By Richard Cottrell
We are now approaching one of the most important tipping points in world history and yet we stagger on, besotted by iPhones and other electronic brain frying clutter in the expectation that things being as they are will remain the same in the future.
One can assume that the people of Hiroshima and Dresden thought that too, before they were toasted to a crisp by the latest advances in peace-keeping technology.
The entire new world order that kicked off with Bretton Woods in 1944 and then spread like a global rash – the World Bank, the IMF, the European Union – is now playing one of the most pointless mind games since our ancient ancestors taught themselves how to work markets with systems of exchange.
Forms of money made barter largely redundant. In came precious metals, and especially gold.
The bright shiny stuff was not, of course, easily portable in large quantities. So it was stocked up in treasury houses and money minted according to the value of those reserves judged against the general credit stakes of any given country.
When we read that this, that, or the other country – the US included – is ‘off’ the gold standard, this is nonsense. Nixon took the US ‘off’ the gold standard in 1971 after a caretaker checked one bright morning and found there was nothing left to actually get off.
From that moment on the dollar was consigned to its inevitable fate as a paper fiat currency, supported by other countries with large gold hoards stored at home, or as invariably became the case, in the vaults of the US Federal Reserve.
Editor’s note: The Federal Reserve has formally admitted that they do not, in fact, “officially” own any gold and have not owned gold in some time. See the testimony below:
Lately something very peculiar is happening to gold.
Largely uncommented on by the lackey corporate media, there is a silent war for gold.
The war is led by the ‘Northern Empire’, the United States, which is effectively reversing the Nixon edict by holding large quantities of bullion that belong to other countries.
Whenever the subject does come up we hear the usual ‘safe as houses’ explanation trotted out. Yet, a few canny observers are catching something on the wind that may be so shocking that it seems unreasonable, in practical terms, to contemplate.
Is the ‘Northern Empire’ planning to nationalize gold hordes held in the US on behalf of foreign depositors?
Let’s see. As of right now, 60% of Germany’s gold is locked up in the vaults of the New York Fed.
Not exactly cashable in an emergency, so to speak. Why has Germany dispatched all that heavy metal across the Atlantic?
What’s wrong with the solid basements of the Bundesbank, if the ECB smells so cheesy?
In practical terms, the Germans are in the same bind as all the other holders of US treasury notes, exchanged as shareholdings in the US economy.
The US demands gold pledges in order to prevent the dollar imploding. Gold is now the ‘ghost Bretton Woods.’ In may also be spectral in other ways, as we will shortly discover.
The unspoken truth is that the dollar system is so thoroughly rotten it makes the euro look like a lively stripling youngster.
If it were not for the fact that it owes some sixteen trillion bucks to the world – and counting – the US government might be tempted to return to the official gold standard to support the dollar.
Unfortunately, this is a misunderstanding of the problem. The American problem is the paper that the US holds – treasury commitments due to foreign central banks – not in the immediate instance, the usefulness or value of solid gold.
But the Fed is not the only central bank with a liquidity problem. The European Central Bank is close to (if not actually) insolvent – and where do you read about that in the corporate coffee house sheets
? Try this on for size. The ECB is out in the breeze for some 3.02 trillion euros at the latest audit, which put another way is about a third larger than the entire Germany economy, reckoned as that is as the power station of Europe.
This is entirely due to a second draw down of loans (bailouts) to tottering duffer states which, at the same time the ECB, in league with the EU and the IMF, is trying to bankrupt. These are the economics of the madhouse.
The ECB does not have the solid assets to back those loans. And do remember dear readers that the various beggar states of the EU are lining up begging bowls empty for another big dollop of porridge.
The real central bank in Germany – namely the Bundesbank – has worked out that should the euro go belly up, then the federal balance sheet will suffer to the extent of half a trillion euros, which is almost twice the size of the annual German state budget. Now this is not just some nightmare which blows away when the sun comes up, because there is no sign of the sun coming up.
Aux la contraire. The euro is heading steadily south in true pear-shaped fashion to Greece, Spain, Portugal, and Italy, where its unkind fate will be decided.
Meanwhile, the Fed stocks up on other people’s gold, if it can get it, that is. Hugh Chavez, the Other Castro, is not backing the western order of things.
Venezuela is the world’s 15th ranking gold holder, she has, practically speaking, more than either Saudi Arabia or the UK (no surprises there, after Gordon Brown emptied the vaults to pay the housekeeping bills, just as gold sunk to rock bottom – proof of the old adage that a fool and his money are soon parted).
Mexico’s central bank, on the other hand, has been compelled to admit that almost 95% of its modest gold holdings are held hostage in New York. Mexico is not a client of the United States.
It is a prostrate vassal. It’s an interesting role reversal if we go back to the Conquistadores who raped El Dorado to prop up a dying, decadent empire with Aztec gold.
No prizes in a reader competition to name the latest dying, decadent empire.
The Mexicans will not get their gold back, ever. Its effectively US property now and will remain so, short of the Mexican army crossing the Rio Grande.
Chavez would not have piled his hoard into New York City in any event. But the fact that he is willing to repose his faith in the Russians or the Chinese speaks volumes.
Chavez watched the fate of the Libyan state, smashed and battered back to the Stone Age for the sake of the Northern Empire getting its sticky hands on Gaddafi’s gold.
Moreover, the Russian treasury is quietly stocking up on gold, so it is not likely to snaffle the gold of others.
Putin has also amassed, as we learned recently, a huge hoard of diamonds, the world’s largest in fact. That the Kremlin should be considered a model of probity represents the fiscal equivalent of a magnetic reversal of the poles.
The Fed’s filching of other people’s wealth should not come as any surprise to anyone who follows the wholesale looting practiced by Wall Street.
The boundary is seamless, of course. If the US is quietly contemplating massive monetary world disorder, in which the only antidote would be gold to support the Northern Empire’s chief currencies, the dollar and the euro, then we begin to understand the beginnings of a bunker policy.
Yet I think this is a serious under estimate of the gravity of the approaching crisis. I opened this piece by saying that people tend to think what they see around them will still be there tomorrow.