NEW YORK (CNNMoney) — The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world’s reserve currency.
The IMF said Special Drawing Rights, or SDRs, could help stabilize the global financial system.
Isaac Newton gave us a fundamental law of physics. Every action has an equal and opposite reaction. In the investment world, currency is the action. Since the US is still the biggest economic player, the US dollar moves everything. Some things have the same action as the dollar. Others are the opposite reaction of the change in the value of the dollar.
Like it or not, commodities like oil and sugar rise in price when the dollar drops in value versus other currencies. More precisely, commodities rise in price when the dollar drops in value versus gold. Commodities are the equal and opposite reaction of the currency trend action. We can make the same analogy with gold and silver. As the dollar falls, gold and silver rise. The chart this week (see below) shows the relationship of the intraday trading for this past week with the US dollar represented by the green line (the ETF UUP) and the gold ETF, GLD, represented with the candlestick line. They are opposite action and reaction. The only question of the day is whether or not gold is in a bubble.
by sherry mann
“This tea party movement can be a healthy thing if they are making us justify every dollar of taxes we raise and every dollar of money we’ve spent, but when you get mad, sometimes you end up producing the exact opposite result of what you say you are for.”
Bill Clinton on the anniversary of the Oklahoma City bombing.
Can that really be true? Let’s look at a few examples:
War on Drugs
The “War on Drugs” was a term was first used by President Richard Nixon in 1969. Since then, the initiative has had countless laws, initiatives and policies have gone into effect which were supposed to discourage the production, distribution, and consumption of everything from pot to heroine. According to Wikipedia:
- In 1970, the Nixon administration implemented the Comprehensive Drug Abuse Prevention and Control Act of 1970.
- In 1973, the Drug Enforcement Agency was created to replace the Bureau of Narcotics and Dangerous Drugs.
- In 1988 Ronald Reagan created the Office of National Drug Control Policy for central coordination of drug-related legislative, security, diplomatic, research and health policy throughout the government. The director of ONDCP is commonly known as the Drug Czar. The position was raised to cabinet-level status by Bill Clinton in 1993.
Obviously, the drug war saves lives by reducing murders.
by Geoffery S. Shough
hat tip: GeofferyShough.wordpress.com
“There are a thousand hacking at the branches of evil to one who is striking at the root.” —Thoreau
For the past century, a general trend has taken shape in America where Americans are finding it harder and harder to make ends meet. There was a time in this country when only one member of the average household needed to work in order to support a family, and now it is not uncommon to have both adults in the household working to support their families. To make matters worse, many of the products we buy are declining in quality, and in many cases these same products are becoming more expensive. America has gone from a nation of savers and producers to a nation of debtors and consumers.
There are many explanations behind why this trend is occurring in America, but the most cogent among them is that the Central Bank, called the Federal Reserve (Fed), through its ineptitude in managing monetary policy, produces a hidden tax and causes serious imbalances in the economy with long term and far reaching effects.
Saturday, March 27, 2010
by Daily Bell Staff Report
Dr. Ron Paul
On Monday, Senator Chris Dodd rammed his “financial reform” legislation through his Senate Banking Committee on a strictly party-line vote. It’s no surprise that Chris Dodd’s answer to the economic crisis is the same as his answer to seemingly everything else: give the government more power … Dodd’s bill, which should be called the “Fed Empowerment Act,” will add more layers of bureaucracy to government. One of its provisions includes creating a new Consumer Financial Protection Bureau to be housed at the Fed and funded by it. Apparently, the Connecticut senator expects us to believe that an agency inside the Fed and financed by it will be “independent.” The legislation also includes a new Financial Stability Oversight Council to “monitor” companies that supposedly could become “too big to fail.” The Council will have the ability to require nonbank financial companies to be under the Federal Reserve’s supervision if the government deems they pose a “risk” to financial stability. Certain large companies will be expected to submit plans to the government “for their rapid and orderly shutdown” if the company goes under … Who knows how many businesses could be targeted and broken up, under the guise of “reform,” solely for standing up to the federal government! In yet another expected move, Dodd’s bill strips out a complete Fed audit and allows the Fed to decline to disclose specific information. – Ron Paul, Campaign for Liberty
Dominant Social Theme: More regulation is necessary …
Free Market Analysis: We were lucky enough recently to snag an exclusive, short interview (below) with libertarian congressman Ron Paul (R-Tex). And when we received the above missive via email from his Liberty organization, we found to some extent it paralleled the interview. In both this exclusive interview, and the call to action above, Ron Paul bemoans the power of the Federal Reserve and Congress’ lack of ability to create meaningful oversight over what can in many ways be considered a rogue monetary entity. Hopefully, the Fed does not end up with even more power after its latest series of economic disasters. See for yourself:
Daily Bell: Will the Fed be audited in your lifetime?
Ron Paul: To the extent that I want to see it audited, probably not. There may be some half-hearted attempts at auditing the now-ended liquidity programs, but the substantive things like open market operations, the discount window, and deals with foreign central banks will remain in the shadows. We’ve had great success with the language from HR 1207, managing to get the language through the House as part of HR 4173, but I fully expect the audit language to be watered down when the House and Senate bills go to conference.
Daily Bell: What’s in store for the dollar and fiat currency in general?
Ron Paul: Well, in the long run the value of all fiat currencies falls to zero. So, it’s just a matter of time before the fiat dollar disappears. The dollar has lost 96% of its value over the past century, and the Federal Reserve and federal government have been doing their best in the past two years to accelerate that.
Daily Bell: Where do you see gold and silver going from here?
Ron Paul: Long-term I think they will be much higher than they are right now. We live in a world of government-monopoly fiat currencies and they all inflate and destroy their value in unison. It wouldn’t surprise me at all to see gold much higher in the next couple of years.
Daily Bell: Can the fiat dollar recover in your opinion?
Ron Paul: That’s hard to predict, but I don’t think it’s likely. The dollar has lost 96% of its value since 1913, and there’s just no way we can get back to that level under a fiat system. In order to recover, the same Federal Reserve that caused that 96% drop would have to suddenly get wise, stop the inflation and debt monetization, and get serious about sound money. That just won’t happen.
Daily Bell: Will we have a China-centric or Asia-centric world in the 21st century?
Ron Paul: This is a difficult forecast, but it’s certainly possible. When you have Russian leaders chiding American leaders for embracing socialism and Chinese students laughing at the Treasury Secretary’s assertion that US assets remain a safe investment, people begin to wonder when the world flipped upside down. For over a century, whether rightly or wrongly, the US has been seen as the epitome of free-market capitalism, where anyone could pull themselves up by their bootstraps and make it big. Over the past several decades that ability for entrepreneurial success has been suffocated by excessive regulation, taxation, and government intervention. Forcing American businesses and workers to get government permission for everything they want to do is not the recipe for economic success.
Ron Paul: Health Care Bill Could Kill The Dollar
“If you think health care is expensive now–just wait until it’s free.”
P. J. O’Rourke
Universal health care will not be free – it will devastate the economy, warns Ron Paul
Paul Joseph Watson
Monday, November 9, 2009 (always ahead of his time)
If the Obama administration keeps its promise in guaranteeing not to raise taxes to pay for universal health care, the only way to cover the costs will be for the Federal Reserve to print even more money out of thin air, a process that will kill the dollar and lead to lower living standards for all Americans, warns Congressman Ron Paul.
In his weekly Texas Straight Talk telephone update, Dr. Paul said that
Saturday night’s passage of the health care bill in Congress will lead to a further devastation of the American economy and the greenback.
The US Economy is Set for a “Double-Dip” Recession
by Paul Craig Roberts
Happy news! The government has come up with a 5.9 percent GDP growth rate in the fourth quarter of 2009. The recession is over.
Or is it?
Statistician John Williams has informed us that 69 percent of this growth, or 4.1 percentage points, is the result of inventory accumulation. That leaves a 1.8 percent growth rate, and the 1.8 percent is likely due to the underestimate of inflation and other statistical problems.
The Federal Reserve’s own monetary evidence contradicts the recovery assurances from Fed chairman Ben Bernanke. The Federal Reserve continues to pour massive reserves into the banks. The monetary base, which consists of currency in circulation and bank reserves (the basis for new loans), has surged from $850 billion in 2009 to $2.2 trillion on February 24.
Despite this potential for massive new money creation, the broadest measure of money growth is still contracting.The banks are too impaired and so are consumers for the banks to create new money by making loans.
The economy, in other words, is going nowhere.
F. William Engdahl: US economy has been hollowed out over the last 15 years and debt load is staggering
hat tip: The Independent
By Robert Fisk
Tuesday, 6 October 2009
In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading
In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs. Against the background to these currency meetings, Sun Bigan, China’s former special envoy to the Middle East, has warned there is a risk of deepening divisions between China and the US over influence and oil in the Middle East. “Bilateral quarrels and clashes are unavoidable,” he told the Asia and Africa Review. “We cannot lower vigilance against hostility in the Middle East over energy interests and security.”