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Duality of value
is a funny thing.
If you have a gun pointed at me and I have an identical gun pointed at you,
they (the guns) are worth the same. Yet, if I am wearing a bullet-proof vest,
my gun has more worth. Not much, just a little more. Strategic location! In
1933 dollars outside the US were worth their weight in gold. Yet, inside the
US they were not. The same dollar had a dual value dependent on location.
Oil, gold, minerals and one's bank account can all have dual values based on
their strategic location. Another form of duality exists for most things.
Gold has a jewelry value and a monetary value. Its price is reflected in the
degree of total demand generated from each value. In fact everything we own
has our personal sentimental worth and a "monetary" value. After
1980, oil also reflected this different duality.
In the late 60's and early 70's some US strategic leaders were beginning to
understand the "monetary value" of oil. It was becoming clear that
local oil reserves, not gold was the real backing behind the robust US
economic engine. Like gold today, oil back then was worth a whole lot more
than the amount we were paying for it.
It was recognized that even though the old (gold) money system of the 60's
had priced oil favorably for the US, its (US) oil reserves were running out
at that price. We needed a higher price for oil in order to build local
reserves. At the very least, we needed higher prices to discover higher cost
reserves located in the "Strategic Americas" (both north and
south).
The potential (indeed, it was reality at that time) for the Middle East to
continue producing reasonably priced oil for gold (dollars) stood in the way
these needed higher prices. In order to resolve this, we moved off the gold
standard (1971) and onto the oil standard. Again, in hindsight it was a
masterful play. You see, in duality, oil in the Middle east was worth more
than other oil if it could back the dollar in world settlement.
The US had already placed it's currency on an oil standard years before (in
practice anyway). They were expanding the money supply directly in relation
with the increased production of goods that modern oil use was providing. Of
course they ran away with the process as is always the case. Gunning the debt
money supply and justifying it by extrapolating growth at ever increasing
rates. Dollar creation overran the ability of the gold exchange standard to
balance it. Still, in all fairness, the old system was built on a much slower
creation of production efficiencies and couldn't accommodate this modern
surge of wealth (and debt). Let's face it, the world has no precedent for the
last 30 years of growth.
After 1971, the value of the gold backing lost, was found in oil. In reality,
the value of oil to the world economy was increasing much faster than value
of gold lost from dollar default. Even at the higher prices per barrel the
need and demand for oil proved to be a far superior "monetary
backing" for the dollar than gold. As long as the majority of oil
producers agreed to receive dollars for oil, the stage was set for a renewed
surge in growth the world over.
During the '70's, dollar price inflation was bad, but by no means did we see
the "runaway price inflation" that should have come from a reserve
currency without gold backing.
In practical theory, oil now backed the dollar as world oil payments were
settled in dollars. In return, gold now backed oil from a US guarantee of an
open market for the metal. Over time, a portion of oil dollars could be
replaced with real gold through actual physical purchases or in participation
with evolving world gold banking (paper gold). Even though the dollar gold
price had surged, the higher oil prices were allowing a percentage of those
dollars to be converted back into gold at the old gold/oil rate. [Note: After
the gold window closed, dollars surrendered for gold REMAINED in
circulation!]
Slowly, the old dollar holdings (prior to 71) were effectively being used to
reclaim gold. The expansion of the world dollar money supply was seen as reflecting
the more modern importance (value) of oil in the economy. As long as growth
in the production of economic goods outstripped dollar price inflation, the
dollar could be expanded to match the unrealized value held in oil.
Again, "strategic location" of the world's major oil reserves was
the backbone behind this "duality" in oil's value. Gold in Fort
Knox could not back the dollar anymore, because the US had shown that they
could just withdraw it from backing. In fact, the entire validity of backing
ANY currency with a fixed gold amount was in question with this new age of
"super nation blocks". For it to work again, gold and the reserve
currency backed by it would have to reside in different "power
blocks" to guarantee delivery. That wasn't going to happen. Indeed, with
supply of the world's major oil reserves being controlled outside the
US, the dollar was now backed more effectively by a commodity that could
be used to devalue it (through the oil price) should the money supply run
wild.
[See The Judgement of Value. This is key. If
I print dollars, the judgement of value of those dollars belongs to whomever
I offer them to. Under the gold standard, the value of the dollar was set by
the printer himself. An unstable and unsustainable system!]
This system [of EXTERNAL backing] came into balance, as the value received
from oil by the goods producing world outran the loss from price inflation
initially created from rising oil prices.
Today, the situation is changing in a much more dramatic way.
Throughout the 80's and 90's, an increasing dollar reserve base impacted the
economies of foreign nations as the US dollar trade deficit and the debt that
represented it expanded without relief. After over three decades of non-stop
foreign dollar inflation, the dollar float has become so large that any
transition from dollar settlement into "Other" settlement will
permanently remove it from reserve status. These events we will witness and
document will be the "Facts" of a dollar fall from grace.
The strong US economic success [is best expressed] in our SOL (Standard Of
Living). Dollar exchange rates, interest on dollars, stock market values,
home values all represent what an American "can buy" if they decide
to spend their wealth. Not what they presently have as owned wealth, paid up
100% [or liquidated 100%]. This leveraging of dollars created an
"illusion of savings" that in effect allowed a high SOL.
In other words, we lived high on the hog because our equity values and
savings don't really exist. Time has transformed the entire dollar system
into a giant "futures contract" that only represents the wealth we
could obtain in partial "future purchases". Just like the
gold market, we mostly trade paper wealth and call it real. Yet, if a large
percentage demand for delivery ever happened, the contracts would fail. Yes,
our wealth and economy status is really based on us cashing in and buying
just a little at a time. If we didn't, the illusion would be exposed.
Our present dollar economy is "super leveraged" not just into the
future of US goods production, but it also completely depends on future
foreign fulfillment to produce those real goods. Truly, most of our present
sizeable financial wealth is little more than a function of the
"acceptance of dollars overseas" by others.
In reality, if this foreign reserves chart was ever forced
into reverse, no amount of real US goods production could be bought using
present dollar price rates.
Foreigners could never spend their dollars at a rate that matches our SOL
values. Indeed, some of the biggest players now know it! It's all an illusion
that has spanned 35+ years from the loss of the gold standard and it's about
to be tested.
Indeed, even now the paper gold market expressed a major "duality"
in real value depending on the strategic location of it's contracts. Some
leveraged gold banking backed with Euroland guarantees is today far superior
after the Euro success. [See Deutsche Bank and the ECB] (I think this
concept is hard on most people. Still, it will look much different after the
train wreck that is coming.)
Going further into the duality of values, Oil prices today are on the rise
and doing so in total conflict to perceived marketplace function. It's no
mistake as to why this dollar price rise is happening now. Just as a high
gold price would expose the dollar by presenting it's true past inflation
(world dollar money supply growth), a rising oil price exposes the US economy
to the super leverage it contains. Especially if one can grasp how that
economy was built on oil backing through dollar settlement. Once the threat
of a dollar crash is made possible by high oil, expect big oil to run
elsewhere for settlement for international trade. Perhaps run is not a good
word? Let's just say a transition will begin that shows the world the trail
ahead.
But the market has yet to fully grasp the impact of these events and still
bids contract gold at par.
Our [FOA and ANOTHER] stance is and always has been that the world will be
using paper digital currencies for the rest of our lifetime. I for one, have
never heard any official voice his stance that we will move back into a gold
standard. Their direction has always been to keep a reserve currency system
and strengthen it with a free physical gold market trading in the background.
In none of our meetings have we heard where a fear was expressed that the
governments will lose control of digital currencies and give it (control)
back to gold. That is simply not going to happen, no matter how severe a down
turn the loss of the American dollar system creates. Believe it.
The dollar system is failing as we move into another stronger (relative to
fiat currencies) money system. The future will see us all using digital
currencies, for better or worse. Therefore, by logical extension if I must
use a reserve currency of account, I move into one that has the best
strategic ability to survive and denominate my assets. In addition, the
Euro's creators are restructuring the gold market to the physical bullion
holders advantage. This is the only reason I "Walk In The Footsteps Of
Giants". They created this bullion path and the world will follow in due
time. Therefore, my position of Euro assets and physical gold. Mostly
(because I am American), I lean to gold for this transition.
One can take the radical position that the world financial system is going to
end without the dollar. You can also say that the Euro will fail as this
process evolves. One can buy gold for these reasons only and still prosper,
whether your grasp of politics leads you to this conclusion or not. Our sole
reason for writing is a private commission to share official directions and
perceptions with the average citizen of the world. Nothing else.
Still, stand alone logic and history promote that the world will lose the
present system to paper inflation and move into another as it has done
before. With this, gold will bankrupt the outgoing system as hyperinflation
runs through it. In a broader view, all total dollar dependent economies
(Canada, Mexico, Japan, etc.) will share this fate.
This view gives you no facts only our perceptions from the builders of the
future. We offer only the events as they occur for our proof. Indeed, strong
events are ahead on this gold trail we all walk.
FOFOA
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