarchies would have to compete against the stalwart wise Germans. If the Arabs fail in the competition within the gold arena, they will lose their gold, truckload by truckload. They would be forced to make adjustments, under the guise of the feedback mechanisms. Instead, central banks would be held accountable. This is requisite after the extreme abuses since QE began in the West in year 2012.
CHSmith reveals his shortcomings by jumping to the conclusion that in his opinion, no way exists to back a reserve currency with gold. The fact stands that he does not comprehend the mechanisms for creating the Gold Standard and implementing its complex systems. Limited credit creation is precisely part of the upcoming solution. Credit abuse has become the standard, which must be remedied quickly. He implicitly gives tacit approval of the absurd cancerous situation with credit fueling rigged financial markets, credit behind the interest rate derivative machinery, credit trying to hold together the comatose energy sector, credit fueling the nutty car loan business, credit fueling the dead corpse of the housing market, credit funding the ridiculous stock buybacks by major corporations, credit fueling the algorithm high frequency stock trading, and credit behind the war machine.
Let us leave narcotics aside for another day, in its new role in guerrilla war. These credit abuses must be brought into check. The Gold Standard is exactly what is required. Furthermore, the extreme deficit spending of most nations is often linked with badly imbalanced welfare states and unjustified military spending. Credit must be directed with urgency toward reindustrialization on the grand scale, and capital formation with business creation on the local level. It seems the advanced nations have lost their way, no longer competent in capitalism and business creation, only in socialist taxation of business and oppressive insurance systems. The Gold Standard can be used to effectively rebuild industry with proper incentives.
The Gold Standard requires defense and advocates. The Jackass stands by the standard, and defends it. Some innovative thought is required. Always, logic might be used properly, and not in any backward manner to dismiss gold from its proper role. Most economic thinking in the modern society today is atrocious and heretic, in defense of a profoundly corrupt system. Even within the gold community, much thinking is flawed and lacks logic. It is a deep under-statement to claim that the King Dollar sphere will be put on the extreme defensive when the Gold Standard is introduced, component by component. A dual universe with the West holding onto the corrupt toxic USDollar, while the East installs the gold platforms and instruments, cannot endure for long before the collapse of Western financial platforms and its financial markets. Gold will prevail, since the USDollar can only compete by brute force and coercion, marred by constant war.