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The End Of Fiat In One Chart

October 23, 2019

The End Of Fiat In One Chart

For the first time in 21 years, Germany has openly bought gold into its reserve holdings.

Source: Bloomberg

German reserves climbed to 108.34m oz in September from 108.25m a month earlier.

Source: Bloomberg

With ECB mutiny and Deutsche Bank’s rapid demise, fears are rising of a looming financial crisis, and with that, Germany has shown a renewed interest in gold.

As a reminder, September’s outright purchase of the precious metal comes after Germany’s central bank, the Bundesbank, repatriated 583 tonnes, or $31 billion worth, of gold in 2017, years ahead of schedule.

Which came after Germany’s stunning announcement in January 2013 that the Bundesbank would repatriate 674 tons of gold from the NY Fed and the French Central Bank (which was initially abandoned in 2014).

Of course, while Germany is now the latest to turn to gold as a safe haven store of value in its reserves, it is not the first as the de-dollarization shift has been accelerating in recent months…

Source: Bloomberg

Germany’s shift comes after China’s acceleration in gold-buying as Peter Schiff recently noted this a “global gold rush on the part of central banks” in preparation for a dollar crash.

“The days that the dollar is a reserve currency are numbered and the smart central banks are trying to buy as much gold as they can before the number is up,” Schiff said. 

Remember, nothing lasts forever…

And now that the always conservative Germans are back in the market buying gold, one wonders if the end of fiat is drawing closer.

Gold Yuan Crypto

August 4, 2018

Gold Yuan Crypto

George Caleb Bingham The verdict of the people 1854
It’s been a while since we last heard from Dr. D, but here he’s back explaining why neither gold nor the yuan nor cryptocurrencies can or will replace the dollar as the reserve currency, but together they just might:

Dr. D: “Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” –Ogden Nash

Over the last year or two there’s been discussion about the U.S. Federal spending moving beyond $4 TRILLION dollars, and whether a $1+ trillion dollar annual deficit, on top of a $20 Trillion national debt – Federal only – is sustainable. It isn’t.

“What can’t go on, doesn’t” is the famous quote of economist Herbert Stein. Since a spiraling deficit of $1 trillion deficit on a $20 trillion debt can’t go on, what will we replace it with when it very soon doesn’t? Historically gold. Whatever gold exists in the nation’s coffers, whether one coin or 8,000 tons, is used to as the national wealth, and fronted by paper to re-boot the currency. With some additions such as oil and real estate, this was the solution in Spain, France, Germany, and the Soviet Union among hundreds of fiat defaults. Why? Because at a time of broken promises — real goods, commodities that can be seen, touched, and used – are the tangible proof of wealth, requiring no trust, and from which the human trust system of paper and letters of credit can be rebuilt.

But in these complicated, digital times perhaps that’s too simplistic. Perhaps we have grown smarter than all our fathers and this time it will be different. Will it really be the same? Let’s look at how the system works now.

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

IMF Warns That We Have a New Crisis Coming

October 13, 2015

IMF Warns That We Have a New Crisis Coming

Lagarde-Coming Crisis

QUESTION: Marty; You mentioned that you met with a board member of the IMF. It certainly seems you are having a much larger impact than you may realize. The IMF is now warning of a crash. Do you think you can help reverse the trend if given the chance?

Thank you for caring

BG

ANSWER: I absolutely could mitigate the crisis. There would be much I could stop in 30 days or less. But the trend is the trend. The system is collapsing. It is not because of some derivatives bubble. It is not because of fiat. This is because of the debt gone wild and governments run by politicians who are clueless and assume that they can bully their way through this by writing laws. LaGarde is now warning that we have not fixed the problems from the last crisis and we have another one brewing.

Yet the IMF is focused on the rising risk of a global financial crash because of a slowdown in China, which undermines the stability of highly indebted emerging economies. The IMF is not saying much other than there are three crisis epic centers within the emerging market crisis including China, Brazil, Turkey, and Malaysia. This could shave 3% off of global GDP, which would devastate Europe in particular. Then there is the chaos of debt in Europe because of the failed euro, but that is a political problem and means politicians need to admit error. The IMF has warned about the battered global markets that have experienced a sharp decline in liquidity since 2007 and are more likely to transmit shocks rather than cushion the blow.

These three areas that the IMF is warning about are the symptoms rather than the causes. The IMF has not identified the root cause of this chaos and that is all emerging from the fact that governments borrow, owe debt, and in turn raise taxes, which lowers growth and reducing living standards. Wait for the pension crisis to hit. A further decline will undermine the European banks and will cause a real meltdown.

Is Quantitative Easing the Same as Printing Money?

October 9, 2015

Is Quantitative Easing the Same as Printing Money?

Quantitative Easing

QUESTION: Mr. Armstrong;

Thank you for coming to Athens. After the presentation, there were so many questions that the moderator did not have time for. You answered some for the crowd afterwards that I had never heard anyone ever explain. You said Quantitative Easing was not money printing nor did it really increase the money supply. You also said to the crowd that fiat is not paper money, but anything declared by government including pegs.

Could you elaborate on those statements.

Thank you for your enlightenment.

GP

ANSWER: Quantitative easing is not responsible for increasing the money supply or printing money. It is a swap of bonds for cash so they are not outright printing money. It is a swap transaction. This combined with the idea that paper money is fiat and precious metals are tangible are all seriously wrong. Fiat is the attempt by government to decree the value of money. This is no different from a peg that broke, such as the Swiss/euro peg, or the Bretton Woods attempt to fix gold in terms of dollars. ANY attempt to flat line the value of money by decree is fiat, regardless of whether the instrument is paper or seashells.

This idea that Quantitative Easing is printing money is very pre-1971 thinking and is a throwback to Bretton Woods. Such an assumption focuses on the differentiation between debt and money or cash. Pre-1971, you could not borrow against government debt so there was a clear difference between debt and money. The theory that it was less inflationary to borrow than print made sense only when there was a real difference between debt and cash or money.

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

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