The following is an excerpt from the book: Empire of Debt: The Rise of an Epic Financial Crisis by Bill Bonner and Addison Wiggin…
“Globalized commerce, as practiced by the United States since 1971, has a fraudulent side. The hegemonic power uses political means; even when it shops. During the last big boost in the division of labor, in the nineteenth century up until 1913, gold backed the money in which transactions were calibrated. No country – not even an imperial one – could cheat.
“If a country consumed more than it produced, other countries found themselves with surpluses of the laggard nation’s currency. They then could ask for gold in settlement. Gold was real, ultimate money. No nation could manufacture it. No national assembly could undermine its value or pass a law that increased it. When a nation’s gold horde was in danger, it quickly adjusted its policies to correct the imbalance and protect its gold. The dollar, on the other hand, is merely a piece of paper, and since Nixon slammed the gold window shut it is backed by nothing more than the full faith and credit of the United States Treasury. How good a promise is that? No one knows for sure.
“The government set up the Federal Reserve in the first place because it wanted a stooge currency. Gold is fine, they said, but it’s antisocial. It resists progress and drags its feet on financing new wars and social programs. When we face a war or a great national purpose, we need money that is more patriotic, they said. Gold malingers. Gold hesitates. Gold is reticent. Gold keeps to itself, offering neither advice nor encouragement. God has no party affiliation; it doesn’t vote. What we need, policymakers said themselves, is a more public-spirited money, a source of public funding, a flexible, expandable national currency, a political money that we can work with. We need a dollar that is not linked to gold.
“In the many years since the Federal Reserve was set up in 1913, gold has remained as steadfast and immoble as ever. An ounce of it today buys about the same amount of goods and services as an ounce did in 1913, and roughly the same amount as it did when Christ was born. But the dollar has gone along with every bit of political gimcracker that has come along – the war in Europe, the New Deal, World War II, the Cold War, the Vietnam War, the war on poverty, the war on illiteracy, the New Frontier, the Great Society, Social Security, Medicare, Medicaid, the war in Iraq, the war on terror. As a result, guess how much a dollar is worth today in comparison to one in 1913? Five cents.
“The Federal Reserve system was set up to provide the nation’s empire builders with a convenient, expandable, and compliant money. Whenever they felt they needed more of it, the dollar was right there, ready for duty.
“There was a crack in that bell, too. The dollar was ready for service, but its very willingness to serve its masters in Washington made it unreliable to the rest of the world. If the Fed asked the dollar to jump off a cliff, it would do so, no questions asked. This might be a benefit to Washington, but to Tokyo or Peking, it was a risk. At the beginning of 2005, the two nations together held many U.S. Treasury notes that could take a dive at any time.
“Since 1971, the United States has added trillions to the world’s supply of dollars and credit. During this same time only about 58,000 metric tons of gold have been brought from the ground. Sooner or later, those extra dollars must be marked to an unforgiving market.
“Of course, it hasn’t happened yet. Investors are tempted to look out their windows, see the sun shining, and think the good times will last forever. They have no interest in the financial crimes of the Disco Age.”
This book was copyrighted in 2006. If you’ve been paying any attention to the stock market, commodities, gold, oil, and currency, you know the dollar is starting to be “marked to market.”
I suggest you get a copy of the book and read it. You’ll be glad you did.
I also suggest you sign up for their email publication: The Daily Reckoning.