Category Archives: china

How much is the dollar really worth?

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The dollar is a fiat currency. It is created out of thin air through debt. A person goes to the bank and wants to borrow 10,000 dollars and if the borrower meets the criteria of paying back the sum plus interest agreed on, the bank issues a cheque of 10,000 dollars or direct deposits the amount to his account. Money has been created out of nothing to enslave that person for 10,000 dollars which he must now pay back at a certain interest rate for a specific period of time. In other words, he sells his labour, his life force, to pay the debt. He is exploited, he is a slave. This is the essence of capitalism, and the fiat currency is an instrument of enslavement.

Initially, the dollar was a gold backed currency as were other world currencies. President Franklin Delano Roosevelt, early in his presidency devalued gold from 20.67 dollars an ounce to 35 dollars an ounce. Also, he made it illegal for Americans to own gold, unless it was in a jewelry form of 18 karats or less. The Bretton-Woods Convention made the dollar the Reserve Currency of the World. The US would keep the gold and the rest of the world would keep the dollars. Other central banks could exchange dollars for gold at 35 dollars an ounce. Gold, however, would be stored in the US and some would be stored in London. This arrangement was propped up by fear that “the Communists” would take over if the gold was not stored in the US. Publicity  made Fort Knox, Kentucky, infamous as the storage place  for the world’s non-communist gold. General Charles de Gaulle, President of France, was not fooled. He realized it was the perfect scam. He had never trusted the Anglo-Americans. He knew how perfidious they were during the Second World War II. The Anglo-Americans hated him, and of course, he reciprocated. He withdrew France from N.A.T.O. and sent French warships to retrieve French gold from the US. Other European countries followed. A run on gold followed…

The gold drain from the US followed. President Nixon closed the Gold window. This closure was permanent, contrary to the President’s statement that  it was temporary. The US was running trade deficits and the Vietnam War was draining the country of its real wealth, gold. The dollar paper drainage was no big deal, because it was only paper. The Arab oil embargo saved the dollar and the US. The US told the oil producers to increase the price of oil but just have it denominated in dollars. The excess dollars of the world poured into US treasuries and helped finance government operation. The decade of 1970’s showcased growth throughout the world but with inflation. Gold was allowed to reach its equilibrium value of 850 dollars an ounce. Silver, taken out of circulation in 1965, went to 50 dollars an ounce in 1979-80. Interest rates were high because demand for money was high. Demand for real money, gold and silver, was high. But the dollar was losing value. In 1969, one could get four Swiss Francs for one dollar, but in 1979-80 period, the Swiss Franc was on parity with the dollar.

President Carter appointed Paul Volcker Chairman of the Federal Reserve Bank. The Prime Rate went to almost twenty percent. The price of precious metals collapsed and value of the dollar rose. Money from all over the world poured into the US. By 1992, the USSR and communism had disappeared in Europe. The end of history was proclaimed. The plunder of the ex-USSR and Eastern Europe, along with the rest of the world began with increasing tempo. A unipolar world of ten years duration was achieved. In Nature, when one extreme is reached, opposite forces start building momentum, and new forces started brewing on the horizon…

Vladimir Putin was appointed Prime Minister of Russia in 2000, and the economic decay started in the first decade of the New Millennium in the West. It is now worsening and encompassing the entire world. The central player in all this has been the dollar. It has no intrinsic value like gold, land or water, but is the instrument of US power. The US wants to maintain that power come hell or high water, and in order to maintain it, debt in dollar terms has to grow. The IMF and World Bank, along with other private organizations, are working overtime to trap more and more countries into unsustainable debt and milk them for all they are worth. This is the MODUS OPERANDI of capitalism…

But opposing forces are rising, and the de-dollarization of the world has began. The World is trying to dis-infect itself from the dollar. Very interesting and dangerous times are approaching. But the US will not willingly give up its instrument of power. It is negotiating trade deals with Europe, South America, and South East Asia to insure the dollar to be the supreme currency. It is confronting China in the South China Sea, but at the same time, it is enticing  it to join the IMF arrangement of Special Drawing Right Currency. The US wants the China to row the dollar-SDR boat, and the US would steer it. Whether China falls for it or not remains to be seen. China, Russia, Brazil, Iran, and other countries that have backbone are trading amongst themselves in their own currencies. The river of history is flowing and it cannot be reversed.

How much is the dollar really worth? Nothing. It is merely an instrument of power, intimidation, and war, like aircraft carriers. And history will be unkind to both. Only time will tell.

The North Atlantic Concept is Dying.

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In many ways, the present world situation was created in the 1930’s. The Soviet Union was considered the main threat to Western control of the world. The Soviet Union supported anti-colonial struggles throughout the Colonial World, which was controlled by Western European States and the US. Hitler was appointed Chancellor of Germany by President von Hindenburg on January 31,1933. The Nazis were the largest party in Germany. Every leader in the West knew who Adolf Hitler was. German-American and British-German friendship societies were formed glorifying German-Nordic race and culture. France and other Latin Countries of Europe were not included, even though they were the main pillars of European and Western Civilization. One cannot imagine Europe without its Greco-Roman foundation. All the sophisticated aspects of the English language are Latino-French.

Overnight, Germany became the dominant European power under Hitler. France, on the other hand, was not as influential and demanding as Germany; it had lost élan, vital in the Franco-Prussian War of 1870-71. Germany became unified under the leadership of Otto von Bismarck, the Iron Chancellor. France was easily defeated, and the Emperor, Napoleon III, was captured at Sedan in northeast France. France with its Allies was victorious in the First World War but the war was highly exhausting and destructive. In the interim period between the world wars, France had weak governments of short duration. Britain was also weak, but enjoyed a special relationship with the US. France, despite being the longest running ally of the US, did not have this special relationship…

The USSR was isolated. Despite its efforts to form an Anti-Hitler coalition, Russia had been spurned. The only ally remaining to it was Mongolia. The USSR and Mongolia defeated the Empire of Japan in the Battle of Khalkhyn Gol, Mongolia in 1939. Europe was sliding towards war. The only western European leader who could have prevented the Second World War would have been General Charles de Gaulle. Had he been the president of France during the 1930’s, he would have formed a military alliance with Russia. Germany, under Hitler, then would have been contained. De Gaulle would also have been able to restore the French elan.

In the 1930’s Hitler was on the march. All his foreign demands had been met and it was Anschluss with Austria in the spring of 1938 and then the takeover of Czecho-Slovakia in the Autumn 1938, via Munich Agreement. The USSR wanted to defend the  Czech interests but was not invited to attend Munich. The secret British and American idea was to entice Hitler to attack Russia, and establish Lebensraum {Living space}, for Germany in the East, which had been Hitler’s goal from the very beginning. The wheels of war were set into motion secretly by the West. When the Soviet-German Non Aggression Pact was signed in August,1939, the West was indignant. Russia, how dare you ! Only the West is allowed such games. The invasion of Russia was then postponed, but not for long…

When Hitler attacked Poland on September 1, 1939, Britain and France declared war on Germany with reluctance. The “Phony War” followed on the Western Front. Britain and France were more interested in helping Finland in the Soviet-Finnish War than fighting Germany. After the French defeat and the British graceful exit from Dunkirk, Hitler was ready to attack Russia on June 22, 1941. The Western press gloated. Germany would win in about six to sixteen weeks. There would be tripartite control of the world, the British Empire, Germany, and the US. Germany would control the USSR land mass, Britain and the US would control the rest of the world. The US and Britain gave Germany about three years to defeat the USSR, but it never happened. By 1944, it was apparent that Germany would lose the war in the East,  and the Western Allies panicked. The Second Front was organized with the Normandy invasion to share in the division of Europe. The Cold War started long before the Second World War had ended. Operation Unthinkable was suggested by Churchill, as well as other plans by the Americans to destroy the USSR. And the Cold War never ended when USSR dissolved…

The Cold War continues today in multiple forms. NATO is expanding even though it is decaying. The Montenegro elite want to join NATO. The currency war against the ruble is raging. Oil prices were decreased in an attempt to hurt Russia. Sanctions and trade embargoes are being waged. Russia and ISIL have been declared enemies of the US. This is crazy. This US wants to destroy Russia to save its failing economic system which ultimately cannot be salvaged. The boomerang of sanctions and embargoes against Russia are only hurting the European Union. The European economy is just as bad as the US’s, if not worse. The onslaught of refugees is destroying the fabric of Europe. The Russian plane and Paris tragedies are changing the very policies of Europe. Europe will drift away from the North Atlantic and embrace Afro-Eurasia. Latin America is already embracing Afro-Eurasia. The US is Introducing counter measures such as the Trans-Pacific Partnership and Trans-Atlantic Trade and Investment Policy, which may or may not work.

The US is in a difficult position. The world is coalescing around Russia and China, and it cannot do much about it. The US  has only known one means of control: the policy of confrontation and intimidation it has used since its very inception. The Ruling Elite of the country will not change, although some members of the Elite perceive the danger. In a previous post, I said that US finance capitalism is supported by three pillars: paper (the dollar), the stock market, and the bond market, and that all three of these are based on debt. If one falters, all three will fall and the US economy will enter a black hole, and the European Union will drift away from Canada and the USA. Only time will tell.

 

 

The Dollar vs Gold

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There is a battle going on between the International Community of the West and he International Community of the Rest. This has been going on since the beginning of Colonialism. The Colonial Powers of the West have practiced a policy of conquest and exploitation, which still continues. Its’ instrument of exploitation is the dollar. The US owns, prints, and uses the dollar to its advantage. Even the European Union States, in trade amongst themselves, must use the Dollar. Such is the power of the dollar and the US, and the US wants to preserve this power…

But now the dollar is under attack, even though the US Dollar Index is above 90. (Actually, it is around 97.) The Index measures the value of the dollar versus other convertible currencies such as the Euro, Yen, British pound, Canadian and Australian dollars, and of course, the Swiss Franc. The Dollar Index has gone as high as above 120, and as low being below 80. A range between 90 and 100 is ideal. Not too hot, not too cold. It is hot enough to destroy or devalue currencies of natural resource countries such as Brazil, Venezuela, Argentina, etc; countries that have an independent economic and foreign policy. These and other countries suffer from immense dollar debt. As dollar value rises their debt burden rises and becomes unbearable. Social upheaval follows. Regime change takes place, either peacefully or violently, and a friendly regime is installed that does what the US wants it to do. Lately this Modus Operandi has not been too successful in Latin America.

It has contributed to the destruction of Socialism. The CIA has probably infiltrated every socialist government in Eastern Europe, including the Soviet Union. Émigré groups have played a key role. How does one explain the fate of Nicolae Ceausescu who went from being the “de Gaulle of Eastern Europe” to being executed by firing squad together with his wife, Elena?  Simple. He had after all, paid his dollar debt to the West by practicing severe austerity. And now, Romania is again in debt, and its economic conditions are not very good. It is member of NATO and the European Union. Now, Romania, has no real say on the world stage as it had under Ceausescu. Such is life. Since the collapse of the Soviet Union, the success has not been that great. Afghanistan has been occupied but not conquered. The Taliban will most likely win. The US will be kicked out. Opium trade which is controlled by the US will probably be lost, and the dollar will lose its significance in the opium trade. The opium and illegal drug trades are huge. Trading in drugs is the number one trade in the world. It dwarfs oil, natural gas, and automobiles. And, it is based on dollar. Wonder why US wants to be in Afghanistan? The drug trade supports the dollar.

The dollar is fiat currency based on debt. When debt in dollar terms grows, the power of the US grows. The indebted countries are manipulated according to the needs of the dollar country. Zero interest rates entices more countries into debt, because these countries do not know the other side of the story. The other side of the story is that low interest rates are a “put” or support for US stock and bond markets. Money from all over the world pours into the US stocks, bonds, and high end real estate market. The value of the dollar goes up, indebted countries start suffering. Their currencies collapse, commodities collapse,  inflationary depression and coups d’état follow. This is what is going in geo-economic terms  in the world presently.

The International Community of the West under US leadership wants the money of the world to go into stocks and bonds. It does not want the money to go into gold. Gold has been pushed into artificial hibernation via paper shorting. The interesting side effect of this artificial hibernation  has been that gold has been moving from the West to the Rest, and is not coming back. China is the number one producer of gold in the world and keeps it at home. Russia is the number four producer of gold and keeps it at home. Gold mining of the world is dominated by western corporations, whether it be in Africa, South East Asia, North or South America, or Central Asia. They also participate in the suppression of gold. These gold corporations are instructed to supply it to keep the price suppressed because it benefits them. There is less revenue sharing with countries where gold mines are located. Also, they are protected from being responsible for enormous environmental damage. Gold mining is environmentally very destructive. It is one of the most destructive, on par with oil fracking. However, it does not produce earth quakes as do oil and gas fracking.

The dollar is strong and it will stay strong as long as the dollar index stays in the range between 90 and 100. In this range, it is strong enough to cause havoc to the currencies of most of the world, including the currencies of its two closest allies, Australia and Canada. They are collateral damage. Gold is weak in order for the dollar to be strong. It is a very artificial relationship. It is a severe form of dis-equilibrium which frequently develops in nature. Dis-equillibria in nature are rather frequent. Weather patterns are classical examples. When weather dis-equillibria develop they manifest themselves as tornados, hurricanes, lightning, snow storms, etc, until the energy of dis-equilibrium  is dissipated and normal weather patterns return.

Financial disequilibria are all unnatural whether they be the Mississippi Bubble, the South Sea Bubble, or the 1929 Crash. The consequences of crashes are usually very severe for the people. We are approaching such an event now. There are warning signs as in the weather. There are mini crashes preceding the big one. The Big One will come without any warning. The US Treasury and the Federal Reserve are doing their best to prevent one, but they will not succeed. It is simple. One cannot violate the Laws of Nature. It will be very interesting, and only time will tell.

What is the prospect for gold? It is Nature’s money. Nature’s money is a form of energy. If one looks at gold it has the color and the energy of the sun. If one looks at the fiat note it has a picture of some famous individual, number, coat of arms, and the name of the country. Fiat can be printed, but gold cannot be created nor destroyed. It is eternal. It was created when the Universe was created. The equilibrium price of gold with the present buying power of the world’s reserve currency would be at least 3000 dollars. The people of Afro-Eurasia are buying gold. The Chinese government is encouraging  its citizens to save in gold. It is wise to invest in Nature’s money. Gold represents TRUTH.

 

 

The Middle East is the Pivot of World History.

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The Middle East is on the verge of great conflict.  The lines of conflict have been drawn up. The policy of the US since 1948 has been to secure the existence of Israel. This policy still exists today. The US is more involved in the Middle East than ever before. The policy of Israel and the US is to destroy or fragment any state that opposes the existence of Israel. Israel is a very powerful state, militarily and technologically. Some consider Israel the fourth most powerful state in the world, after the big three countries, China, Russia, and the US. The Achilles Heel of Israel is water. It has to import almost half of its water, mainly from Turkey,  a clearly pivotal state to the existence of Israel. The Armenian Genocide of 1916 in the Ottoman Empire caused  by the Turks is not recognized by Israel nor the US. It is understandable as to why.

Egypt and Jordan have been neutralized and diplomatic relations with Israel established. This relationship is precarious at best though. Libya and Iraq have been severely damaged but not yet destroyed.The last man standing has been Bashar al Assad of Syria. The US has decreed that Assad must go, but he is not going anywhere. A famous Prussian general, von Clausewitz, declared that war is a diplomacy by other means. Creation of the Islamic State by the West is diplomacy by other means. ISIS or the Islamic State has been declared by the US to be a terrorist state…but not really. The US bombs ISIS.. but not really. With all those shiny, new Toyota trucks and modern weapons ISIS is moving with the speed of light across Iraq and Syria. Volunteers are coming from all over the world. Volunteers are mainly Moslem Youth. One famous US senator was photographed with the Islamic State group. Even so, Iraq and Syria are still standing. Russia and Iran have stepped in. A sort of alliance has been formed, composed of Hasbullah  of Lebanon, Syria, Iraq, Iran, and Russia. The opposing forces are ISIS, the US, Israel, Saudi Arabia, and the Gulf States. The massive refugee problem which has been created by US policies in the Middle East is destabilizing Europe. The economy of Europe, already weak, is being weakened further by the onslaught of refugees from the Middle East, North Africa, and Afghanistan. The vaunted economy of Germany is standing on one leg only. German exports are collapsing. Sanctions are hurting Europe more than they are hurting Russia. If Syria and Iraq win against ISIS, there will be a geo-strategic shift in the Middle East. The Palestinians are sensing this. A massive Palestinian uprising is in the making. China is developing new Silk Roads to Europe and Africa avoiding sea lanes controlled by the US Navy. Latin America is moving closer to Afro-Eurasia. Highways and high speed rail roads will be criss-crossing Afro-Eurasia. The US and its closest allies will face isolation…

Europe must re-consider its position vis a vis Russia. The Wall of Enmity that the US is’ building between Russia and Europe is not going to succeed. It is just a matter of time before the  people of the Ukraine rise up against the Kiev Junta and take their country back (with Russia where it belongs). The future of Europe is with Afro-Eurasia and Latin America. If the Palestinian Intifada turns massive and Israel feels threatened, it may use the nuclear option. Saudi Arabia also cannot be ignored, it is one of the key players in the Middle East. The Saudis are involved in mortal combat in Yemen with the Houthis and are about to lose big. If the Saudi dynasty is overthrown in the not too distant future and replaced by an anti-western leadership, you can kiss the petro dollar good bye. The dollar and the US economy would collapse. The US would face a series of crises it has never yet faced in its entire history. The Israeli economy, which is dependent on the US, would most certainly collapse. Perhaps, instinctively, the Palestinians are sensing that. I repeat again, a massive Intifada is in the works. No question, the Middle East is the pivot of world history.

The Big Shift

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The world is shifting, whether one likes it or not. It is inevitable. As I mentioned in an earlier post, there are two international communities: the one of the West, and the other of the Rest. The International Community of the rest is much bigger, and consists of more than six billion people. The International Community of the West, up until recently, played the leading role. Not anymore. The International Community of the Rest refused to sanction Russia because of Crimea. The Western Community sanctioned Russia for which its members in Europe are suffering. The US wants to destroy Russia, partition it into three parts and exploit it. By destroying Russia, the West would be able to control China on all sides, hence achieving the domination of the world. But right now, the world is at a stalemate. This stalemate cannot persist for long because of the inherent instability; it requires too much energy. Projecting power a la US is very expensive. The US is able to do this because of the unique status of the dollar in the world. The dollar is after all, the official currency of the world. The world is supporting the use and value of the dollar, while the US prints it. What a beautiful arrangement!.

By trying to sanction Russia, the US wanted to destroy it. But the West does not know Russia, its people, its history, or its culture. Russia is an unassailable fortress. It is totally self sufficient. Morally and ethically speaking, Russia is on the right side of history. An American,Edgar Cayce, once said that Russia is the hope of the world. The Pentagon boys and the Wall Street boys should be aware of this. The International Community of the Rest is aware of this, and is siding with Russia. Defending the independence of nations is morally and ethically correct. Destroying countries, nations, and installing puppets is immoral and evil. The world is realizing this and is coalescing with Russia. Russia and China have close relations. In trade,they are using their currencies, not the dollar. There is the Shanghai Co-operation Organization composed of China, Russia, and Mongolia. Many of the former Soviet Central Asian Republics are also members, like Kazakhstan, Uzbehkistan. Tajikistan, and Kyrgizia. India and Pakistan have recently joined. Iran has observer status but it also wants to join. The Eurasian Union consists of Armenia, Kirgistan, Kazakhstan, Tajikistan, and Russia. Vietnam recently joined. MERCOSUR of Latin America is negotiating with the Eurasian Union about joining. (Members of MERCOSUR are Argentina, Brazil, Venezuela, Bolivia, Paraguay, and Uruguay.)

The US is also moving towards forming trading blocks in the Pacific and the Atlantic, known as Trans Pacific Partnership, and the Trans Atlantic Free Trade. The TPP is almost finished, but rans Atlantic talks are not going that well. There could be confrontation brewing between the International Community of the West led by the US and the International Community of the Rest coalescing around the Russia Federation. Nuclear war cannot be excluded.

The future is very uncertain.

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The future of the world is very uncertain. Thermo-nuclear war and the life as we know it could end instantly. In a matter of hours or days, in fact. Life on earth would be close to extinction. Most people do not think in those terms,but the individuals who plan wars do. Most people are concerned about personal matters, such as family members, their own general well being, jobs, love, and their health. In the past, world events did not have such an all encompassing effect as they do now. Presently, the whole world is interconnected. So, let us speculate about our world’s problems…

Economically, tensions are building every where. Let us look at China. Every body is claiming that China is slowing down, but so what? It is natural that China should grow at its own pace. China is resilient and the Chinese people know how to suffer and take pain…

Presently South East Asia is the most dynamic region of the world. Let us list the countries located there : the Philippines, Vietnam, Laos, Cambodia,Thailand,Singapore, Malaysia, Myanmar, and Indonesia. Also, Australia, New Zealand, Papua New Guinea, the Fiji Islands and the Solomon Islands are a part of this huge region. There are some disputes amongst themselves and the Chinese concerning the resources of the South China Sea, specifically, the Spratly  Islands. Without outside interference, resolutions will be peaceful. China wants peace. This is the place where the Silk Road will start. It will have two paths: one through India, Pakistan, Iran, Iraq, Syria, Turkey to Europe. The other route will go through Saudi Arabia over the Gulf of Aquaba to the Sinai, Egypt and into Africa. Also it could go across the Red Sea into Africa. The other major branch of the Silk Road will go through China, Mongolia, Kazakhstan, Russia to Europe. In other words, Africa and Eurasia will be interconnected and intertwined. There will be no place for foreign interference. Japan will have to join or be doomed. This will be a huge community of nations of Afro-Eurasia based on equality and co-operation. The Trans Pacific Partnership will not succeed. The TPP will fail...

The nations of Latin America  and the Caribbean will join in. Trade between Latin America -Carribean  and Afro-Eurasia will use the southern routes of the Pacific and Atlantic Oceans. The US and Canada will try to prevent this inter-continental coalescence but will not succeed. They will have to join in or face isolation. Nuclear war or any major war would prevent the inter-continental coalescence.

It is precisely for this reason, that the US and its allies want to build a Wall of Enmity between Europe and Russia. As I mentioned in a previous post The Wall of Enmity , this wall would run from the three Baltic states of the north-east through Poland to the Ukraine in the south-east of Europe. That is why the Ukraine is so important to the permanent division of Europe and its subservience to the US. Many politicians and political parties of Europe are aware of this and will oppose the scheme. I do believe that Ukrainians will decide their own fate and will not join the European Union which is in serious crisis. The Ukraine and Russia are one country and one people. They have a common heart and common soul. The present junta regime in Kiev is undergoing decay. Socio-economic conditions of the country are worsening by the day. More than one million refugees have been welcomed into Russia like family members and not as refugees. It will not be European nor American gas that will keep Ukrainians warm in the winter but Russian gas. Whether war is restarted or not, Ukrainians will rebel and overthrow the Junta and foreign influence. It will be a sight to behold…

One of the key ponts of change will be in Canada and the US.These two countries are intertwined culturally, linguistically, ethnically, and historically. They are entering the greatest crisis of their existence; both are in denial. I will only discuss the US, but this discussion more or less applies to Canada as well. The strongest power on the planet is the US but its power is essentially ephemeral. The US economic system does not have strong foundations. A strong foundation for the US would be if seventy percent of the population lived and cultivated the land. The population is now too big to be fully employed in services and industry. If 200 million people lived as guardians and cultivators of the land, they would be independent and not the slaves of a debt system.They would have their own marketing and credit outside the big banks. They would become the strong back bone of the country. Instead,they are wards of the state. This is the age of Finance Capitalism based on a slavery called DEBT. This is the essence of capitalism. The US power is based on three pillars of paper,the dollar,the stock and bond markets. All three are based on debt. Will they fall together or separate remains to be seen. Time will tell….

One region that must be discussed is the Middle East. It is the cauldron of cauldrons ( see my post Large Middle East cauldron is brewing around the corner…). The structure of the Middle East has been destroyed. Iraq has been destroyed. Libya has been destroyed. Syria is being destroyed now. Saudi Arabia and the Gulf States will meet their destiny in Yemen and it will be very soon. Egypt has been neutralized for the time being. Turkey is on the verge of civil war. The only countries standing tall are Israel and Iran. Iran is essentially self sufficient, but Israel is not. Sanctions against Iran hurt but do not destroy it. Iran became stronger. Israel,on the other hand, depends on a lot of aid, especially from the US and Germany. Also, Israel lacks water. It covets the waters of Lebanon. War for water is inevitable. Presently,Israel imports water from Turkey. Efforts to desalinate water are underway but it’s not enough for a high tech country such as Israel. All this destabilization of Arab countries is essentially for the benefit of Israel without the necessity of overt Israeli involvement. Israel is just waiting to pounce. And Iran is watching the situation very carefully, giving aid to the Syrian government and the Huthis of Yemen. War seems inevitable. Which side will win? It will to a large extent depend on the US economic situation. Only time will tell….

(These are some of the scenarios for the next year or two.)

 

 

 

The monetary policy of the US is way too tight.

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The monetary policy of the US is way too tight! How could that be if the interest rates are the lowest in the history of the US?  Interest rates alone do not determine fiscal tightness…

The dollar has been the reserve currency of the world since 1944 when it was crowned emperor at Bretton-Woods. It is the official currency of the world. Most trade is done in dollars,but less so every day. Most of the debt of the world is denominated in dollars,but less so every day.That is of eminent concern to the US. If the dollar loses its reserve status, the game is over.

In my article, “Gold and the Dollar in mortal combat”, I stated that gold does not need the dollar or any other currency, but the dollar needs gold. How so? Simple! Dollar currency can only be valued in terms of gold. By suppressing the intrinsic value of gold, the economic activity of the world is suppressed. When economic activity decreases,the need for raw materials decreases, but the debt burden of natural resource countries increases. Remember,most of the debt, ninety percent in fact, is denominated in dollars. Commodity prices go into collapse mode. What is the motive behind this? Is it to destroy the economy of China and Russia? Very likely. Of course, no one will  admit that. But there is a collateral damage or side effects to such a policy. Stock markets, bond markets,and debt in general rise to unsustainable heights. As there is less and less energy to keep the game going, the system goes into collapse mode.

The currencies of such countries as Brazil, Argentina, Venezuela are collapsing. Possibly, these are welcome results, because the governments of these and other countries are in the works to be “changed” because they are too independent. The negative side effects are also affecting friendlies such as Canada, Australia, New Zealand, and Norway.Their currencies are also collapsing. The boomerang of this policy is hitting the US itself. The velocity of money is collapsing. People have no money. The Baltic dry index is down. Labour force participation is way down, below sixty three percent. Infrastructure is deteriorating. The living standard of ninety percent of US citizens is decreasing rapidly. Socioeconomic unrest is increasing…

And,now, the coup de grace: China is devaluing the yuan. This is sending panic. China is being accused of currency manipulation. Why? Because the only way  China can devalue its currency is to de-peg the yuan from the dollar and start selling US treasuries. Other countries who hold treasuries such as Japan will follow.  This is the nightmare scenario. By suppressing the price of gold, the monetary policy is way too tight. The proper policy would have been to let gold reach and stay at its equilibrium value, whatever that may have been. Now, the US cannot let go. Gold will break out. Now, gold can be bought at around eleven hundred dollars an ounce. When gold breaks out it will be unavailable in any currency at any price. Only time will tell.

Japan will switch!

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The world is very unstable.With the demise of the USSR, the world has entered a period of disequilibrium. The states which were essential to the West in the Cold War are no longer  as special as they once were. One such country is Japan. Japan, like Germany, is occupied. It has no free will. It can complain and nothing else. It is the third largest economy in the world, but its significance or influence is less than that of Iran. Why is that?. Simple. Iran is independent and Japan is not.

This month of August is the 70th anniversary of the atomic bombing of Japan. Hiroshima was bombed on August 7,1945 and Nagasaki on August 9,1945. The war in Europe ended in May of 1945. Japan was willing to surrender and begged for peace. There was tremendous hatred of Japan. Japan was an imperial power. If one is Chinese one cannot forget the massacre of Nanjing, where it is claimed that about a half million Chinese were killed. Chinese people may have forgiven but cannot forget. The Japanese relationship with the US was different. Japan treated the US with deference. The Empire of Japan was a possible threat to the Hawaiian Islands which were possession of US. It was not the US proper. The Japanese threat to the US mainland was very remote. The US and the West had an economic hammer lock on Japan. All of South-East Asia was under US Western European control. To break out of this control it formed an alliance with Italy and Germany. When the Second World War started in Europe and Germany invaded the USSR and when in the early stages it looked like Germany would win, Japan took a huge gamble and attacked the US in Hawaii, a possession of the US. The plan was to destroy the American Pacific Fleet. The bait was set. Japan attacked which doomed it as Germany was losing the war in Europe,especially on the Eastern front. We know the results. Japan became the occupied territory of the US and it still is today…

The economic recovery of Japan after the war was phenomenal and was supported by the US. The primary reason was to create a prosperous bulwark against communism, and that’s exactly what it became. With the demise of the USSR, things changed. Japan became less important, China more. Accommodation with China was in order. The reason? Simple.  The huge market and cheap labour. As a result, Japan lost its way. It stayed an occupied  and subservient state. Japan did not even think about neutrality. Japan was to the US what India was to the British Empire. The Fukushima disaster has made the situation unbearable. The trade surplus is decreasing. It is either gone or will be soon. Demographically and economically, Japan is dying. Japan needs new challenges to stimulate itself. It needs to abandon the buying of US treasury debt. It needs to proclaim independence and turn neutral. It will be painful, but it will be worth it. Time will tell….

gold and the dollar in mortal combat!

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The dollar and gold are in mortal combat. Up to the present the dollar has been supreme. The Bretton-Woods Agreement crowned the dollar as Emperor of the World. This gave immense power to the US. As a matter of fact, it gave immense super power to the US. All economic activity of the world was transacted in US dollars and not only was it the reserve currency of the world, it was the official currency of the world. It enabled the US to buy anything it wanted by either printing dollars or going into debt. The US lends money to other countries, especially to newly independent countries in Africa, Asia, and Latin America in order to trap them into dollar debt and to exploit them to the limits of exploitation….

Any leader who opposes this arrangement is punished. The list of past and present offenders is long: Mossadegh of Iran in 1953, Gustavo Arbenz of Guatemala in 1954, attempted coup of Castro in 1961, Bay of Pigs,Patrice Lumumba of  Belgian Congo in 1962, Saddam Hussein of Iraq 2003 and Libya’s Gaddafi in 2011. There are many others such as Juanio Quadros of Brazil in 1964. The Modus Operandi of the West was total exploitation of the world through economics and any leader who opposed this policy was accused of communism and was overthrown. ( Another good example was president Sukarno of Indonesia in 1965.) The US will go to any length to protect the dollar rule of the world; possibly even nuclear war.

The opposing force to the dollar is nature itself. Gold is the power of nature,of the universe. It has the colour, the energy,and the power of the sun. Gold and other precious metals were created when the Universe was created. All civilizations of the world,past and present,cherished gold and silver. Both gold and silver are symbols of power and wealth. He,who has the gold,makes the rules.

Gold does not need the dollar, but the dollar needs gold. The “value” of the dollar can only be valued in physical things. How many dollars are needed to buy a barrel of oil or a bushel of corn.? Agricultural commodities cannot be used as money except in barter deals. Oil and agricultural commodities are consumed and cannot be used as money, but they can be the path to riches through labour. According to the first Law of Thermodynamics, energy cannot be created nor destroyed. Gold cannot be created nor destroyed. It possesses the power and energy of the sun. The dollar needs gold to measure its buying power. The true buying power of any currency can only be measured in terms of gold.

Presently gold is being suppressed for obvious reasons: to convince people that the dollar, and other fiat currencies, stocks,and bonds are the way to go. Anything that can be printed such as fiat currencies, stocks, bonds, and annuities are paths of speculation and not of investment. The world is waking up and experiencing an epiphany. The countries of Afro-Eurasia and Latin America are accumulating gold and abandoning the dollar.That is the nightmare scenario for the US and the main reason they hate Putin. They want to destroy Russia and encircle China. They want to give China the Japan treatment of 1939-41, that is, economic strangulation. If they succeed, the dollar will be supreme, and gold will go to jail. If the US fails, the dollar will most likely go to zero. Only time will tell….

Large Middle East couldron is brewing around the corner…

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All the ducks are lining up in a row. Opposing forces are positioning themselves. Turkey and the US are making common cause against the President of Syria, Basar El-Assad. Incerlik air base in Turkey near the Syrian border is available to the US. Saudi Arabia and Israel are about to  join the Turkish-American operation in Syria. American drones are bombing Syrian government troops, a very new development. The escalation has started. Kurds, feeling betrayed by the US,will be fighting ferociously on Assads side. There are about 35 million Kurds in Turkey, Iraq, Syria, Iran, and Lebanon. Almost 25 million plus are in Eastern Turkey alone. One can say that eastern Turkey is the heart of Kurdistan. Actually, the Kurds are already fighting on the Syrian government side. Erdogan, president of Turkey, does not have a majority. His rule depends on a coalition and Turkey is unstable. The Saudi Arabian regime is also not very stable.There are attacks taking place in Saudi Arabia along the Yemeni border. The war in Yemen against the Houthis is not going too well. Two days ago or so, Saudi tanks rolled into Yemen to support the forces of the former president, Hadi. Israel also supports ISIS and wants to depose Assad and partition Syria as well as Iraq. But above all, it wants the waters of the Litani River in Lebanon. Hesbullah stands in its way and Hesbullah is fighting on Assad’s side. Israel is water poor; it imports nearly half its fresh water needs from Turkey.

The forces supporting Assad are Hesbullah of Lebanon and Hamas of Gaza. Iran is supporting Assad unconditionally. With the sanctions against Iran removed, its power has increased. If Turkey and the US send troops into Syria, Iran will send its volunteers. And of course,there are Russia and China who support Syria. Russia will not back off in Syria. China will also not back off. President Putin of Russia had a very intense meeting with the Turkish ambassador recently. It was reportedly two hours long. It is alleged that he told the Turkish ambassador that if Turkey invades Syria, Russia will make sure that Syria becomes the Turkish Stalingrad. This time, the Kurds will fight ISIS, the Turks, and the US to the death. The Turkish gas pipe-line will not be built. War is starting. Turkey, the US, Israel, the Saudis, and ISIS say Assad must go. Iran,China,Russia say: NO WAY.