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History Tells Us to Own Gold When Central Banks Run Out of Control

HISTORY TELLS US TO OWN GOLD WHEN CENTRAL BANKS RUN OUT OF CONTROL

“Extraordinary Popular Delusions and the Madness of Crowds” happen with regular intervals as Charles Mackay wrote about. It seems that the world experiences more delusions and madness than truth and sanity. 

The pattern is always the same. The economy is never in equilibrium but moves in cycles of boom and bust. If these cycles were allowed to take their natural course, they would move up and down in a steady rhythm without reaching extremes at the top or bottom. 

GOVERNMENTS’ PRIME OBJECTIVE IS TO BE REELECTED BY BUYING VOTES

But human psychology and hunger for power prevent these natural cycles from taking place. Most leaders, whether they are kings or presidents, all have fear of failure combined with illusions of grandeur. As the economy peaks and the good times come to an end, they know that the best chance of not being ejected is for the good times to continue. Today’s leaders’ primary objective is to hang on to power by buying votes. 

And how can they buy votes when the economy is turning down and the coffers are empty? Easy! You just print money out of thin air, as I discussed in my article a couple of weeks ago. The Romans did it, and so did the French, the Brits, Germans, Argentinians, and everyone else. 

PRICES DON’T GO UP – VALUE OF MONEY GOES DOWN

Initially, when a country prints money to extend the prosperity, nobody notices that it is fake. After all, they are still called dollars or pounds. But gradually things become more expensive. The popular interpretation of increasing prices is calling it inflation. Nobody actually notices or understands that it is not prices going up but the value of the money going down as more and more which has zero value is issued.

…click on the above link to read the rest of the article…

Forced Liquidation

Forced Liquidation


Historians of the future, pan-roasting fresh-caught June bugs over their campfires, may wonder when, exactly, was the moment when the financial world broke with reality. Was it when Nixon slammed the “gold window” shut? When “maestro” Alan Greenspan first bamboozled a Senate finance committee? When Pets.com face-planted 268 days after its IPO? When Ben Bernanke declared the housing bubble “contained?”

If our reality is a world of human activity, then finance is now completely divorced from it for the obvious reason that, for now, there is no human activity. Everyone, except the doctors and nurses, and some government officials, is locked down. So, the only other thing actually still out there spinning its wheels is finance and, to those of us watching from solitary confinement, it is looking more and more like an IMAX-scale hallucination with Dolby sound.

How many mortals can even pretend to understand the transactions now taking place among treasury and banking officials? On their own terms – TALFs, Special Purpose Vehicles, Commercial Paper Funding Facilities, Repo Rescue Operations, “Helicopter Money” – stand as increasingly empty jargon phrases that signify increasingly futile efforts to paper over the essence of the situation: the world is bankrupt. It’s that simple.

The world is locked down and in hock up to its eyeballs. It faces what the bankers euphemistically call, ahem, a “work-out,” which is to say, a restructuring. The folks in charge are resisting that work-out with all their might, because it will change many of the conditions of everyday life (especially theirs), but it is coming anyway. When debt can’t be paid back, money vanishes. Money isn’t capital, but it represents capital when it is functioning. When it isn’t functioning, it stops being money. Now the whole world realizes that the debt can’t be paid back, will never be paid back… and that’s the jig that’s up.

…click on the above link to read the rest of the article…

Bretton Woods Is Dead: What Next?

Bretton Woods Is Dead: What Next? 

French Finance Minister Bruno Le Maire has publicly admitted something normally reserved for backroom discussion in the circles of Europe’s governing elite at an event honoring the 75thanniversary of Bretton Woods (the conference which created the foundations for the post WWII world order).

At this event, Le Maire stated ever-so candidly that “the Bretton Woods order has reached its limits. Unless we are able to re-invent Bretton Woods, the New Silk Road might become the New World Order”.

He went onto state that “the pillars of that order have been the International Monetary Fund and its sister institution, the World Bank since their inception at the Bretton Woods conference in  New Hampshire in 1944.”

Were a radical transformation not undertaken immediately, then Le Maire laments “Chinese standards on state and on access to public procurements, on intellectual property could become global standards”.

The finance minister’s statements reflect the growing awareness that two opposing systems operating on two conflicting sets of principles and standards are currently in conflict, where only one can succeed. Yet as much as he appears to be aware of the forces at play between two systems, Le Maire fails miserably to identify what the Bretton Woods System was meant to accomplish in the first place, or what type of “radical transformation” is needed to save Europe from the collapse of its own speculation-ridden system.

Le Maire dives so deeply out of reality that he actually believes that the radical transformation desperately needed in the west does not involve collaborating with the New Silk Road, but rather to strengthen the power of Brussels, while becoming more technocratic and more green (aka: de-industrialized, de-populated).

 …click on the above link to read the rest of the article…

The Next Economic Crisis and the Looming Post-Multipolar System

 The Next Economic Crisis and the Looming Post-Multipolar System

The Impending Crisis

At one time, specifically during the post-World War 2 Bretton Woods era, it looked like as if the capitalist model could be indefinitely sustainable and avoid plunging the world into major world conflicts. That era began to come to an end during the stagflation crisis of the 1970s, and came to a complete end at the end of the Cold War which ushered in the era of the so-called “globalization” which took form of unbridled competition for markets and resources. At first this competition did not show many signs of trouble. There were many “emerging markets” created as a result of the collapse of the Soviet bloc into which Western corporations could expand. However, the law of diminishing returns being what it is, the initial rapid economic growth rates could not be sustained and attempts to goose it using extremely liberal central bank policies, to the point of zero and even negative interest rates, succeeded in inflating—and bursting—several financial “bubbles”. Even today’s US economy bears many hallmarks of such a bubble, and it is only one of many. Sooner or later the proverbial “black swan” event will unleash a veritable domino effect of popping bubbles and plunge the global economy into a crisis of a magnitude it has not seen since the 1930s. A crisis against which the leading world powers have few weapons to deploy, since they have expended their monetary and fiscal “firepower” on the 2008 crisis, to little avail. The low interest rates and high levels of national debt mean that the next big crisis will not be simply “more of the same.” It will fundamentally rearrange the global economy.

 …click on the above link to read the rest of the article…

Mike Maloney: “One Hell Of A Crisis”

Mike Maloney: “One Hell Of A Crisis”

Crashing stocks, bonds, real estate & currency all at once?

Mike Maloney, monetary historian and founder of GoldSilver.com, has just released two new chapters of his excellent Hidden Secrets Of Money video series.

In producing the series, Maloney has reviewed several thousand years of monetary history and has observed that government intervention and mismanagement — such as is now rampant across the world — has alwaysresulted in the diminishment and eventual failure of currency systems.

As for the world’s current fiat currency regimes, Mike sees a reckoning approaching. One that will be preceded by massive losses rippling across nearly all asset classes, destroying the phantom wealth created during the latest central bank-induced Everything Bubble, and grinding the global economy to a halt:

Gold and silver are tremendously undervalued right now, and I dare you to try to find another asset that is tremendously undervalued. There just is not. By all measures, everything is just in these hyper-bubbles. OK, real estate is not quite a hyper-bubble; it’s not quite as big as 2005 and 2006, but by all measures, it’s back into a bubble. But now, we’ve got the bond bubble, the biggest debt bubble in the world. These are all going to pop.

We had a stock market crash in the year 2000, and then in 2008, we had a crash in stocks and real estate. The next crash is going to be in stocks, real estate and bonds — including a lot of sovereign debt, corporate bonds and a whole lot of other bonds that will be crashing at the same time. So, it will be all of the standard financial asset classes, including the traditional ‘safe haven’ of bonds that are going to be crashing at the same time that the world monetary system is falling apart.

…click on the above link to read the rest of the article…

The Global 1% Is Destroying Democracy

The Global 1% Is Destroying Democracy

Unraveling a web of dark money

“Wherever you live in the world, you’ve been robbed. Not by a hidden bandit, but a global kleptocracy: the super-rich who’ve managed to rob the poor blind in every corner of the globe for the past seven decades.” — Michelle Chen

We’re living in a time of global income inequality on a scale never before seen in history. Money is concentrated in the hands of fewer and fewer people around the world, and every year they have more of it than ever before. According to the 2018 World Inequality Report, those belonging to the wealthiest 0.1 percent of the global population have, since 1980, increased their combined wealth by as much as the poorest 50 percent. The combined net worth of all 2,208 of the world’s known billionaires is twice that of the poorest 2.5 billion people. By 2030, members of the wealthiest one percent of the global population are projected to hold 64 percent — a full two-thirds — of the world’s wealth.

It wasn’t supposed to turn out this way. The world’s top economists sat down in Bretton Woods, New Hampshire, in 1944, to figure out how to prevent the world economy from ever again becoming as destabilized as it was in the years leading up to World War I. They envisioned a global financial system that would stop countries from manipulating their exchange rates, curtail unrestricted international cash flows, and lock speculative capital behind national borders.

At first, financial globalization — which generated international institutions like the World Bank and the International Monetary Fund, and tied currencies to the U.S. dollar, which was tied to gold — worked exactly as intended. It laid the economic foundation for a period of unprecedented prosperity and stability in the second half of the 20th century.

…click on the above link to read the rest of the article…

The Degrading Facts of a Fake Money Hole in the Head

The Degrading Facts of a Fake Money Hole in the Head

Squishy Fact Finding Mission

Today we begin with the facts.  But not just the facts; the facts of the facts.  We want to better understand just what it is that is provoking today’s ludicrous world. To clarify, we are not after the cold hard facts; those with no opinions, like the commutative property of addition. Rather, we are after the warm squishy facts; the type of facts that depend on what the meaning of ‘is’ is.

Fact-related pleas… [PT]

The facts, as far as we can tell, are that we are presently living in a land of extreme confusion.  The genesis of this extreme confusion is today’s fake money system.  And the destructive effects of this fake money system have spread out like a virus into nearly all aspects of daily life.

Plain and simple, central bank fiat money creation, multiplied by commercial banks through fractional-reserve banking, propagates financial and economic chaos.  The experience of long periods of money supply expansion punctuated by abrupt, episodic contractions, has the effect of whipsawing the working stiff’s efforts to get ahead. This trifecta of offenses has debased the rewards of hard work, saving money, and paying one’s way.

Quite frankly, these facts are insulting. In particular, they are insulting for those running in the rat race for their family’s daily bread. These facts are also insulting for retirees, who worked for four decades only to have their life savings extracted by the depredations of the fake money system.

 

Early rat race conditioning [PT]

Short-Sighted Decisions

The facts are that on August 15, 1971, Tricky Dick Nixon stiffed the world unconditionally.  He defaulted on the Bretton Woods system, and terminated the agreement that allowed member nations to redeem their paper dollars, acquired through trade, for gold.  But that’s not the half of it…

…click on the above link to read the rest of the article…

Back in the (Great) Game: The Revenge of Eurasian Land Powers

Back in the (Great) Game: The Revenge of Eurasian Land Powers

What is left roaming our wilderness of mirrors depends on the mood swings of the Goddess of the Market. No wonder an effect of Eurasia integration will be a death blow to Bretton Woods and “democratic” neoliberalism, says Pepe Escobar.


Get ready for a major geopolitical chessboard rumble: from now on, every butterfly fluttering its wings and setting off a tornado directly connects to the battle between Eurasia integration and Western sanctions as foreign policy.

It is the paradigm shift of China’s New Silk Roads versus America’s Our Way or the Highway. We used to be under the illusion that history had ended. How did it come to this?

Hop in for some essential time travel. For centuries the Ancient Silk Road, run by mobile nomads, established the competitiveness standard for land-based trade connectivity; a web of trade routes linking Eurasia to the – dominant – Chinese market.

In the early 15th century, based on the tributary system, China had already established a Maritime Silk Road along the Indian Ocean all the way to the east coast of Africa, led by the legendary Admiral Zheng He. Yet it didn’t take much for imperial Beijing to conclude that China was self-sufficient enough – and that emphasis should be placed on land-based operations.

Deprived of a trade connection via a land corridor between Europe and China, Europeans went all-out for their own maritime silk roads. We are all familiar with the spectacular result: half a millennium of Western dominance.

Until quite recently the latest chapters of this Brave New World were conceptualized by the Mahan, Mackinder and Spykman trio.

The Heartland of the World

Mackinder

Halford Mackinder’s 1904 Heartland Theory – a product of the imperial Russia-Britain New Great Game – codified the supreme Anglo, and then Anglo-American, fear of a new emerging land power able to reconnect Eurasia to the detriment of maritime powers.

…click on the above link to read the rest of the article…

The US Two-Tier Monetary System that Ended in 1971

QUESTION: You said the US had a two-tier monetary system under Bretton Woods. Can you explain that one, please?

DHJ

ANSWER: When Roosevelt confiscated gold, he created, in reality, a two-tier monetary system quite frankly as the medieval city of Florence. The Great Financial Panic of 1344 was when the value of silver rose dramatically blowing out the silver/gold ratio. Silver was used locally for the normal people. Their wages were paid in silver. The gold florin was used for international trade and companies had to keep actually two sets of books with accounting in each separate currency.

When Roosevelt confiscated gold, he devalued the dollar from $20.67 per ounce of gold to $35. Gold remained the unit of account for INTERNATIONAL transactions. While the last silver dollar was at first still minted, it was decided to end that production as well. Therefore, the last U.S. silver dollar to be struck was that of 1935. Nonetheless, the government then maintained silver as a backing for the currency domestically and issued Silver Certificates until 1963.

When the price of silver was rising with just about all other commodities during the early 1960s, the pressure was mounting on the financial system. President Kennedy authorized the abandonment of silver as a backing for the currency. He allowed the silver certificates to be redeemed for silver bullion. However, the minimum lot accepted for redemption was 5,000 for this was the size of the silver bars.

Therefore, in 1963 is when we see the beginning of the end in the two-tier monetary system. Between 1964 and 1971, the gold standard remained intact until President Nixon was forced to close the gold window ending the convertibility of dollars to gold internationally.

…click on the above link to read the rest of the article…

Washington Is Destroying American Power

Washington Is Destroying American Power

 

Readers at home and around the world want to know what to make of the announcement that China henceforth will conduct oil purchases and sales in gold-backed Chinese currency.

Is this an attack by Russia and China on the US dollar? Will the dollar weaken and collapse from being discarded as the currency in which oil is transacted? These and other questions are on readers’ minds.

Below is my opinion:

The US dollar’s value depends on whether central banks, corporations, and individuals are content to hold their assets or wealth in dollars. If they are, it does not matter what currency is used to transact oil. If they are not, it does not matter if all oil is transacted in dollars. Why?
Because if they don’t want to hold dollars, they will dump the dollars as soon as the transaction is completed and move into other currencies or gold. What China is doing is creating a currency that might be a more attractive currency to hold.

It is possible that the gold-backed Chinese currency is a move against US power, but I see it differently. I see it as a protection against US power. China and Russia are disassociating from the dollar system, because Washington, in its abuse of the world currency role, uses the dollar payments mechanism to impose sanctions on other countries and to threaten them with exclusion from the payments clearing system.

In other words, Washington, instead of operating a fair system, uses its world currency role to dominate other countries. Russia and China are too strong to be dominated, and, thus, are throwing off the dollar system. If other countries follow, the dollar will cease to be an instrument of US control over the rest of the world.

…click on the above link to read the rest of the article…

Trump Left Saudi Arabia Off His Immigration Ban… Here’s the Shocking Reason Why

Trump Left Saudi Arabia Off His Immigration Ban… Here’s the Shocking Reason Why

Trump Left Saudi Arabia Off His Immigration Ban… Here’s the Shocking Reason Why
On August 15, 1971, President Nixon killed the last remnants of the gold standard.

It was one of the most significant events in US history—on par with the 1929 stock market crash, JFK’s assassination, or the 9/11 attacks. Yet most people know nothing about it.

Here’s what happened…

After World War 2, the US had the largest gold reserves in the world, by far. Along with winning the war, this let the US reconstruct the global monetary system around the dollar.

The new system, created at the Bretton Woods Conference in 1944, tied the currencies of virtually every country in the world to the US dollar through a fixed exchange rate. It also tied the US dollar to gold at a fixed rate of $35 an ounce.

The Bretton Woods system made the US dollar the world’s premier reserve currency. It effectively forced other countries to store dollars for international trade, or to exchange with the US government for gold.

By the late 1960s, the number of dollars circulating had drastically increased relative to the amount of gold backing them. This encouraged foreign countries to exchange their dollars for gold, draining the US gold supply. It dropped from 574 million troy ounces at the end of World War 2 to around 261 million troy ounces in 1971.

To plug the drain, President Nixon “suspended” the dollar’s convertibility into gold on August 15, 1971. This ended the Bretton Woods system and severed the dollar’s last tie to gold.

Since then, the dollar has been a pure fiat currency, allowing the Fed to print as many dollars as it pleases.

Of course, Nixon said the suspension was only temporary. That was lie No. 1. It’s still in place over 40 years later.

And he claimed the move was necessary to protect Americans from international speculators. That was lie No. 2. Money printing to finance out-of-control government spending was the real threat.

 

..click on the above link to read the rest of the article…

Opinion Infected by Bias

Opinion Infected by BiasBIAS

QUESTION: Marty; Why do you say your opinion is not worth much? You have been around for some time and you are the only analyst to have been behind the curtain. If anyone’s opinion carries any weight, it has to be yours.

RJ

Friedman-sand

Spock

ANSWER:Yes. Experience is everything. You cannot forecast something you have never seen, but opinion is fallible because we are all infected with that human trait of being fallible. I have learned so much from the computer. This is the importance of real cognitive adaptive computer systems. They have no emotion or bias so they are objective. In a way, they are like the character Spock from “Star Trek.” If someone believes that paper money is the great evil, then they will be blind to all other influence and look no further. Concluding that the evil is paper money, means they consider nothing else when in fact it is the fiscal mismanagement of the monetary system irrespective of what society uses for money. This is why a gold standard would not work and has failed historically every time just like Bretton Woods. It has nothing to do with the medium of exchange. It is always about those in charge. Milton Friedman said if you put the government in charge of the Sahara Desert, there would be a shortage of sand in no time. Investigating the truth requires abandoning all bias.

1992PRES

The computer has never been wrong because it sees trends without interjecting some theory or bias which infects all opinion. The only times the computer has been wrong seems directly linked to serious manipulation. It projected the Al Gore would win by a tiny, narrow margin. The Supreme Court gave it to Bush and would not allow a recount. When the recount was completed, it proved that the computer was correct after all. But that is reality.

1992PRES

The computer has never been wrong because it sees trends without interjecting some theory or bias which infects all opinion. The only times the computer has been wrong seems directly linked to serious manipulation. It projected the Al Gore would win by a tiny, narrow margin. The Supreme Court gave it to Bush and would not allow a recount. When the recount was completed, it proved that the computer was correct after all. But that is reality.

…click on the above link to read the rest of the article…

Gold is the spectre haunting our monetary system

Close-up of bars of pure gold bullion
A scramble for gold has begun as central banks bet against US dollar inflation  CREDIT:ALAMY

 

For a century, elites have worked to eliminate monetary gold, both physically and ideologically.

This began in 1914, with the UK’s entry into the First World War. The Bank of England wanted to suspend convertibility of bank notes into gold. Keynes counselled wisely that the bank should not do so. Gold was finite, but credit elastic.

By staying on gold, the UK could maintain its credit, and finance the war effort. This transpired. The House of Morgan organised massive credits for the UK, and none for Germany. This finance was crucial, and sustained the UK until the US abandoned neutrality and tipped the military balance against Germany.

Despite formal convertibility of sterling to gold, the Bank of England successfully discouraged actual conversion.

Gold sovereigns were withdrawn from circulation and turned into 400-ounce bars. This form of bullion limited gold ownership to the wealthy, and confined gold’s presence to vaults. A similar disappearance of gold as a circulating currency occurred in the US.

Gold graph
The price of gold has jumped in recent years CREDIT: LONDON METAL EXCHANGE

In 1933, US President Franklin Roosevelt issued an executive order making ownership of gold a crime. FDR relied on the Trading with the Enemy Act of 1917 as statutory authority for this edict. Since the US was not at war in 1933, the enemy was presumably the American people.

In 1971, US President Richard Nixon ended convertibility of US dollars into gold by trading partners of the US. Closing the gold window was said by Nixon to be temporary. Forty-five years later the window is still closed.

…click on the above link to read the rest of the article…

Jim Rickards: The New Case For Gold

Jim Rickards: The New Case For Gold

A powerful set of arguments for owning the yellow metal

Monetary expert Jim Rickards returns this week to share the insights from his latest work The New Case For Gold, a detailed and highly-researched study of the fundamentals likely to drive the price of gold bullion in the years to come.

Rickards is quite confident that the price is going higher — much higher in fact — as the current world fiat currency regimes falter, to be replaced by ones backed (at least in part) by bullion.

On the way to that outcome, expect the price to be subjugated to the interests and aims of the largest players on the geopolitical chessboard:

Is there gold price manipulation going on? Absolutely; there’s no question about it. That’s not just an opinion.

I spoke to a PhD statistician who works for one of the biggest hedge funds in the world. I can’t mention the name but it’s a household name, you would know the fund. This guy is a PhD statistician. He looked at COMEX opening prices and COMEX closing prices for a 10-year period and he was dumbfounded. He said…This is the most blatant case of manipulation I’ve ever seen. He said if you went into the aftermarket, bought after the close and sold before the opening every day, you would make risk-free profits. He said statistically that’s impossible unless there’s manipulation going on.

I spoke to Professor Rosa Abrantes-Metz at the New York University Stern School of Business. She is the leading expert on globe price manipulation. She actually testifies in some of these gold manipulation cases that are going on. She wrote a report reaching the same conclusions. It’s not just an opinion, it’s not just a deep, dark conspiracy theory. Here’s a PhD statistician and a prominent market expert lawyer, expert witness in litigation qualified by the courts, who independently reached the same conclusion.

…click on the above link to read the rest of the article…

Is The Pending Euro Collapse on Target From Our 2011 Forecast of 2016.202?

Draghai Euro Crisis

The euro crisis appears to be unfolding right on target rather amazingly. Our target was published in “The Rise and Fall of the Euro” back in 2011. The target for the collapse in confidence was 2016.202. This comes into play March 13/14, 2016. It is rather amazing that we can target a specific event within time, years in advance, and watch these things unfold. This illustrates that TIME remains everything and humanity repeats a process that results in the same response over and over again throughout history. This also demonstrates that our forecasting is not based upon OPINION. With the euro unable to reach 116 of a rebound, this does not look very good in the next few weeks.

Here is what we published in that report:

27th

 

From a timing perspective, the Bretton Woods System actually began with the operational start of the IMF on March 1, 1947 (1947.164). The euro began officially on January 1, 1999 (1999.002). The birth of the euro essentially completed the 51.6-year cycle between 1947 and 1999. The collapse of the euro appears to be due no later than 17.2 years from its birth, making the ideal target 2016.202, just 23.5 weeks ideally AFTER the peak on this current Economic Confidence Model wave 2015.75.

Olduvai IV: Courage
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Olduvai II: Exodus
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