A second reserve currency of choice will put the US dollar under pressure
by Humayun Gauhar
Overrated economists — technicians masquerading as designers really — helped destroy the global economy for hegemonic ends by dropping the gold standard in the early Seventies and making the US dollar the reserve currency, claiming that “the dollar is as good as gold” and would remain ‘stable’ within a certain narrow value band. In the event it did not, and far from being “as good as gold”, it hardly remained worth the paper it is printed on. The net effect was that the US and thus the global economy fell into the merciless hands of Wall Street banks and banksters who played all sorts of games to impoverish people and played merry hell with national economies.
More was to come: the US made it so that crude oil could only be brought or sold in US dollars, making it imperative for all oil-importing countries, which most are, to hoard dollars. Came into being two private oil bourses owned by US citizens, needless to say, one in New York and the other in London. Saddam Hussein decided to sell some of Iraq’s oil in euro and see what happened to him and his country. Ahmadinejad tried to set up his own oil bourse to trade Iran’s not in dollars. Others like Venezuela and Russia supported him. See what happened to Iran – it was turned into a nuclear weapons ‘terrorist’. We Pakistanis are familiar with this kind of story.
Thus, times were that the strength of a country’s economy was judged on the size of its gold reserves; later it became the size of its dollar reserves. Basically, paper became gold. Have you ever seen a bigger swindle than that?
Okay, so from after the dropping of the gold standard, the value of currencies depended not on how much gold it was backed by but on the value of the dollar and how many it had in reserve. But what determined the value of the US dollar?
Don’t laugh, but the answer is, the US dollar. The dollar backed the dollar. Try wrapping your mind around that. Times were when every currency note stated that if you took it to its central bank you would be paid the equivalent in gold. Today take Rs1,000, say, or any other currency, to a central bank and its governor promises to pay you Rs1,000. What the hell does that mean? Words escape me. Yet the huge con job escaped most people.
The results of this great swindle are before us. We have seen the world’s currencies go to hell. Worse, we have seen the global economy teeter on the edge of a precipice. The world economy and the economies of many countries, including of the USA, are in disarray. In 2008 we saw how the swindle could destroy purportedly the most powerful economy in history. The solution they found to this disaster was – believe you me – to bail out the instruments of swindling, the banks and banksters, not the swindled. Who says that mankind doesn’t have inbuilt self-destruct genes. We’ll be back to barter yet before we are done.
Ever since this Great Gold Swindle these same ‘economists’ have been telling us that the world could never return to the gold standard. Everyone had sold their gold reserves and bought the dollar. Meanwhile the US, which owns the dollar, kept buying gold.
Now it seems that the ‘unthinkable’ might yet happen and we might see another reserve currency in addition to the dollar. World currencies could even start returning to the gold standard, or some other commodity with intrinsic value (though for the life of me I cannot imagine what it could be) as the charade of the US dollar “being as good as gold” fades and the Chinese yuan rises. So compelling has been the rise of the Chinese economy and the concomitant rise of the yuan that the IMF has had no option but to accept the Yuan into the IMF’s foreign exchange basket. This would place the yuan at a par with the USD. I had been predicting this for years in various articles; so had many others all over the world.
Let me tell it to you as ‘they’ say it in the words of ‘their’ news organisation, Reuters. “The IMF officially green-lighted the acceptance of China’s currency – the yuan – into the IMF’s foreign exchange basket…This move paves the way for the IMF to place the yuan on a par with the US dollar. This is the latest in a series of global developments that threatens to eliminate the US dollar as the world’s reserve currency. Experts predict this announcement will trigger one of the most profound transfers of wealth in our lifetime. So if you want to protect your savings and retirement, you better get your money out of US dollar investments and into the one asset class that rises as currencies collapse.
“The International Monetary Fund, or IMF, is one of the most secretive and powerful organisations in the world. They monitor the financial health of more than 185 countries. They establish global money rules and provide ‘bail-out’ assistance to bankrupt nations. Some are warning that any move by the IMF to supplant the US dollar could be catastrophic to American investments.
“And now, the IMF has made the first move. As reported by The Wall Street Journal, the IMF officially green-lighted the acceptance of China’s currency – the yuan – into the IMF’s foreign exchange basket. This marks the first time in history the IMF has expanded the number of currencies in the foreign exchange basket. This means that the Chinese currency will now become a viable global alternative to the US dollar.
According to Juan Zarate, who helped implement financial sanctions while serving in George W. Bush’s Treasury department: “Once the [other currency] becomes an alternative to the dollar, rules of the game begin to change.”
Leong Sing Chiong, Assistant Managing Director at a major central bank, said this dollar alternative ‘is likely to transform the financial landscape in the next 5-10 years.’
Currency expert Dr Steve Sjuggerud warned, “I’ve been active in the markets for over two decades now, but I’ve never seen anything that could move so much money, so quickly. The announcement will start a domino effect, that will basically determine who in America gets rich in the years to come, and who struggles.”
Dr Sjuggerud says if you own any US ‘paper’ assets – and that includes stocks, bonds, or just cash in a bank account – you should be aware of what’s about to happen and know how to prepare. A number of experts believe a recent spike in gold and silver prices is a direct result of the IMF’s action. Precious metals notoriously rise when the US dollar falls.
For the last 600 years, there have been six different global reserve currencies controlled by world superpowers. The latest – the US dollar – has dominated world currency for over 80 years. The alarming fact is, global reserve currencies have collapsed every 80-90 years for the last six centuries! What does this mean for America and the dominance of the US dollar? Based on recent evidence and long-standing historical trends, experts predict the imminent collapse of the US dollar!
Paper currency is “fiat” currency. It is paper currency backed by nothing tangible. As opposed to ‘sound money’ which is backed by gold or some other valuable commodity, a fiat currency is backed by nothing more than faith in the government. The US dollar has been a fiat currency since Nixon closed the gold window in 1971 in what was the greatest heist in American history. The scary fact is, the average life span of a fiat currency is 40 years, and the US dollar has now exceeded 40 years as a fiat currency!
Prior to 1933 and for well over 100 years, the dollar was backed by gold, and $20 bought you an ounce of gold. But after the government stole all US citizens’ gold in 1933 for a $20 paper certificate, gold was revalued at US$35, meaning the dollar was devalued by 43pc overnight and all foreign and domestic holders of dollars were effectively robbed.
After Nixon closed the gold window completely in 1971, it took $67 to buy an ounce of gold, devaluing the US dollar by 50pc again. Today, it takes well over a thousand US dollars to buy that same ounce of gold. Why? Because the US dollar is now nothing more than a fast-declining Federal Reserve note backed by a corrupt government that is saddled with $18 trillion in unpayable debt — growing by $10 million per minute!
This ‘Paper Money Experiment’ has run its course. The Federal Reserve, the US government, and Wall Street crooks have misused their power by mismanaging the dollar, and now there are global repercussions. The debt load sitting on top of the US dollar is unsustainable and will continue to crush the dollar’s purchase power until no one wants to hold US dollars, and they are no longer accepted for global trade. The dollar’s collapse means that every single one of your paper investments that are dollar-backed – stocks, mutual funds, money markets, cash accounts, etc – will go down right along with the dollar! Meanwhile, the government and the banks will find a way to protect themselves at your expense.
So as we say goodbye to the US dollar’s dominance, it doesn’t have to mean goodbye to your savings and retirement. Remove at least some of your savings and retirement from the dollar-backed, paper-based financial system and protect it with the one asset that has outlasted every fiat currency ever invented for the last 5,000 years – Gold.
So there you have it. The most important issue for Pakistanis is what will be the impact on our trashed economy and what impact this will have on our huge external debt of over US$ 83 billion and growing.
What are the choices before us? Sure it will also make us wonder and conjecture about its impact on the euro. If Germany, France and Italy are still sensible, the euro might also become a third alternative global currency. Let’s see.