"Strong Dollar"..."Weak Dollar"...What About A Gold-Backed Dollar?

Authored by Antonius Aquinas, annotated by Acting-Man's Pater Tenebrarum,

Contradictory Palaver

The recent hullabaloo among President Trump’s top monetary officials about the Administration’s “dollar policy” is just the start of what will likely be the first of many contradictory pronouncements and reversals which will take place in the coming months and years as the world’s reserve currency continues to be compromised.  So far, the Greenback has had its worst start since 1987, the year of a major stock market reset.

A modern-day reenactment of the famous “our currency, your problem” play that went over so extremely well in the 1970s… [PT]

 

The brief firestorm was set off by Treasury Secretary Steven Mnuchin who said in response to the dollar’s recent slide:

“Obviously, a weaker dollar is good for us, it’s good because it has to do with trade and opportunities.”*

Mnuchin backtracked a bit as international financial leaders criticized the apparent shift in policy while Administration officials sought to clarify the Secretary’s remarks.  President Trump weighted in on the matter saying:

“Ultimately, I want to see a strong dollar” and added that Mnuchin’s comments were “taken out of context.”

While President Trump sought to allay jittery currency markets that monetary policy had not changed, candidate Trump supported the Federal Reserve’s suppression of interest rates and did not want to see a rising dollar:

“I must be honest, I’m a low interest rate person. If we raise rates and if the dollar starts getting too strong, we’re going to have some very major problems”.**

Of course, the entire uproar about a strong dollar versus weak dollar is a sham. When the dollar (and for that matter all other national currencies) cannot be redeemed for either gold or silver, it is inherently “weak” and ultimately worthless.

That this obvious fact is not recognized by the Trump Administration, international monetary authorities, and the financial press demonstrates just how unstable the dollar and world currencies actually are.

The US dollar today and in 1987 – in both years the Federal Reserve had embarked on a rate hike campaign, a new and untested Fed chairman took the helm at the Fed, and the US dollar was very weak. As you can see it actually reached “oversold” levels in late January/early February in both years, and started to bounce from there in the short term (before resuming its slide in 1987 – we cannot be certain yet what will happen this time around, but the parallels are slightly worrisome). [PT]

 

How to Create a MAGA Dollar

If President Trump truly wants to see a strong dollar that will become a linchpin in “making America great again,” he should enact policies that will return the dollar to its original function – a warehouse receipt that can be redeemed for precious metals.  Just as important, an authentic strong dollar policy would mean that no dollar can be created that did not have “an equal amount” of gold/silver in bank vaults – in essence a 100% gold dollar.

These two acts would guarantee a strong dollar and ensure that the dollar would remain the world’s reserve currency. Moreover, a fully redeemable dollar would likely lead to other nations adopting similar measures.

A gold-backed dollar would also head off China’s not too subtle attempt at replacement of the Greenback with the Yuan as the world’s reserve currency.  Its “Belt & Road Initiative,” its massive accumulation of gold, and other actions are all aimed at making the Yuan the dominant world currency which, if successful, will have catastrophic financial repercussions for the US and Western Europe.

What paper dollars looked like back when they were warehouse receipts for actual money – note the various sizes these banknotes came in. Evidently, no-one was concerned about the potential for criminal shenanigans that the use of large denomination banknotes allegedly invites. One wonders how the US ever survived this! Shouldn’t it have drowned in an uncontrollable miasma of crime? [PT]

 

Gold-backed money will not only have positive international effects, but domestic benefits as well.  Crippling price inflation that has been intentionally under reported by government statistics will be a thing of the past. Prices in a gold-backed currency will actually fall, raising living standards for everyone.

Without the ability of the Federal Reserve to create money out of thin air, the massive federal budget deficits would have to be dealt with.  And without the Fed’s purchasing of US debt, the government would be forced to actually cut spending.  Spending cuts would have to be deep and across the board.

Happily, under such a scenario, a reduction in spending would mean a pullback in the American Empire. The US would simply not have the resources to maintain bases abroad or involve itself in the countless conflicts and wars it is now engaged in.  It is more likely that when the American Empire comes to an end, it will not be because of a military defeat, but because it can no longer be sustained financially.

Sadly, under current ideological conditions, a return to gold money is definitely not on the financial horizon.  It will most likely take a collapse of the irredeemable paper monetary system before commodity money is re-established as a general medium of exchange.

Gold: the money of the free market. The fact that we are currently not allowed to use it as a general medium of exchange is quite telling with respect to how free Western economies actually are. [PT]

 

It is clear from the recent exchange among Trump Administration financial officers that the same dollar policy will continue, which will inevitably lead to a dollar crisis and certain political disaster for whoever is President when it arrives.

Comments

doctor10 So Close Fri, 02/09/2018 - 05:38 Permalink

Will work beautifully.  ALL of the material wealth created in the USA occurred prior to 1970. We created SO much in fact, the world has allowed us to live off credit extended against that wealth from then until today.  It is now coming to an end.

Surveillance states cannot create wealth. The governments are so preoccupied with rifling through one another's pocketbooks, medical records, taxes, bedroom behavior etc that nothing gets done.  Government becomes the agent of control.

A government dedicated to the US Constitution, the Bill of Rights and the US$, focused on anti-trust for the people of Main St America, that propagated its own currency independent of a central bank, and made certain that currency was available in large denomination notes, that deregulated the means of production, could re-establish the business climate that created the America.

The current DC crowd really can't envision little else but Moar Woar. The world will not stand for that any longer.

In reply to by So Close

JIMSJOE2 So Close Fri, 02/09/2018 - 07:52 Permalink

Exactly. This is all part of the pump and dump scheme. The US alone has over $52 trillion in liquidity in and outside the US. The total amount of gold ever mined is anly $7 trillion with most being unavailable so where are they going to get the gold? In addition this requires a country to constantly buy gold to back the new liquidity an economy needs to grow and to restock what went out the gold window. No major country can afford this at today's prices so forget the nonsense promoted by these idiots that a much higher price would take care of the lack of physical gold. Another factor is that this would strengthen the currency and collapse their exports then their economy. 

      This nonsense insults my intelligence and it should insults yours!

In reply to by So Close

Scipio Africanuz So Close Fri, 02/09/2018 - 09:14 Permalink

All empires come to their end due to military defeat, ALL! The defeat does not have to be catastrophic, it only needs to be "strategic", the key word, is strategic. Strategic is derived from "strategy", when your strategies fail to cower or intimidate your opponents, you're done! 

What follows in all similar situations, is a decamping of allies, vassals, and even citizens. Has this happened to USA, or is it happening? Answer this, and you know if the empire is kaput or not. It doesn't mean the empire can't wreak havoc, it simply means, there'll be severe, and possibly catastrophic consequences if it does so. 

After this, comes the financial, economic, and social defenestration. Observe and learn, good luck! 

In reply to by So Close

E5 Xredsx Fri, 02/09/2018 - 08:25 Permalink

just make it illegal for citizens to have gold.

give a bounty for turning in your friends who have gold.

chill people from accepting gold.

then tell everyone the amount of money you currently have printed is only 1/10th of the gold you have in 1928 values.

Around we go again.

In reply to by Xredsx

Sudden Debt Hoffman Lenz Fri, 02/09/2018 - 05:43 Permalink

or somebody else his gold...

maybe they have been preparing for it for 2 decades by attacking every country that still has gold.

But to do that, they need to jack up the prices to 50K an ounce and that would also mean that a lot of America's enemies would become filthy rich.

My guess is that America did have that plan but that most western countries got a hint at it and started buying it causing the American reserves to drop which they did not expect.

So in a way, that plan of a gold backed dollar is out of the window.

China, Russia, Germany... they all would be at par with America. And when you have so many rich superpowers, all it needs is a fuse

In reply to by Hoffman Lenz

Memedada Sudden Debt Fri, 02/09/2018 - 05:55 Permalink

Very true. But the Petro-dollar is dead. The question is: what will replace it? Maybe SDR with gold as part of its backing - China already buys oil from Iran with gold. And Russia/China have made gold-backed transaction systems to replace the dollar-based trade. In other words: the currency war is gearing for the next round - and the first round was lost by USA. What weapons will be used in the next round (when the fiat-printing-press don't work anymore)?

In reply to by Sudden Debt

Memedada Offthebeach Fri, 02/09/2018 - 06:43 Permalink

That is not how the Petro-dollar-system works. It is not some sort of mercantilism but basically just a forced “use the dollar for oil”-system (or get invaded/economic hitmaned!). I.e. you had to have dollars to buy oil (used had because of the very new and revolutionary Yuan, gold and Rubles for oil in relation to Iran). If you attempted to sell your oil for anything else than dollars (like Iraq did – for Euro and gold) the MIC was put in action (or, when applicable, the cheaper economic hitmen – like against Venezuela).

In reply to by Offthebeach

Hoffman Lenz Sudden Debt Fri, 02/09/2018 - 06:20 Permalink

Let's face it, SD. They're gonna keep the current system going until 99.9% of people on the planet are living in 3rd world conditions.
They make the rules. They take what they want. And they will leave us with nothing.
If the petro-yuan takes over from the petro-dollar, the usual suspects will already have their foot in the door and, when the timing is right, will accelerate the demise of the dollar. Then, over time, they will milk the petro-yuan the same way they have milked the petro-dollar.
They will leave us with nothing.
A gold backed currency is a pipe dream for gold bugs. If trade in pm's on some black market became worrying for them, they would make it an capital offence to use pm's.

 

(edit)

New ZH headline: No Shutdown: Congress Passes Two-Year Budget Deal

Looks like they're keeping the petro-dollar going for a bit longer.

In reply to by Sudden Debt

7againstThebes Hoffman Lenz Fri, 02/09/2018 - 07:19 Permalink

The reason that we don't have a gold standard is not because of ignorance of economics, but because of power. The present monetary system gives power to those who control the state.

To switch to a gold standard would cure many problems, for sure, but it would also take away power from those who now have it.

     To go to a gold standard is not an economic problem.  It is a military one. The government entity in Washington has killed hundreds of thousands of people over the last generation.  If you think that they are going to cede power to a decentralized system without a fight, you are naive.

Hoffman is right: if gold  becomes a problem for the state, those who control the state will pull out their long knives.

The present criminal state can be beaten. Although powerful, it is controlled by men who are stupid beyond measure.  They will run the ship of state onto the rocks, and destroy themselves.  The real danger is that they will take us with them.

In reply to by Hoffman Lenz

Hoffman Lenz 7againstThebes Fri, 02/09/2018 - 08:05 Permalink

"The present criminal state can be beaten."
It's my one hope for cryprocurrencies; that they may bring down the current system.

It's an idea that's not very popular with most gold-bugs (and yes, I hold pm's. Though they're somewhere on the bottom of a lake due to a boating accident!).
The trouble with gold as an alternative is that it's bulky and easy to steal, which is why paper took off in the first place (Templar Knights, etc).

Some on here laugh that there are over 1,000 cc's. I don't see that as a problem. In fact I see it as a benefit. It costs very little to exchange them, and the more of them there are, the harder it is for tptb to control them. My neighbourhood/village/town/city/county could have it's own cc if necessary, in case things break down everywhere else. It would keep the wheels of commerce moving, at least at a local level.

The EMP argument is also flawed. The only reason there would be an EMP large enough to take out a country is because tptb want there to be an EMP large enough to take out a country. And the only reason that they can control us so thoroughly is because of technology. The same technology that would be wiped out by the EMP. Therefore, no EMP.

Yes, it's about power. You may be right and they are stupid, but they still have all the good cards in a deck that they have marked. The only other way is to relinquish them of that power. Other than a coordinated revolution covering Europe and North America, what are our options?

In reply to by 7againstThebes

messystateofaffairs Fri, 02/09/2018 - 05:14 Permalink

Sadly, under current ideological conditions, a return to gold money is definitely not on the financial horizon.  

Needs fixing.

Sadly, under current Jewish conditions, a return to gold money is definitely not on the financial horizon.

bombdog Fri, 02/09/2018 - 05:14 Permalink

Since the Chinese will probably do this via Shanghai gold exchange, why not simply Yuanize the United States? After all, America has been encouraging dollarization for so many other countries. If it's good enough for the goose it's good enough for the gander.

CasualKat Fri, 02/09/2018 - 05:18 Permalink

JP Morgan has been stacking silver. At one point when under scrutiny for something shady they were excused as they were acting as "agents of the government". Silver has a high tech value moving forward. Possible? 

Offthebeach Jack Oliver Fri, 02/09/2018 - 06:18 Permalink

US has immense gold.  Reserves.  If people really want it, they will express to buy it.  Or not.  Or just what is being dug up now.  There is no law, nor physical reason gold mining couldn't increase by ten times( 1,000% ), except that no one wants to pay.   

So the people that do have gold, seem to have enough, and are not willing to give up more dollars for more gold. ( They are dollar hoarders, dollar bugs )

In reply to by Jack Oliver

Memedada Fri, 02/09/2018 - 05:35 Permalink

Trump, being a fiat-billionaire/a banster-pawn, has no interest in a gold-backed dollar. His entire “fortune” (paper with zeroes on) is based on Ponzi-schemes (that’s how you make “money”/fiat in real estate and casinos). Plus, his deep state handlers (his swampy cabinet of Goldmanites, MIC-generals and Exxon CEOs) would easily “convince” him of the wonders of fiat-printing (look how Trump marvels in his own “genius” in creating the current – however waning -  stock-hyper-Ponzi. In other words: he is an idiot or a willing propagandist for the banksters to tell the plebs that a rising stock market has anything to do with the fundamentals of the economy being sound…in a fiat-controlled world).

Plus, Trumps fortune is inherited. Had he put his inherited “wealth”/fiat into random stocks he would have been richer today than he is = he has a negative alpha (i.e. don't hope for him suddenly understanding economics...).  

gmak Fri, 02/09/2018 - 05:53 Permalink

Every bar of physical gold out there has been re-hypothecated and sold short so many times that when the ponzi ends, there is going to be a lot of wailing and gnashing of teeth for those who thought that the gold was safe in someone else's vault. 

 

I just wish that I had not lost mine in a boat-capsize while taking it out to an island. I'm happy to have escaped with my life.

Easyp Fri, 02/09/2018 - 05:53 Permalink

Gold, Silver and Oil maybe.  The argument against a return to the Gold Standard is that its mismanagement by people long dead made the 1930s depression tougher then it needed to be.

While that is true why do people assume that those same mistakes might be repeated?  Ditch the Fed and get Washington to put into law a new $ which will always be supported by some form of recognized commodity.  Give companies the option to pay federal taxes in commodities. 

gmak Fri, 02/09/2018 - 05:57 Permalink

The 1930s depression was as bad as it was because of all the prolific borrowing and debt ballon that happened in the decade before. The standard of living had to fall to "retire" that debt through non-payment. But, at the same time, there was a dust bowl in the most fertile agra-regions which led to many many farmers and workers becoming itterant labour. Hence the grapes of wrath.

 

Mal-investment from all that debt in the decade before created a financial asset bubble and the false signals of debt-fuelled consumption. Too much capacity + too many jobs based on debt = rapidly declining standard of living when the debt exceeds the ability to repay.

shovelhead gmak Fri, 02/09/2018 - 08:38 Permalink

The real tipping point of the Depression wasn't domestic credit but foreign credit. As the mantle of King of the Industrial Revolution passed from England to America in the prior century, America's prodigious agriculture and manufacturing revolution was poised to profit immensely around the globe and particularly in Europe, that was devastated by WWI.

Unfortunately all this buying was done on credit extended by American banking consortiums.  When the inevitable defaults could no longer be papered over, a cascading broken bank effect took hold which was exacerbated by domestic borrowing to feed the boom. Farmers borrowed to expand holdings and modernize equipment the same as manufacturers to feed demand fueled by credit and suffered when the frenzy of note-calling arrived at their doorstep.

The arguable points in this was that Hoovers lassez faire approach to the bank crisis would have flushed the system quickly of bad debt and left some dead and others wounded and made room for more fiscally prudent firms to take their place, but soon was replaced by Roosevelt's meddling in all aspects of the economy trying to 'fix' it thus extending the crisis.

Here we come to the standard trope of 'stock market crash' Depression Theory which played a highly visible, but actually minor part of the whole.

The never learned lesson from all this seems to be unbridled lending to those of dubious means of repayment, while promising enormous riches in the short term, rarely deliver in the long and lead to disaster affecting the foolish as well as the wise.

 

In reply to by gmak

rphb Fri, 02/09/2018 - 06:07 Permalink

"A gold backed dollar" I don't think he knows what a dollar is. The dollar is a debt, ponzi and pyramid scheme of titanic proportions. A fraud cannot be based in honesty any more then a lie can be true.

What we can have is a post-dollar gold currency, but we need to get to the post- first, we need to first get rid of all the rot.

AUD Fri, 02/09/2018 - 06:40 Permalink

return the dollar to its original function – a warehouse receipt that can be redeemed for precious metals

Rubbish. The dollar, as issued by a bank, is the more marketable form of a bill of exchange. Or should be. It was never a warehouse receipt. No bank as ever had the gold to redeem every $ on issue, nor is it necessary.

hardmedicine Fri, 02/09/2018 - 06:45 Permalink

The one thing that keeps coming to my  mind is that if a community could rally together, and take enough of their children out of the government funded school system, band together to home school them, then the school system would collapse.  Then how are they going to collect school taxes?  If the school system is collapsed then the school taxes (which are astronomical here in Texas) would collapse

Then the real estate valuation in the community would rise, people would want to move there. And once that momentum was accomplished I feel that a voluntaryist community could be a reality.

 

does anyone here see this as doable?