“What in the world is China up to? Why are the Chinese hoarding so much gold? Does China plan to back the yuan with gold and turn it into a global reserve currency? Could it be possible that China actually intends for the yuan to eventually replace the U.S. dollar as the primary reserve currency of the planet? Most people in the western world assume that China just wants a “seat at the table” and is content to let the United States run the show. But that isn’t the case at all. The truth is that China doesn’t just want to compete with the United States. Rather, China actually plans to replace the United States as the dominant economic power on the planet. In fact, China already accounts for more global trade than the United States does. So what would happen one day if China announced that it was backing the yuan with gold and that it would no longer be using the U.S. dollar in international trade? It would cause a financial shift so cataclysmic that it is hard to even imagine. Most of those that write about the “death of the U.S. dollar” usually fail to point out that China is holding a lot of the cards as far as the fate of the dollar is concerned. China owns about a trillion dollars of our debt, China is the second largest economy on the planet, and nobody uses the dollar in international trade more than China does except for the United States. Up until now, China has had to use the U.S. dollar in international trade because there has not been an attractive alternative. But a gold-backed yuan would change all of that very rapidly.”
“This is no time to be complacent. Massive economic problems are erupting all over the globe, but most people seem to believe that everything is going to be just fine. In fact, a whole bunch of recent polls and surveys show that the American people are starting to feel much better about how the U.S. economy is performing. Unfortunately, the false prosperity that we are currently enjoying is not going to last much longer. Just look at what is happening in Europe. The eurozone is now in the midst of the longest recession that it has ever experienced. Just look at what is happening over in Asia. Economic growth in India is the lowest that it has been in a decade and the Japanese financial system is beginning to spin wildly out of control. One of the only places on the entire planet where serious economic problems have not already erupted is in the United States, and that is only because we have “kicked the can down the road” by recklessly printing money and by borrowing money at an unprecedented rate. Unfortunately, the “sugar high” produced by those foolish measures is starting to wear off. We are going to experience a massive amount of economic pain along with the rest of the world – it is just a matter of time.”
“I suppose the first question is; what does it mean that we have the “world’s reserve currency”? At the end of WWII the allies met at Bretton Woods and decided to use the US dollar as the official world currency and that it would be backed by gold. All worldwide trade would be priced in dollars and settled in dollars. Food, energy (oil), etc from around the world would be priced and paid for in USD. New York became the financial center for all world trade.
Fast-forward to President Nixon in 1971 and the USD was cut loose from the gold standard due to OPEC oil imports and a growing imbalance of trade that was causing gold to flow out of the US in large amounts.”
Via Alt Market
“Is the coming financial collapse going to be inflationary or deflationary? Are we headed for rampant inflation or crippling deflation? This is a subject that is hotly debated by economists all over the country. Some insist that the wild money printing that the Federal Reserve is doing combined with out of control government spending will eventually result in hyperinflation. Others point to all of the deflationary factors in our economy and argue that we will experience tremendous deflation when the bubble economy that we are currently living in bursts. So what is the truth? Well, for the reasons listed below, I believe that we will see both. The next major financial panic will cause a substantial deflationary wave first, and after that we will see unprecedented inflation as the central bankers and our politicians respond to the financial crisis. This will happen so quickly that many will get “financial whiplash” as they try to figure out what to do with their money. We are moving toward a time of extreme financial instability, and different strategies will be called for at different times.”
“Two years ago, Zero Hedge first made the observation that the bulk of Fed reserves (also known simply as “cash created out of thin air” because money is first and foremost fungible no matter what textbook theoreticians may claim, and the only cash allocation preference is the capital allocation IRR analysis) had been parked not with US banks, but with foreign banks with US-based operations. We followed that with more analyses, showing explicitly how the Fed was providing a constant cash injection to foreign banks courtesy of the rate on overnight reserves which is the amount Fed pays to banks that hold reserves with it, as the bulk of reserves continued to end up with foreign banks – a situation set to become a huge political storm some time in 2014-2015 when the IOER has to rise and the Fed is “found” to have injected tens of billions of “interest” not into US banks but in foreign banks operating in the US, and which then can upstream the “profits” to insolvent offshore domiciled holding companies.”
Via Zero Hedge
“Were you to look at official government statistics that calculate our rate of price inflation for food, energy, clothing, and other consumer goods, you’d think that prices were as stable today as they were under the gold standard.
According to the Bureau of Labor and Statistics, the CPI (Consumer Price Index) inflation rate remains well below the Federal Reserve’s 2.5% threshold. Insofar as the government is concerned America’s core inflation rate is just 1.7%, a testament to the economic prowess of our central bank and Chairman Ben Bernanke.
And because there is no significant price rise being realized in consumer goods based on the government’s calculations, the millions of Americans dependent on disbursements like social security, disability assistance and nutritional food support will see no adjustments to their monthly stipend. And why would they? Prices aren’t rising!”
Via SHTF Plan
“The almighty dollar is looking less mighty these days. By almost every measure, the purchasing power of the US dollar is in precipitous decline.”
Via Zero Hedge
“If the American people truly understood how the Federal Reserve system works and what it has done to us, they would be screaming for it to be abolished immediately. It is a system that was designed by international bankers for the benefit of international bankers, and it is systematically impoverishing the American people. The Federal Reserve system is the primary reason why our currency has declined in value by well over 95 percent and our national debt has gotten more than 5000 times larger over the past 100 years. The Fed creates our “booms” and our “busts”, and they have done an absolutely miserable job of managing our economy. But why do we need a bunch of unelected private bankers to manage our economy and print our money for us in the first place? Wouldn’t our economy function much more efficiently if we allowed the free market to set interest rates? And according to Article I, Section 8 of the U.S. Constitution, the U.S. Congress is the one that is supposed to have the authority to “coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures”. So why is the Federal Reserve doing it? Sadly, this is the way it works all over the globe today. In fact, all 187 nations that belong to the IMF have a central bank. But the truth is that there are much better alternatives. We just need to get people educated.”