The fiat currency regime is a profoundly parasitic system. It is parasitic because the dominant currency (the US dollar),also known as the reserve currency or official currency of the world sucks the energy and blood of the rest of the world. It affects the whole non Anglo-American World.
The system was set up in Bretton-Woods, New Hampshire in 1944. The sucking instruments were the International Monetary Fund, the World Bank, the Agency for International Development and others. The modus operandi was the creation of debt denominated in dollars.The plan was and still is to place into debt the entire world, especially the Third World and the former Communist World.
Being in debt in a foreign currency implies that a country must earn that currency by selling its own natural resources at ever cheaper prices. Devaluation of the local currency ensues, inflation follows. The local population, already poor, is faced with a threat to its survival but the creditors’ mission has been accomplished. This method of operation is repeated over and over again. The governments of these miserable countries are blamed and if they rebel they are overthrown. Hyperinflationary depression is the end result.
A similar fate is awaiting the US. Since 1945 the US has been sucking the blood of the rest of the world. First, on the basis of the dollar being linked to gold at thirty five dollars an ounce. When this policy became too costly, the US simply defaulted. The US was losing too much gold. New policy was introduced, the petro dollar,by inducing oil producing countries to sell their oil only in dollars. The Shah of Iran played a key role and his role in this policy sealed his fate. One must remember that Iran is a millennial civilisation. Also, all trade and debt continued to be based on dollars. In the nineteen seventies the dollar weakened and precious metals spiked as inflation spiked to almost hyperinflationary levels. Interest rates were raised to almost twenty percent. Savers were doing great. The Cold War intensified. The Soviet Union dissolved itself. Japan entered a declining phase. China accommodated the US, formed a “modus vivendi” with the US but Russia was on its knees. It was plundered by the the West via Yeltsin and the oligarchs. Europe was compliant to the US and the dollar reigned supreme.
Good things never last. The tech bubble burst in 2000. The housing bubble inflated. 911 happened. The sympathy of the world was on America’s side. Wars were started. First Afghanistan,then Iraq. In Afghanistan, the Taliban were US allies but then they reduced the production of opium to only ninety six tons. That threatened the value of the dollar. The US attacked Afghanistan. The excuse was El-Quaida and 911. The production of opium went from ninety six tons to six thousand four hundred tons. In dollar terms, this is over six trillion annually and all traded in dollars. That trade supports the dollar and keeps domestic inflation at bay because the opium or drug trade is the biggest form of trade in the world (it is bigger than even the automobile or oil industries! ) Weapons of mass destruction were the reason given to attack Iraq. The real reason was Saddam Hossein wanted to sell Iraqui oil for Euros. Libya was destroyed because Gaddafi wanted to use Gold Dinar.
Housing and the debt bubble collapsed. The system was shaken to its foundation. Zero interest rates were introduced. Quantitative Easing was instituted. Easy money poured into the stock market, the bond market, high end real estate market, and various kinds of speculations. Money poured into the US from all over the world. The dollar rose. Gold and other precious metals went into collapse. All commodities went into collapse mode. The third world is entering hyperinflationary depression. In the US, they are talking about deflation. The only deflation that is being experienced in the US is the standard of living of ninety percent of Americans. This has never happened before. During the nineteen thirties, the standard of living of people who worked rose because the prices of everything had collapsed, including the dollar. Dollar was devalued with respect to gold to thirty five dollars an ounce from twenty dollars and sixty seven cents.
There is no deflation in America except in living standards for ninety percent of its people. The prices of everything including groceries, services, health care, rents,etc are going up. Wages are stagnating. The buying power of the dollar is going down. Since 1945, the US has been exporting inflation to the rest of the world. The rest of the world is slowly de-dollarizing. The dollar will be abandoned. Nobody will want a piece of paper that is backed by nothing except the “Full Faith and Credit” of the United States. Inflation is coming to the US. If the dollar were gold backed currency, the US would not be having these problems. Under fiat currency deflation it is not possible. Only gold or gold-backed currency leads to deflation. Time will tell.