The Dollar's 70-Year Dominance Slowly Coming To An End

Authored by Alex Deluce via GoldTelegraph.com,

The US dollar hasn’t been backed by gold since 1971, but that might change soon.

Republican Congressman Alex Mooney is proposing that the US once again place value on the dollar by backing it with physical gold. The problem is, the Federal Reserve has been printing money with the abandon of a drunken copy machine, and the 147.3 million ounces of gold being held in Ft. Knox may not be enough to cover the out-of-control fiat currency currently in circulation.

According to Alex Mooney’s bill, the dollar has decreased 30 percent in purchasing power since 2000. It has lost 96 percent of its value since 1913. On an average, the US is devalued by 50 percent every generation.

If the gold standard were to be reinstated, control of the dollar would revert to free market forces instead of the whim of the Federal Reserve. It would mean that each dollar would have its equivalent in gold, as it did prior to 1913. At that time, the US economy grew at a robust annual rate of 4 percent compared to an average annual growth of 2 percent since 2000.

Officially, the US has 8,133.5 tons of gold in reserves, although the government won’t confirm that number. No one is permitted inside the various vaults to verify. Even the purity of the available gold bars is in question, as many may not conform to industry standards. As other countries contemplate the return to the gold standard, unless the US catches up, the dollar will lose its dominance as the world reserve currency.

China launched its oil futures-backed Petro-Yuan in March.

The oil industry has revolved around the petrodollar since the 1970s. It is expected that the Petro-Yuan will take up to $800 billion worth of trade from the petrodollar. Currently, the petrodollar secures global demand for the dollar. For the US, the petrodollar translates into tremendous purchasing power. China’s Petro-Yuan may change all that.

China is the largest crude oil importer in the world, and that may give it enough leverage to unseat the US dollar when it begins to pay Saudi Arabia for its crude in Petro-Yuan. This provides an opportunity for oil exporters to bypass the current powerful petrodollar arrangement. If this happens, it could mean serious trouble for the US dollar. The value of the dollar is heavily dependent upon US oil imports. If oil exporters become dependent on the Petro-Yuan instead of the petrodollar, it could be the death blow for the dollar. In addition to the Petro-Yuan, China has been quietly building up its gold reserves for years and may have plans to ultimately back the yuan with gold.

President Trump has been discussing tariffs on Chinese imports while attempting to persuade Beijing not to use its crude oil contracts as a means of trade. China is unlikely to agree to this, thus opening the possibility of a nasty trade war between the two countries.

China has much to lose in a trade war. Its economy is overly dependent on exports to the US. Also, the Petro-Yuan is, as yet, an unknown quantity, while the petrodollar has been securely established for decades. In addition, the US is less dependent on oil than China, as it is able to produce more oil for its own needs. While China’s oil futures are a wakeup call to the US, they are still a dice toss.

Additionally, Germany is another country that is rediscovering the value of gold. The Deutsche Bundesbank has recently recalled $28 billion worth of gold previously stored in New York and Paris back to Frankfurt.

The National Bank of Hungary has called back 100,000 ounces of gold back to its Budapest reserves in an effort to strengthen its own market. Other central banks have followed suit. There is a global interest in keeping gold reserves close to home in the event of upheaval in the geopolitical situation.

At this point, it is unknown whether Congressman Mooney’s bill to reinstate the gold standard will pass. What is certain is that the global interest in gold continues to take off. In bettor’s terms, gold is the last ace in the hole for global currency stability.

Comments

Victor von Doom beepbop Fri, 04/20/2018 - 03:33 Permalink

No it wouldn't. They'd just start printing excess claim notes again. This was the original reason why Nixon took the US off the last vestiges of a gold standard to begin with - de Gaul had busted open the myth that the US was on any form of a gold standard even when it said it was.

Gold standards are fiction. Come on guys - you all know this. If you don't own the phys, you don't own the gold.

Enough said.

In reply to by beepbop

RafterManFMJ beepbop Fri, 04/20/2018 - 07:25 Permalink

There's NO REASON to "back" the dollar figuratively - do it literally.

A fraction of a gram of gold hammered thin into a foil and sealed in a fancy polymer bill; easy to do with today's technology 

And there you fucking go; ezpz 

Bigger denominations - more weight per bill

EVEN BIGGER? How about a silver coin with 1/4 oz gold all pretty in the center?

FUCK THIS "backing" shit which is forever open to manipulation - put the gdamn metal INTO the currency 

In reply to by beepbop

COSMOS Déjà view Fri, 04/20/2018 - 01:28 Permalink

And some numbskull expert in the article of lottery winners losing all their wealth recommended they not take a lump sum but take the monthly payments since it pays more.  LOL with this erosion in value accelerating as the fed keeps printing they most likely will end up broke faster since the millions they get every month wont buy a loaf of bread.

In reply to by Déjà view

RU4Au Yellow_Snow Fri, 04/20/2018 - 00:10 Permalink

"The problem is, the Federal Reserve has been printing money with the abandon of a drunken copy machine, and the 147.3 million ounces of gold being held in Ft. Knox may not be enough to cover the out-of-control fiat currency currently in circulation. "

This is a commonly repeated fallacy. Please watch the link below to understand why there is always enough gold to back the currency, unless of course there is absolutely none.

 

https://www.youtube.com/watch?v=kwY43hjq754

In reply to by Yellow_Snow

Jack Oliver NugginFuts Fri, 04/20/2018 - 04:28 Permalink

Governor who suggested this - needs to face FUCKING reality ! 

The GOLD standard has a historic ratio of 10 to 1 !!

Meaning  - for the value of every ton of gold a country held - they would permit the treasury to print up 10x the gold value in PAPER ! 

So essentially - it was backed by GOLD ! 

So - with a gold standard ratio of a million to one ( that’s what would be required by the US - unless of course they FUCKING lie about their gold holdings) 

Basically - they are FUCKED - Enormous debt and NO gold !! 

In reply to by NugginFuts

Fireman NugginFuts Fri, 04/20/2018 - 05:24 Permalink

"Gold is safe" as Munchkins and his latex dominatrix said as they visited the nerve gas installation at Fort Knox.... What he didn't say of course is that it is safe in Moscow and Beijing who have more than 20,000 tons apiece. The future of money will be decided by those that have gold and resources and that most definitely is no the anglozionazi empire of filth.

In reply to by NugginFuts

Hurricane Baby Thu, 04/19/2018 - 23:04 Permalink

US$ backed with gold? That ship has sailed, at least under the present regime.

The petrodollar thing is eroding as well.

Good thing the narcotics trade is based on the US$ or it would be Weimar here already.

OliverAnd Thu, 04/19/2018 - 23:08 Permalink

I always laugh when I see the 91 year old Queen of England picking up a 27 pound gold bar as if it were a bar of soap during her visits to the vault at UK's Central Bank in London.

SergeA.Storms Thu, 04/19/2018 - 23:19 Permalink

We will never go back to the gold standard.  Not enough gold even at a gazillion dollars an ounce.  Do you think TPTB are going to let every stacker out there let the shiny asset jump up a gazillion dollars?  Never. Gonna. Happen.  If you stack waiting for the big pop then you better dig in and plan for the great, great, grand kids.  I stack to hedge against future collapse and everything else seems to be as controlled in our banker driven world.  I’m not in the club, but I want a better, secure future for my little spawnling, what ever comes down the pipe.

JLarryL Thu, 04/19/2018 - 23:22 Permalink

They would have to revalue gold upward dramatically. But first they would confiscate it. And after that nationalize all retirement accounts. For everyone's benefit.

flyonmywall Thu, 04/19/2018 - 23:23 Permalink

Dollars will be used for kindling. It's just a matter of time. How much time is anybody's guess.

Given how far down the road Japan has kicked the can, with endless money printing, endless deficits and endless corruption, I'd say the US can go on at least as long as Japan.

We will all be Japanese at some point, the only question is how long that will take. I'd say 30-40 years. Deficits will go well into the $30-40 trillion range before it happens. The pundits will say debt doesn't matter, blah, blah, blah, until it does.

 

loveyajimbo flyonmywall Thu, 04/19/2018 - 23:41 Permalink

Incorrect.  Interest payments on the debt are already becoming a huge percent of REQUIRED expenditures... at historically LOW rates... and we are running $Trillion++ annual deficits. 

When interest rates "normalize", like the Fed and the markets intend... those interest payments will become overwhelming.  China and Japan are drastically slowing their purchases of US debt...

It is spelled DEFAULT... Credit collapse... Hyper-inflation... massive DEPRESSION... game over.  A mathematical certainty.

In reply to by flyonmywall

moonstears Thu, 04/19/2018 - 23:26 Permalink

US Mint needs a $500 Silver coin, that's your return to. Available upon request at any bank. (You can buy an ozt Ag for $45~ as we speak..true USD price of silver vs $17??)