This article is a bit alarmist and probably politically slanted, and it's over two years old, but it has some interesting data which ring true and which I was not aware of.
Quotes:
In 1971 several countries simultaeously tried to sell a small portion of their dollars to the US for gold. Krassimir Petrov, (Ph. D. in Economics at Ohio University) recently wrote, "The US Government defaulted on its payment on August 15, 1971. While popular spin told the story of `severing the link between the dollar and gold', in reality the denial to pay back in gold was an act of bankruptcy by the US Government."
[.... ] Dr Bulent Gukay of Keele University recently wrote, "This system of the US dollar acting as global reserve currency in oil trade keeps the demand for the dollar `artificially' high. This enables the US to carry out printing dollars at the price of next to nothing to fund increased military spending and consumer spending on imports. There is no theoretical limit to the amount of dollars that can be printed. As long as the US has no serious challengers, and the other states have confidence in the US dollar, the system functions."
6 comments:
I don't understand most of that complicated global-economics mumbo-jumbo (there's a lot of local-economics mumbo-jumbo I don't understand, too), but I'd have to say I wouldn't be surprised if the US government really acts with "total fiat" on all matters, whether economic or not.
I recall when someone explained to me that a house mortgage "creates money" in the overall economy. I found it quite interesting, to hear the explanation, and then I immediately lost it from my head. They explained it to me again at a later date and I lost it again just as quickly.
Doesn't stick to me. Meh ...
Well, we don't have to pay in gold when the dollar is backed by oil! Have you seen Robert Newan's history of Oil? It is very entertaining and informative, and he talks about the relationship between the dollar and oil. The link is to part 5 of 9.
http://www.youtube.com/watch?v=Z3ZVgj_-VAg
It was the end of the WWII Breton Woods Agreement. Gold backed US dollars in international exchange. Foreign countries could request gold for the dollars they accumulated.
The other parties in the agreement made their currencies convertible in US dollars. The US dollar took the position as the World Reserve currency.
At the end of the Second World War the US held most of the worlds gold reserves. The 1960's War on Poverty and Vietnam War were highly inflationary. Foreign governments increasingly demanded Gold for Dollars eventually turning into a hemorrhage.
De Gaul being no fool in 1971 demanded for France a large exchange of Gold for Dollars. Nixon's Treasury complied and promptly closed the "Gold Window".
This made the US Dollar a completely "Fiat" currency as well as all other currencies in the agreement worldwide. The only "Hard" currency left was the Swiss Franc backed at 40% Gold. That ended in the late 90's.
Inflation is the excess introduction of currency into an economy at a rate greater than the increase in Gross National Product. Wars can be fought and Votes be bought with this excess money and the average Rube has no idea why.
It is a secret tax, legal counterfeiting, fraud, and theft, take your pick.
The Congress of the US abdicated its responsibility to create and regulate the Money in the US. The Wealthy Bankers in NY, London, and Europe created the private Central Bank "The US Federal Reserve" in 1913. They like the private Bank of England and the private Central Banks of Europe have the government sanctioned privilege of creating money from nothing and loaning something that cost nothing at interest to the government i.e. "rube taxpayers" creating permanant National Debts ie. Interest payments to private banking families in perpetuity.
Pretty soon the only viable currency will be in carbon credits. The world financial system has relied increasingly on debt for the last 400 years... it's about time we began paying mother nature back!
http://www.michaeljournal.org/myth.htm
About Money,a parable.
The same people that ruined our money now want to tax the air we breath with fraudulent "Carbon Taxes.
Lewis Black: The End of an Empire sale (video)
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