RANTING ANDY: 40 Years of Infamy

Ranting Andy – Surely you didn’t think I’d let this day pass without writing about the 40th anniversary of America’s abandonment of the gold standard, on August 15th, 1971.  As you know, I consider this day (tied with 9/11, of course) to be the saddest in U.S. history, and for that matter the ENTIRE GLOBAL FINANCIAL SYSTEM. 

As yet another day of failed Cartel manipulation passed (aside from the maniacal silver capping at $40/oz ahead of next week’s options expiration), I reflected on the magnitude of Nixon’s ill-fated actions 40 years ago.  For the first time, I watched the Sunday night prime-time speech (America’s first “Sunday Night Special”), when he announced the closing of the gold window, and simultaneously a 10% tax on all imported goods (link below).

The eeriest part of the video is you can substitute Obama, Bush, or whichever President you’d like, as they ALL talk in the same forked tongue of the corrupted, slimy politician.  Nixon said his actions would be good for America’s citizens, even if ‘too complex to understand.’  Moreover, he of course blamed SPECULATORS for the declining value of the dollar, and stated convincingly that there will be no inflationary impact!

How ironic that the average lifespan of essentially every major fiat currency in history has been roughly 40 years, and today we are watching the END GAME for the dollar unfold right before our eyes, on EXACTLY the 40th anniversary of its decoupling with gold.

http://www.zerohedge.com/news/today-40th-anniversary-nixon-ending-gold-standard-and-creating-modern-fiat-monetary-system

Of course, the beauty of the dollar’s demise, which no matter how hard I try I can’t get people to understand, is that “the dollar” is not the problem.  The REAL ISSUE is the GLOBAL FIAT-BASED CURRENCY SYSTEM, which happens to utilize the dollar as its reserve currency.  The way I view it, there is essentially ONE global currency operating under the guise of several names, with “the dollar” utilized as the anchor.  The U.S. dollar, i.e. the heart of this Frankenstein being, has terminal degenerative disease, so blood is not being circulated, and thus the body is dying.

Talk of a “dollar collapse” is ridiculous, if one is referring to the “dollar index”, below.  To believe the Euro has ANY chance of holding together while the U.S. economy collapses is naïve as it is illogical, as the next wave of global economic panic (which will likely be ORIGINATED in Europe) should blow the Euro to smithereens.  Thus, no matter how bad things get in America (can you say WORST-CASE scenario?), there is simply no way the “dollar index” can substantially decline when it is nearly 58% composed of the Euro, outside of a six sigma event such as a nuclear attack.

What will happen, of course, is that the ENTIRE BODY, i.e. ALL CURRENCIES, will together crash against ITEMS OF REAL VALUE, particularly REAL MONEY, i.e. PHYSICAL GOLD and SILVER.

To further emphasize the point, although the dollar’s global share of currency reserves has declined with its exchange rate over the past decade, nearly 61% of all global reserves are still dollar-based (U.S. Treasury bonds, etc.).  Even though as many Euros exist in the world today as dollars, the share of global government reserves in Euros is less than half that of dollars, with no significant uptrend in place (and none likely given what is going on in Europe today).

Currency composition of official foreign exchange reserves

 

’95

’96

’97

’98

’99

’00

’01

’02

’03

’04

’05

’06

’07

’08

’09

’10

Latest Data
’11 Quarter I

US dollar

59.0%

62.1%

65.2%

69.3%

70.9%

70.5%

70.7%

66.5%

65.8%

65.9%

66.4%

65.7%

64.1%

64.1%

62.1%

61.5%

60.7%

Euro        

17.9%

18.8%

19.8%

24.2%

25.3%

24.9%

24.3%

25.2%

26.3%

26.4%

27.6%

26.2%

26.6%

German mark

15.8%

14.7%

14.5%

13.8%

                         
French franc

2.4%

1.8%

1.4%

1.6%

                         
Pound sterling

2.1%

2.7%

2.6%

2.7%

2.9%

2.8%

2.7%

2.9%

2.6%

3.3%

3.6%

4.2%

4.7%

4.0%

4.3%

4.0%

4.1%

Japanese yen

6.8%

6.7%

5.8%

6.2%

6.4%

6.3%

5.2%

4.5%

4.1%

3.9%

3.7%

3.2%

2.9%

3.1%

2.9%

3.8%

3.8%

Swiss franc

0.3%

0.2%

0.4%

0.3%

0.2%

0.3%

0.3%

0.4%

0.2%

0.2%

0.1%

0.2%

0.2%

0.1%

0.1%

0.1%

0.1%

Other

13.6%

11.7%

10.2%

6.1%

1.6%

1.4%

1.2%

1.4%

1.9%

1.8%

1.9%

1.5%

1.8%

2.2%

3.1%

4.4%

4.7%

 

Sources: 1995-1999, 2006-2010 IMF: Currency Composition of Official Foreign Exchange Reserves
Sources: 1999-2005 ECB: The Accumulation of Foreign Reserves

This is why currency intervention is so prevalent, even though the concept that weakening one’s currency to promote “prosperity” makes about as much sense as ZIRP, or “zero interest-rate policy”, which discourages savings and fosters inflation.  In other words, the currency reserve “body” has only so much blood to distribute, so when one area receives more blood, another receives less.  Thus, the “global currency system” cannot be fixed by such adjustments, just temporarily camouflaged until one realizes the damage done to another part of the “body.”  Moreover, the blood is tainted, so spreading it ANYWHERE makes the problem worse, let alone when simultaneously creating artificial blood (i.e. money-printing) at exponential rates and trying to cram it all into the “body.”

This horrible global quandary, in which the ENTIRE WORLD is tied to the fate of the dying U.S. dollar, is the result of the global abandonment of the gold standard, which officially commenced on August 15, 1971 when Richard Nixon decided that the spending desires of American politicians were too large to be constrained by the available supply of gold.  Lyndon Johnson threw out the trial balloon regarding the world’s potential reaction to runaway U.S. spending, and when the world demanded U.S. gold Nixon denied it to them permanently.

From that point, the GRAND GLOBAL BLUFF commenced, in which the U.S. has exponentially increased its money supply, daring the world to fight back by selling U.S. Treasuries, as epitomized by the saying “it’s OUR dollar, but YOUR problem”. 

Thus far, the world has kowtowed to America, with their only real counterattack being the ability to print their own, respective currencies, which they have done in spades, in every region from Europe to Latin America to the Far East.  The only problem with that strategy, however, is when you DO NOT own the global reserve currency, INFLATIONARY PRESSURES mount much more rapidly, which is why you have seen mounting unrest and revolutions in the MENA region of the world, now spreading to more democratic, supposedly “civilized” countries such as Greece, Israel, and England.  And I haven’t even gone into the cancerous effect the BANKERS have had on the “body”, nor the DERIVATIVES which will ultimately stop the patient’s heart.

Readers, I do not believe it POSSIBLE for the body to survive through early 2012, and by “the body” I mean the GLOBAL, DOLLAR-ANCHORED CURRENCY SYSTEM.  Either the U.S. economic crisis will create the initial cardiac arrest (or possibly the hyperinflationary effect of QE3), or Europe will implode when the Germans are forced by the P.I.I.G.S. to dissolve the Euro.  All scenarios will unleash massive global inflationary pressures for THINGS WE NEED (such as food and energy), and massive deflationary pressures of THINGS WE WANT, but do not need.

And when this END GAME commences, those who have not PROTECTED THEMSELVES with PHYSICAL GOLD and SILVER, FOOD, and OTHER LIFE NECESSITIES will be hopelessly caught in the maelstrom.

And all due to what came to pass on that fateful day 40 years ago, August 15th, 1971.

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