Well look at Argentina, now look at America......see any difference? That may soon change!
The dollar resides in the Trauma Section of the world's Monetary Emergency Room. Fiat currencies, like people, become feeble and old, and die. The killing cancer for the fiat dollar is debt. For nothing except cancer grows and consumes like debt. Dollar denominated debts have 'Hannibal' and the dollar bankers desperately 'pushing on a string'. Dollar holders are overwhelmed with debt; be they individuals, corporations, local governments, or federal governments. Unpayable dollar denominated debts have to be liquidated, by currency inflation or by default. And those debts are so pervasive world-wide, that either way, the dollar probably fights its' last desperate and powerful "Battle of the Bulge" before it too runs out of gas and dies.
What shall be the new fiat reserve currency to replace the dollar for the next K-Wave cycle? The Euro! Euroland central banks have gold; but, in reality the euro, as presently constituted, is just another fiat currency like the dollar. The ECB 'talks the gold talk' in its advertisements promoting the euro currency. However, the ECB and the euro do NOT 'walk the gold walk'. Neither domestic European euros; nor foreign euros, are redeemable for the token gold reserves of the ECB; or, for the substantial gold reserves of the national member central banks. The chief 'asset' of the euro is its extreme youth and the absence of many years of accumulated euro denominated debts around the world. However, it is highly questionable as to whether euro creation, within a fractional reserve banking system, can in the long run be controlled by the ECB. I personally think that such a notion of possible restraint of euro creation within a fractional reserve banking system is delusional. So, an uncontrollable fractional reserve banking system is a fatal flaw for the euro. There is semantically deceptively implied gold backing for the euro within euro advertisements. But, the euro, as presently constituted, has no meaningful gold backing.
I sense the appearance of another deliberate grand deception so that central bankers can, with another fiat currency, again evade the discipline, and honesty of gold as a medium of exchange. With another fiat currency waiting in the wings, (the euro), the central bankers keep control of covert criminal and political theft of purchasing power by the printing press and by the computer, after the anticipated death of the dollar.
I see the old law enforcement 'good guy/bad guy' routine. The dollar, overextended in debts and collapsed in terms of purchasing power, is the 'bad guy'. The fiat euro currency, draped in a sheepskin of advertising with 'gold' words is the 'good guy'. However, neither European citizens, nor foreign trade partners, can redeem their euros for gold at Euroland central banks.
The euro, as presently constituted, is 'Fiat Reserve Dollar # 2'. With time the euro will become overextended in debts and collapse in terms of purchasing power, and die. But, that will probably not be until the debt liquidation phase of a new K-Wave cycle, more than a half century from now. In the next K-Wave debt liquidation, the euro may be the 'bad guy' and 'Fiat Reserve Dollar #3', draped in fool's gold rhetoric, will be the new 'good guy'.
I fear that in every K-Wave cycle the 'sheeple' will get sheared by another fiat reserve currency like the dollar or the euro; draped in fool's gold rhetoric; but, not redeemable for gold. Even before its banknotes circulate, the euro currency suffers from six long-term fatal flaws. The first fatal flaw is that an abundance of gold or silver coins will not circulate as a euro currency median of exchange. The second fatal flaw for the euro is that euro paper bank notes are not redeemable for gold or silver. The third fatal flaw for the euro is that euros acquired by foreign trade with the euro nations are not redeemable for gold or silver. The fourth flaw is that the overwhelming majority of the l4,400 metric tons of gold belongs to the individual nations and not the ECB. The fifth structural flaw is that for many euro nations to turn their gold reserves over to the ECB in order to back euros would require most unlikely constitutional amendments. And the sixth fatal flaw for the euro is that it operates within an uncontrollable fractional reserve banking system. With these six flaws it is self-evident to me that the euro is NOT gold-backed and its growth is not controllable.
And most importantly, the Euro may quickly and decisively dethrone the mortally wounded dollar as THE world's government and private reserve currency. The Euro may even live for the next thirty to sixty years. But, the Euro, as presently constituted, is nothing more than a newborn Fiat Reserve Dollar #2, that is not entangled with over a half-century explosion of euro debt creation..
For at least a half-century, we American 'sheeple' have been financially sheared of purchasing power each year. I remember what it was like about fifty years ago. I would take a dime to the corner. For five cents I would buy a large Coke. For another five cents I would buy a large chocolate Hershey bar with almonds. Today, that same ten cent purchase would cost me over two dollars. And, to add insult to injury, I would now have to pay at least a thirteen cent sales tax on that coke and candy bar. That thirteen cents of sales tax is more than my total original purchase cost of ten cents. By the Coke/Hershey Bar measure, the circa 1951 dollar has lost more than 95% of its purchasing power.
I also remember that circa 1951 that I got my hair cut in a downtown Coral Gables barbershop for twenty-five cents. Today, I pay twelve dollars for a lesser haircut (no straight razor trim around the ears). Also, today I am expected to tip. Forget the tip; but, because of the less thorough haircut, by my haircut measure, the circa 1951 U.S. dollar has lost about 98 percent of its purchasing power.
In the past half-century, 95 percent to 98 percent of the 'wool' (purchasing power) has been sheared from the 'sheeple's' dollars. Now, they are coming for our 'hides'- the homes that we return to each night. Have you ever seen 'sheep' with no 'wool' and no 'hides'? Yes! Of course you have! They are the homeless beggars that abound in the cities across America. They are the Americans that you do not wish to make eye contact with. They are the Americans that you pretend do not exist. Many of us, to our dismay, shall soon personally experience that pain, suffering and humiliation; as the loss of purchasing power caused by fiat dollar debt repudiation, economically skins great numbers of the American people alive in a severe and prolonged economic depression. And if the euro, as presently constituted, replaces the dollar as the world's reserve currency; then, our grandchildren shall be sheared for decades and then finally economically skinned alive by the euro. For, the euro is a Trojan horse. As it is presently constituted, the euro is gold paint on the outside; and, another band of criminal, conquering and looting white collar barbarian central bankers on the inside. The euro is simply a de facto young step-child of the dollar. The euro as presently constituted is simply Fiat Reserve Dollar # 2.
The imperialistic central bankers shearing of the 'sheeple', with their white collar crimes, shall not cease unless physical gold and physical silver and physical copper currency are DEMANDED as daily mediums of exchange, independent of a fractional reserve banking system, and for purchases large and small. The euro, because of its youth and relative lack of debt, is a vast improvement over the dollar with its overextended debts. But, the euro is still just fool's gold and 'Fiat Reserve Dollar # 2'.
Forget all the polite, friendly and co-operative public rhetoric between the Fed and the ECB. The stakes of the war between the dollar and the euro are much more than substantial. At stake is the privilege to continue performing the greatest historical criminal plundering and looting of purchasing power in the history of the world. At stake is the ownership rights to the greatest criminal financial con game in the history of the world: The world-wide use of a fiat currency as a reserve currency. If the euro wins; then, the Europeans receive the financial privilege and economic gains of selling to the world essentially cost-free computer entry and paper fiat currency reserves, for tangible goods and real labor services. If the euro wins; then, the Europeans would become able to loot and plunder the purchasing power of the world in order to artificially raise the standard of living in Europe. If the euro wins; then, the Europeans would become the ruling white collar barbarians; able to do as the Americans have done for more than a half-century. (Nixon closing the gold window turned all outstanding previously created dollars into fiat dollars.) If the euro wins, then the Europeans will in due course replace the Americans as the most hated people in the world.
If the dollar loses the war with the euro; then, the United States privilege of criminally plundering and looting the purchasing power of the world, via the sale of essentially cost-free fiat dollar reserves for natural resources, tangible goods and real labor services, stops. If the dollar loses; then, the criminal practice of the United States plundering and looting the purchasing power of the world via dollarization, stops. If the dollar loses; then the decades long use of the dollar in order to artificially raise the standard of living in America by monetarily looting and plundering foreign purchasing power, stops. Hence, an even longer and more severe economic depression will occur in the United States, more than likely with increased domestic violence and increased risk of revolution.
My how modern imperialism has evolved. We no longer send armies to plunder and loot foreign lands of their gold and silver. Now, we send bankers. Instead of sending our armies we now send the peoples of the world our bankers and our computer entries (with no intrinsic value) and with no tangible substance. We demand that foreigners pay for the "reserve" of our computer entries (with no intrinsic value); with their natural resources, their finished goods and their labor. And our trading partners who use the dollar as a "reserve" asset must accept this 'exchange' thankfully and humbly, even while we plunder and impoverish them to pervasive hunger. Just look at our cumulative trade deficit. We export our bankers and our computer entries to lie dormant as their public and private "reserves". In exchange for exporting our computer entries with no intrinsic value to lie dormant as "reserves", we import their valuable raw materials and finished products.
It is the biggest criminal con game in the history of the world. And the marks go along with this exploitation while a deep world-wide festering hatred of America and everything American builds and builds. To the rest of the world, the 'ugly American' is a banker with a computer. The international public and private global banks profess altruism and such noble intents to third world nations. All the while the bankers are criminally plundering their purchasing power and creating decades of countless deaths by starvation throughout the world.
What usurper central bank shall wear the illegitimate crown of the king of the moneychangers? What central bank shall wear the papier-mhé crown of the king of the white-collar barbarians? Due to obvious superiority, the outcome of ongoing wars often seems obvious. Due to obvious superiority, the United States had to win in Viet Nam. Due to obvious superiority, the USSR had to win against the Afghans. But, neither did. Our best guess is that the euro will defeat the dollar. However, what will actually happen in the euro/dollar clash of white collar barbarians is anyone's guess.
The imperial Fed has evolved into a desperate and paranoid adversary of gold since Nixon stole the rightful crown of king of the money changers from gold.. Although the ECB itself is a fiat currency, white-collar barbarian; the ECB talks gold with the reality that a euro psychologically coupled with gold in a positive way, has the best chance of winning the euro war with the dollar for the status of THE reserve currency.
Thus gold is the major battlefield in the euro war with the dollar. It is a battlefield carefully selected by the euro as the best available high ground. Gold is the pivot of the seesaw. The plank on one side of the seesaw pivot represents the dollar at war with gold. The plank on the other side represents the euro as a pronounced gold advocate. If the dollar plank goes down on a sustained basis, the euro and gold should go up in relative purchasing power.
The white-collar barbarians at the Fed and the U.S. Treasury made a self-destructive and fatal error when they psychologically and falsely coupled a low dollar/gold currency exchange rate with the pronounced health and prosperity of the United States economy. The ECB is vulnerable to many self-destructive mistakes. But, that is one Fed mistake that the ECB is unlikely to make any time soon.
Hope springs eternal. Some may hope that the euro will in time evolve into a true gold-backed currency with eventual redemption of all euro currency units for gold. My view is that this is highly unlikely. First, I do not see this possibility as pragmatic or long-lasting, because the EU banks function within a fractional reserve banking system. Eventually the ECB would have to close its domestic and foreign gold windows (like the dollar did) because of euro multiplication within a fractional reserve banking system; or, the ECB would continuously have to severely devalue the euro in the gold/euro currency exchange rate because of the constant increase of euros due to a fractional reserve banking system; and, due to the dominant reserve status of the euro.. The blowback from that would eventually be the people of the world having a constantly growing mathematical index (the gold/euro currency exchange rate) of how the bankers were defrauding them. Under such circumstances, one would hope that the people of the world would demand that governments reinstate gold itself as the moneychanger currency (reserve currency) for all other currencies.
Secondly, actual euro/gold redemption is to the severe economic disadvantage of the ECB and its nations because a redeemable gold euro would essentially foreclose the opportunity for ECB nations to criminally loot and plunder the purchasing power of the nations of the world through the use of fiat euros as public and private foreign reserves. Payments between nations in physical gold keeps international trade relatively honest. Gold as the international moneychanger currency assures 'something for something'. A world-wide empire of a primary fiat currency for the payments between nations criminally defrauds the world and enriches without merit the fiat reserve currency creators. A fiat currency as the primary international moneychanger currency (reserve currency) assures the fabulous riches of world-wide 'something for nothing' exchanges. We Americans (our bankers) could not resist that temptation. I do not expect European bankers to resist that temptation. I do not expect any peoples of the world to resist the temptation of fabulous world-wide riches for nothing. That is why we the people must demand a return to circulating physical gold and silver currency, without fractional reserve banking.
DISCLAIMER: This article is not intended as investment advice. It is one person's view from a broad historical and criminological perspective on economic events uniquely unfolding for the first time in history. The information herein is believed to be accurate. However some of the information was obtained from public sources and may or may not be accurate. Please also keep in mind that the author is just a messenger; and, he did not create the existing currency and economic problems, nor does he find anything but sadness in their content.
"Atocha" has been an entrepreneur since 1969. He earned BS and MS degrees in Criminology, and is a former professional investigator.
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Original: The Euro, Gold and the Dollar