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This Global
Financial Crisis is not so much about the dollar as it is about the dollar
system, the $IMFS. The dollar system is a system of selling debt as a wealth
reserve. This system went global in July of 1944 at a meeting in Bretton
Woods, New Hampshire. All 44 Allied nations participated in the meeting that
took place a year before the end of the war.
Here is an important Q&A with Another that I used in part in my last
post, now presented in its entirety.
5/5/98 ANOTHER (THOUGHTS!)
Mr. Kosares,
A few thoughts for you, as the questions are asked.
Q: ** It seems that both you and your friend believe that the world is
splitting up into currency/trading blocks -- much as the world did for both
World Wars. There has been much discussion around the world about the
imposition of a NEW WORLD ORDER and international one world government.
Simultaneously, we see another, opposing force at work -- regionalism,
nationalism, even tribalism. What do you make of this? Is the Euro a child of
the forces of the New World Order, or the forces of
regionalism/nationalism/tribalism? **
A: Sir,
I would say, "Old World Order" to return. To understand/explain
better: "A very easy way to view this "order", would be to
simply say that the American Experience is reaching the end! As we know,
world war two left Europe and the world economy destroyed. Many thinkers of
that period thought that the world was about to enter a decades-long
depression as it worked to rebuild real assets lost in the conflict. It was
this war that so impacted the idea of looking positively toward the future.
The past ideals of building solid, enduring, long term wealth were lost in
the conception of a whole generation possibly doing without! In these
fertile grounds people escaped reality with the New Idea of long term debt,
being held as a money asset. Yes, here was born the American Experience that
comes to maturity today.
New world order, regionalism and tribalism are but modern phrases that denote
"group retreat to avoid paying up". The worldwide currency system
is truly a reflection of an economy built from war, using the American
Experience, the US$ and the debt that it represents. But, for the American
dollar to continue as the representative of the global financial system, in
the form of being the reserve currency, maturing generations of all countries
must accept it, and the tax on real production it clearly imposes! In the
very same mindset that people buy the best value for the lowest price
(Japanese cars in the late 70s), and leave an established producer to die, so
will they escape the American currency and accept any competitor that offers
a better deal. And because we are speaking of currencies here, the transition
will be brutal!
As you ponder these thoughts, consider that; all economies today are truly
equal in production as the exchange rates are the manufactures of profit!
Q: ** Is Europe (led behind the scenes by the BIS) an opponent to the United
States?**
A: Sir, Yes, but not in the ways of war, as it is in the feelings of
"pride" and "we go our own way". The downfall of the
Russia, did allow for the Euro and all that it will build. They now see the
debt of the US$, as a reserve money, can be escaped! As even the US citizen
will leave its own workers to die as products are purchased "overseas",
how much easier will the world also flee the dollar! Opponents? No, I would
say they are learners of the "American Way" as they embrace the
"American Idea" of a "free world market economy".
Q: *** If so which countries are in which camp? Your associate seems to feel
that Asia is split between the United States which has Japan as an ally, and
Europe which has China as an ally (a notion I found particularly intriguing).
Where is Britain in this? Japan? And most importantly, the Gulf States, particularly
Saudi Arabia? **
A: Sir, I feel he is correct in this thought. Europe does grasp for a
relationship with Asia as the US did have with Japan. It would build a mighty
economy on a foundation of oil and gold as backing for new money. As China
and Arabia were once a part of the Europe economy, in a small way, they may
now return with no fear of Russia. Britain? A lost nation. Japan? This one is
"of the American Economy" and is to live and die by it! They will
seek your Alaska oil before loss of face with gold. A dead Yen be a dead
Japan.
Q: **Along these lines, I too believe that currency movements will flow
through Europe because the Euro currency will be gold backed. Where does that
leave Japan with over $200 billion in dollar reserves, let alone its massive
U.S. Treasuries' holding? **
A: Perhaps, they be like Korea? Rich in paper until the world says,
"this paper, it is not good"!
Q: ***Your associate says that BIS helped China increase its gold holdings.
Please tell me what the source of that information is, or is it simply a
speculation on his part. ***
A: The BIS is the gold broker for all interbank sales/purchases. Bullion
Banks are for sales to other entities. I think, at first, China was leverage
against the oil producers. Then Arabia was allowed into BIS for Euro.
Q: **One other item you might clarify for me is "Who is really behind
BIS?**
A: Perhaps, "who control them"?
Q: **The Swiss?
A: Yes.
Q: **The eurocentral banks?
A: Yes.
Q: **Who does BIS really represent?
A: "old world, gold economy, as viewed thru modern eyes" or "
way to move from US$ without war".
Q: **Why was Saudi Arabia just included in BIS?
A: answered.
Q: **Has Saudi Arabia gone with Europe?
A: Yes.
Sir, there is much more to this, but we talk over time, yes? I will be away
for perhaps ten days. We speak again.
Thank You
--------------------------------------------------------------------------------
5/5/98 USAGOLD
Dear ANOTHER, my great respect for you has just deepened further. Have a
pleasant ten days and I will consider your words. Yes, we will talk over
time. Thank you Mike Kosares
The Catch-22
Here is the big Catch-22. The dollar and the $IMFS are dependent on each
other for survival, just like Siamese twins that share vital organs. If one
dies, so does the other. But in Gold is Money - Part 2, I
showed you that the dollar and its system are also at odds with each other,
and that only one can be supported at a time - by sacrificing the other! I
explained that without a shadow of a doubt, the dollar is being sacrificed in
a futile attempt to save the system...
Saving the System
- Not its Value
It was said, many years before Paulson, Bernanke and TARP, that the financial
system will be saved at any cost! Apparently this statement has proven to be
true. But at what cost?
You see they are now faced with a dilemma they will not discuss publicly. On
one side is their product, the conceptual unit of credit account, their
currency. And on the other side is their offspring, the financial system,
Wall Street. What saves one will kill the other. They can save the present
value of their product and kill their offspring through starvation. Or they
can save their offspring by delivering what it desperately needs to
survive... a constant expansion of credit (aka monetary inflation). But this
will, of course, kill the value of their product, the currency.
They can save one or the other, but not both. And it was always known, but
has now been proven, that the system will be saved at ANY cost.
(Unfortunately for them, they did not think it through far enough to realized
that the cost of saving their offspring will also kill it and a whole lot
more. But that line of Thought is straying a little too far from the topic of
this post.)
In order to survive, the system, the financial industry, Wall Street NEEDS a
constantly increasing supply of CREDIT! If the population won't give their
own blood to save this dying Frankenstein monster, then the CB's and governments
WILL! It is happening now. Right under our noses. For more than a year now!
...The bottom line is that the banking system will be "saved" at
the expense of sacrificing the market value of every last credit instrument
they have created. Anyone and everyone with their savings inside the system
will take a serious purchasing power haircut. The only people that will enjoy
the full value of their wealth (and more) are the ones who hold it outside of
the imploding system. Inside the system, credit of any color, green OR
yellow, is only credit.
Perhaps now you can see that "the dollar" clearly represents the
transactional function of money, a role in which the specific value of a
dollar does not matter. And the $IMFS represents the wealth reserve or store
of value function of money. In the dollar's case these two functions are, at
the very same time, co-dependent for survival yet they must kill each other
through sacrificial abandonment.
Please read the very end of my post Say Goodbye to Wall Street
understanding that Wall Street IS the $IMFS...
You see, the
Siamese twins, credit and equity, have finally been separated. Gold has been
demonetized! It is now a world class wealth asset. A tradable wealth asset. A
portable wealth asset. A durable wealth asset. Money, which has been deemed
by society to be fiat currency only, no longer needs to carry the heavy
burden of ALSO being a store of value. No longer must we raise entire
industries that suck in generations of our best and brightest talent for the
sole purpose of designing paper wealth derivative products in a vain attempt
to make money be a store of value. No longer. Say goodbye to Wall Street.
The $IMFS
The US Dollar International Monetary and Financial System is represented in
visible form by the big Wall Street banks. These banks control the Fed, the
money distribution system, and the debt, the "wealth reserve"
distribution system. And the global expanse of the this system can be viewed
most easily by simply looking at their websites.
Here is the list of countries where the Goldman Sachs parasite has attached
itself as found on goldmansachs.com > Careers > Locations:
The Americas:
Argentina
Brazil
Canada
Mexico
United States
Europe, Middle East, and Africa:
France
Germany
Ireland
Israel
Italy
Russia
South Africa
Spain
Sweden
Switzerland
United Arab Emirates
United Kingdom
Asia:
Australia & New Zealand
China
India
Japan
Korea
Hong Kong
Singapore
Taiwan
Thailand
And here is Morgan Stanley's list from morganstanley.com > Global Offices.
And yes, there are a few differences like Greece, Hungary, Netherlands, Saudi
Arabia and Russia:
Argentina
Australia
Brazil
Canada
China
France
Germany
Greece
Hong Kong
Hungary
India
Ireland
Israel
Italy
Japan
Mexico
Netherlands
Russia
Saudi Arabia
Singapore
South Africa
South Korea
Spain
Sweden
Switzerland
Taiwan
United Arab Emirates
United Kingdom
United States
As I explained in an answer to a question in a recent comment, there are two
things I am watching for right now. The first is any sign that the non-dollar
factions are starting to abandon the $IMFS, and the second is the emerging
favorability of gold as the reserve of choice to replace the dollar.
Here is my comment:
"My friend,
debt is the very essence of fiat. As debt defaults, fiat is destroyed."
What is the problem with Greece and the other so-called PIIGS? Is it
profligate public spending/financing, the credit that enabled it, the system
that helped hide it, and the mountain of unserviceable debt that resulted?
The difference between the $IMFS and Freegold is that the former encourages
and enables the above while the latter never lets it get this far along so as
to become a systemic risk. It's called 'balance as you go', as opposed to
enabling the growth of an imbalance so large that it finally collapses back
into balance.
I cannot give you the blow by blow that you ask for, but I can still show you
what must happen. And it is helpful in this regard to work backward from the
future until we come to two choices that will both result in the same end.
First is that we are facing a systemic shift from the $IMFS to Freegold.
Don't forget that the actual value of an individual transactional currency
unit (even a euro) doesn't really matter in the context of its primary
function. So even though one currency is built for the new, emergent system, I
would still not want to be holding that currency through the transition.
Second is that Greece's debt cannot be paid back in real terms, and neither
can the aggregate planetary debt. It doesn't really matter if it is not paid
back through default (bankruptcy) or through devaluation of the currency...
it will not be paid back in real terms. But devaluation of the currency is
certainly the more politically acceptable route.
Third is that all this planetary debt (including Greece's) is a function of
the $IMFS. The eurosystem, even though it was built to thrive under Freegold,
is still supporting the $IMFS. The action to look for is the passive action
of withdrawal of support.
The way the $IMFS works is that, at the very end, it either bails you out or
kills you dead, depending on who your friends are. Freegold spanks you along
the way with a little pain here and there until you get your finances back in
order.
I expect Greece and the PIIGS to get spanked hard at the beginning of the new
system. I do not expect Greece to leave the euro, but it will certainly have
to get its public finances in order.
You see, the shift is going to be swift and it will reveal a change in
perception that is almost impossible to imagine right now. Physical gold is
going to rise so high, so fast that it will become known as the most prized
treasure a collective state can hold. And immediately upon this recognition
Greece will have to either part with or encumber its most prized
"monetary" treasure while it restructures its newly devalued debt
and its economy.
No longer will unlimited Ponzi finance be an option for ANYONE'S financial
difficulties. But at the same time, the worst of the financial predicaments
will have been significantly devalued, as they were bad bets by creditors from
the start.
This is why it is so important to understand the implications of Freegold
now, because the cascade of events once "the plug is pulled" will
be mind-numbing. The ability to understand events as they unfold will be
quite rare (and quite valuable) as we are in uncharted waters.
And now here are a couple examples of the kinds of stories I am watching for.
Europe Begins
Abandonment of the $IMFS
Europe bars Wall Street banks from
government bond sales
Guardian UK
Monday 8 March 2010 21.36 GMT
"Governments
do not have the confidence that the excessive risk-taking culture of the big
Wall Street banks has changed and they still cannot be trusted to put the
stability of the financial system before profit," said Arlene McCarthy,
vice chair of the European parliament's economic and monetary affairs
committee. "It is no surprise therefore that governments are reluctant
to do business with banks that have failed to learn the lesson of the crisis.
The banks need to acknowledge the mistakes that were made and behave in an
ethical way to regain the trust and confidence of governments."
And from Jesse yesterday:
Wall Street Excluded from European
Government Bond Sales
The Ugly American
is a novel that was published in 1958, and was later made into a movie
starring Marlon Brando. It tells the story how America was losing the hearts
and minds of the people in Asia after its heroic performance in the Second
World War by the predatory business practices and exploitation of US
multinationals. The book was a bit of a scandal, coming on the heels of
Nixon's visit to South America where he was spat upon by angry mobs.
At the time people talked about the way in which US corporations were
alienating the developing world (we called it 'third world' then), and how it
would create a generation of political difficulties for the US around the
world. This was an initial wake up call to the American public, which was
lost and forgotten in the fervor of the Go-Go Sixties. What was good for
General Bullmoose was good for the USA. Or so we all thought.
Regrettably, once again US corporations, the Wall Street banks, are busy
alienating the world against America's interests through their unethical and
shockingly predatory business practices. It will be interesting if Asia and
South America pick up this theme of banning the Wall Street banks on ethical
considerations from doing certain types of business in their regions...
"The Gold
Man"
BIS Board elects Christian Noyer as new Chairman
8 March 2010
The Board of
Directors of the Bank for International Settlements (BIS) elected as its new
Chairman, Christian Noyer, Governor of the Bank of France. His term is for a
period of three years, commencing on 7 March 2010.
Mr Noyer succeeds Guillermo Ortiz, Governor of the Bank of Mexico, who served
as Chairman of the Board until the end of December 2009, when he left his
post as central bank Governor.
Members of the Board of Directors expressed their sincere gratitude to Mr
Ortiz for his excellent services to the Bank.
FLASHBACK: JANUARY 1999 - ONE OF THE FIRST ECB PRESS CONFERENCES
ECB: ECB Press conference: Introductory
statement
Transcript of the questions asked and the answers given by Dr. Willem F.
Duisenberg, President of the ECB, and Christian Noyer, Vice-President of the
ECB
Question: I'd just like to talk to you about gold reserves. The ECB said it
will readjust the value of its gold reserves on its books each quarter, and I
think it is also decided to keep about 15% of its exchange reserves in gold.
If there was a major change in the price of gold on the world market, that
percentage would be likely to change, and so I would like to ask you if that
means that the ECB would buy or sell gold in order to keep its proportion of
reserves at that amount of percent.
Wim Duisenberg: Christian, you're the gold man!
Christian Noyer: No, there is no such conclusion to draw, because it was not
a decision to hold 15% of foreign exchange reserves in gold, as a structural
decision of the Governing Council. The decision of the Governing Council at
the time was that in the initial transfer 15% would be made of gold, but that
has no consequence on the structure of foreign exchange reserve to develop in
the future, nor has it any consequence on the total percentage of gold
holdings of the system, including the reserves that are still in the balance
sheet of national central banks, and we know that in some cases they have
more than 15% gold, and in some cases they have less, but they are for the
moment and for the foreseeable future keeping the proportion they have.
Duisenberg: And in this case, the foreseeable future is much longer than in
the earlier case
A Final Thought
I'll end with this latest poignant piece from Bill Holter:
U.S. States and
Sovereigns
To all; the talk has recently been all about Greece and the PIIGS because
that's where the media has steered attention. Of course Moodys downgraded
Greece and the media went on its "the Euro is dead" frenzy at a
most opportune time as the Dollar was looking very sickly on the charts at
the time. Divert attention in other words.
Attention was diverted from several (many) US states that were and still are
walking financial zombies. California, New Jersey, Illinois etc. are running
deficits and debt levels similar to and in some cases far worse than Greece
in percentage terms. What is truly humorous is even with retarded budget
projections the numbers aren't working. How many states have "proposed"
budgets that have turned out to be pie in the sky dreams after only 6 months?
The tax revenue projections that have and are being used by many states are
so far out of whack that the ink doesn't even get a chance to dry before a
3rd grader puts a pencil to the projections and figures out they are wrong!
This goes for many big cities, counties, and municipalities. The point
is...EVERYTHING is broke! The only thing not broke is the stock market but
that's only because of the PPT support and rigging. Unemployment insurance is
being extended further and further into the future while tax revenues
decline. Much of the so called "employment" has been in the public
sector that will obviously weigh further on all government budgets. It is not
sustainable in any way even if the credit markets don't seize up.
Anyone who doesn't believe we have a stock market crash and train wreck
directly ahead must believe we have a hyperinflationary event coming
immediately or they can't do math. You cannot have sovereign governments, US
states, cities etc. (and federal government) on the verge of bankruptcy and
stocks not panic and stay at these levels. In my opinion the only
justification for "Dow 10,000" is the probability (guarantee) of
hyperinflation, period!
There is no recovery in real estate, employment, main street or anywhere else
except for Wall Street because of the $ trillions pumped in and running
through its veins. About once every 10 days or so we hear about the Fed
raising rates and withdrawing stimulus. This cannot happen without an
immediate fatal heart attack to Wall Street and Main Street taking a final
body blow. It is now and has been for years, "inflate or die". The
Fed is having a difficult time "reinflating" with their foot
through the floor boards on the accelerator, taking their foot off the gas
(not to mention tapping the break) is entirely out of the question and
nothing more than poor humor..
It is now only a matter of time before investors get spooked by the fear of
sovereign defaults spreading like a disease. The day is not far off where ALL
paper gets shunned and real money gets bids that swamp actual supply. Once
the thought process turns to "there's no place to hide", the amount
of fake capital trying to enter metal and the ridiculously small Gold stock
arena will bid these assets to never before dreamed of values. When there is
no place to hide "within" the system, capital will move outside the
system.
The problem is very simple indeed. This week alone the U.S. Treasury is
borrowing 1 1/2 times the entire annual global production of Gold. And how
much have they borrowed the week before that and the week before that...? The
math is impossible and the lifeboat far too small to accommodate anyone even
1 second too late! What could "never happen" 2 or 3 years ago
has already happened and then some. Now we wait for sovereigns, U.S. states
and cities, even the U.S. Treasury to default...........or hyperinflate. It
is only a matter of time now and no longer a question of if! Regards, Bill H.
Sincerely,
FOFOA
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