Category Archives: dollar debt

The velocity of money and the Baltic Dry Index.

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The world economy is dying. Powerful people of the world are in denial. They think they will be able to correct the situation, but the world economy cannot be saved. The two indicators of a dying economy are the velocity of money and the Baltic Dry Index.

Let us examine the velocity of money. The simple definition is the speed with which money circulates through the economy. The more dynamic the economy, the more optimistic people feel about jobs and economic security, the more they feel relaxed and the more likely they will spend, travel, feel good about the country, the government, the people, and themselves. Presently, the velocity of money is collapsing. Whatever money ordinary people earn and have they do not want to spend. Also, many, many people have no money to spend. The situation is very dire, but one would not know by watching the “evil vision”. On evil vision, attractive women in eternal spring dresses, and men in impeccable suits with or without neckties constantly proclaim prosperity. The only people enjoying prosperity are the less than one percent of the ownership class and about five to ten percent of the overseer class to which the stars of the evil vision belong. (Evil vision is TV.) There is so much discontent in the country that it threatens the stability of the country. The economy is getting worse. Just look the stock market and the high yield bond market!

Another measure of how bad the US and world economy are is the Baltic Dry Index. Just last week it dropped below four hundred. Before the “Great Recession” of 2007-09, it was registering in the several thousands. After the so called Great Recession ended, it recovered to almost 2000. Now, after seven years of recovery it dropped to below 400, in the year of 2016. Any intelligent person, non-brain washed, knows that there was no recovery. In one of my previous posts, I stated that economic recovery in the US is impossible, because the energy entering the US economic system is decreasing, while the energy needed to maintain its internal and external operations is increasing. The Reserve Status of the dollar in the world is enabling the US to maintain its operation internally and world wide as long the rest of the world is accepting the dollar. That ability to maintain its operations is based on debt. As long as the rest of the world accepts American debt there is no problem. But that is ending and that is the problem. When the dollar is rejected it will be kaput.

The Baltic Dry Index {BDI} is indicating that world trade is collapsing. Empty ships are being anchored in ports. Oil tankers, full of crude, are anchored. There are few buyers of crude. Some experts are telling it is going to get worse. Collapsing BDI is possibly signaling world wide depression. Decreasing velocity of money is indicating that the majority of people have no money to buy even basic necessities.  Why are 94,000,000 people not in the labour force? Why are 47,000,000 people on food stamps? Why are wages for the non overseer class stagnant and decreasing? Why is the infrastructure of this nation dilapidated? Up until 2016, there was plenty of money for Wall Street. Now the stock markets and the bond markets of the world are collapsing. It could be that the world is entering the Economic Black Plague State. Only time will tell.

 

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 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 Dollar, the American Thunder Bolt of Zeus

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Most people do not know how much power and control the US holds over the world by the fact that the dollar is the reserve currency of the world. Until recently, it was the official currency of the world. By controlling the reserve currency, the US in fact, controlled the world. At Bretton-Woods, New Hampshire in 1944, the dollar was crowned Emperor of the World. The International Monetary Fund {IMF}, the World Bank, and the Bank for International Development were created to impose the rule of the dollar. These institutions have international sounding names, but they are as American as a McDonald’s hamburger…

After the Second World War, the Colonial World of Asia, Africa, Latin America, and the Carribean  were decolonized. Instead of being free and totally independent they went right into ” dollar debt dependency”. They jumped from the pan into the fire. In this Salto Mortale, they were guided and helped by, what do you know, the IMF, the World Bank, etc. The agenda was set by the US Government to fight Communism. They have been in hell ever since. Any leader who rebelled was overthrown, assassinated, hanged or impaled. Many communist countries of Eastern Europe were infiltrated and enticed into the beauty of dollar debt. Poland, Romania, Hungary, and Yugoslavia come to mind. Hungarian dollar debt was referred to as “Goulash Communism.” Communism is gone but the dollar debt remains. Also, Yugoslavia is no more, but the debt of the successor states has increased markedly.

Presently, the world is so indebted that debt can hardly grow. The burden of debt of the Third World and many countries of the First World has become unbearable. Individuals, countries, nations, and other entities  will start going into default. The US is the most indebted nation in the world ,but that is no big deal, because it is indebted in its own currency. The rest of the world supports the US debt by holding dollars. In the process it is subservient to US interests. In other words, whatever the US wants, it gets and the rest of the world pays, because US possesses the Thunder Bolt of Zeus.

It is immoral to entice individuals, and/or nations to go into debt, Christianity and Islam condemn usury; it is a criminal act. The Western media constantly encourages people to go into debt. Capitalism without debt is like life on earth without water. It cannot exist and thrive. The world’s debt is slowing down, hence consumption is decreasing which is leading to a deceleration of growth.  Wages are stagnant or decreasing. The velocity of money is at an all time low. The Baltic Dry Index is going down. World trade is decreasing. The recovery in the US has not been ” recovery”. Instead, it has been stagnation to the down side, with 94.5 million people in the US no longer in the labor force. The reported unemployment rate is 5.1. That is an outright lie and deception. Eric Blair, aka, George Orwell said that telling truth in an Age of Deception is a revolutionary act. We live in an age of lies and deception. The Modus Operandi of the present economic system is lies and deception. US power will persist as long as the Thunder Bolt of Zeus has juice. How long will it last? Nobody knows. The US will do everything possible, including war, to maintain it. However, it will be the rest of the world that will determine the longevity of the dollar. The Zeus of antiquity and his thunder bolts are no more.

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.

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….