The Bankruptcy of the United States

And as we all know, Fiat currencies like the New EURO are %100 speculative. Since they arent backed by anything except the paper they are written on.

The post-1918 gold exchange standard included the workings of the so-called gold points. This had to do with the relation of currency quotations to the established gold parity. Norman wanted the pound sterling to be worth $4.86. If the pound strengthened so as to trade for $5, let us say, then the pound was said to have exceeded the gold import point. American and other gold would be shipped to London by those who owned gold. That gold would be deposited in London and would earn interest there. If, as later happened, the pound went down to 4 dollars to the pound, then the pound was said to have passed the gold export point, and British gold would be physically shipped to New York to take advantage of the superior earnings there. This meant that if Norman wanted to keep a strong pound, he needed to weaken the dollar at the same time, since with a strong dollar the British gold would flee from London, forcing Norman to devalue the pound sterling, lowering its the gold parity. Notice that gold movements were to a very large degree based on the decisions of individual banks and investors.


....The only way to stop the flow of gold from London to New York, Norman reasoned, was to get the United States to launch a policy of easy money, low interest rates, reflation, and a weak dollar - in short, a policy of inflation. The key to obtaining this was Benjamin Strong, who dominated the New York Fed, and was in a position to dominate the entire Federal Reserve system which was, of course, independent of the "political control" of the US government which these oligarchs so much resented.

www.nex.net.au...

This was the beginning of the USA leaving the gold standard,...it was not a plan to remove obsolesence though.

Now to the present,...gold is still completely in use, just by different arena's. The USA has gold left in the Federal Reserve banks (the corporation). The Treasury has very little gold left (the Gov).


A third, and last for the central banks, way to hide the bad consequences of their policies, was for the central banks to provide their gold to the bullion banks at the ridiculous (but with the present low interest rates, which signify therefore the death knell of this carry trade, no longer ridiculous) interest rate of 1% pro annum. By selling this gold immediately and invest the price at a higher interest rate, the bullion bank was assured to gain upon refunding the gold to the central bank. The bullion banks therefore also had an interest in keeping the price of gold low and like the hedge funds, they started indoctrinating the public by saying that gold is no longer an investment vehicle.

This gold market is a completely free market in the sense that the supply of those contracts is almost unlimited and is only limited by on the one hand nine times the gold, which can be mined and by on the other hand the costs of mining under which the price of paper gold cannot (be allowed to) fall. The contracts have therefore been offered to anyone who was prepared to conclude such wagers concerning gold price movements and it was not difficult to sell three wagers that gold would decline for every wager that gold would rise.

www.free-europe.org.../eu/english.p hp?itemid=56

The gold market, and currency exchange, still exist, except in the hands of the world's central banks, and loaned out on 'paper' to many other countries.

In Russia, the Middle East and India, there is an increasing aversion against the dollar and is a search for a replacement under way. The present gold fever in China where individuals are since early 2003 again allowed to possess gold implies that in order to be an economic world power by 2012, China could well accede to this world standard, Freegold. At that moment only physical gold will be traded as the natural vehicle to incorporate one�s wealth, the value of paper gold will be reduced to nothing, and the value of the euro will increase quarterly upon the marking to market of its gold reserves.

Yes the Middle Eastern countries, as well as the asian countries, have a predisposed affinity for gold and jewelry, but more importantly and less obvious is that those same countries governemnts have been making vast and continuous purchases of hard (monetary) gold, not the paper, and plan to use it to purchace euro's, supporting the euro's value against other currencies, as well as giving the purchasing countries some currency that hasnt deflated, has an intrinsic value, and is marketable to oil countries.

[Edited on 3-11-2003 by smirkley]

Psst. Want to buy some bush bucks.


[Edited on 3-11-2003 by websuspect]

In a separate address, Vladimir Sokolov, of the International Department of the Central Bank of Russia said that the Bank of Russia held gold in its reserve portfolio partly for the purpose of lowering investment risks. He said that gold currently accounted for 10.5% of Russia's total reserves and was helping to meet one of the Bank's key criteria for reserve asset management - safety. The central bank had no intention of lowering the gold component in its reserves.

Professor Hans Tietmeyer, former President of the Deutsche Bundesbank, and Professor Robert Mundell, Nobel Economics Laureate, were speaking at the World Gold Council's third annual conference on "Challenges for Europe: the Euro, the Dollar and Gold", in Berlin. They both underscored the continued key function of gold in monetary policy and as a reserve asset.

www.gold.org...

Two of the world's leading opinion research firms, TN-SOFRES in Europe and Opinion Dynamics Corporation in the U.S., conducted the surveys. They tested for the first time the assumption that people do not care how much gold their countries hold in their reserves, or that the governments and central banks that decide to reduce their gold reserves are acting in accordance with the wishes of their citizens.













So how many countries hold monetary gold,...thru their central banks, on paper as well as hard assetts?

www.gold.org...
Not bad for "Fiat" currencies not backed by anything. But of course this does not diffrentiate between hard gold and paper gold, but is used for illistration the gold market is still very much in play to support countries currency values.

My concern would be that if the doller were to devaluate, and central banks began buying hard monetary gold (not the paper gold) with the dollars, becouse that would be a way to liquidate at a loss, then the paper gold would fail also. Which of these countries would be stuck holding the bag, so to speak?

.

[Edited on 3-11-2003 by smirkley]

My concern would be that if the doller were to devaluate, and central banks began buying hard monetary gold (not the paper gold) with the dollars, becouse that would be a way to liquidate at a loss, then the paper gold would fail also. Which of these countries would be stuck holding the bag, so to speak?

The United States would be left holding the bag. Unless it was intrested in pulling 8000 tons of gold out of its repository and actually really really gaureenting that it was goign to balance the budget.

In case an actuall audit might turn up the gold was missing or spent. The American people might turn up having all the real money and end up dictating constitutional policy to a government that is supposed to be respresentative of its people.

Heh I was not aware Russia had any Gold at all. I know ther currencey is artificially deflated.

On the other point, if the Euro deflated. Every country but Germany would be at the mercy of Germany because all of those countrys gave all their money to Germany in exchange for Euros.

[Edited on 3-11-2003 by websuspect]

By the way. Gold has tremendous applications in industrial electronics. It has a low impedence and resists corrosion.

While the Fed prime rate is still at a rate not matched since 1958......4.00...
research.stlouisfed.org...
Early historical data for this series include the following:
1929 5.5-6
1930 3.5-6
1931 2.75-5
1932 3.25-4
1933 1.5-4
1934 1.5
1935 1.5



And the current unemployed civilian data rate equals 1995, 1988, 1978, showing a slight down-tic on a climbing scale...
research.stlouisfed.org...




And the Consumer Price Index, is well...up as usual
(primarily since the early 70's when the US completely came off the gold standard)
research.stlouisfed.org...




The industrial Production Index has been essentially flat since the last recession..
research.stlouisfed.org...



And finally the M2 Own rate.....not seasonally adjusted.
research.stlouisfed.org...



Looking at these numbers it seems money supply is up, yet not domestically, industrial output is flat, while prices are rising, and unemployment still on an upward trend.

S even though emplyee compensation has been rising since the last recession.
research.stlouisfed.org...



And Foreign Official Assets in the US is definetly on an up trend,..and nearing highs.
research.stlouisfed.org...



For comparison purposes, realize that the ENTIRE M1 money supply of the United States of America in 1966 was less than $172b. While it took the US government and eventually the Fed, after it usurped the monetary helm in 1913, almost 200 years to inflate the narrow money supply of the American people to $172b, the Alan Greenspan Fed was so utterly terrified of financial collapse following the WTC collapse that it injected $172b into the US financial system in ONE WEEK!


The dollar is falling, the equity markets in the US are in serious trouble and remain way overvalued, and the Fed has killed the incentives for buying bonds. As the inflationary tsunami prepares to slam into US economic shores, the usual destinations for capital remain on the highly-risky open coastline. Both bonds and stocks hate inflation as it reduces their potential real returns and causes investors to flock to the ultimate inflation refuge of gold.

The inflation graph shows a definite uptrend..(note the sharp increase of Producer Price Index, vs the Consumer Price Index, and that the PPI has crossed over the CPI index line. I suspect the CPI to follow shortly, and just as sharply)




In my opinion, as a running average, inflation is back, as a function of very low interest rates. Additionally, home mortgage rates are climbing, and nearing 7% (without Fed rate changes!) as an average. With money supply high, and gold being purchased globally, for a variety of reasons, it appears to me that we are definetly heading for an inflationary cycle. Solid assetts will help protect your buying power, and folks with low rate notes will benefit by paying them back with money with less buying power, those who just live check-to-check will begin to notice that living will take more of that check.

This is just an update, to verify, on a running basis, the projections outlined in this topic.

I have not included currencies, and metals, per country, as I feel that a major international event, is what will cause them to deviate considerably, and enough worthy reporting on.

.

[Edited on 7-11-2003 by smirkley]

[Edited on 7-11-2003 by smirkley]

Great book. Just finished reading it. What an eye opener.
Hat's off to you, sir.

Yes I am still pushing this topic. It is my feeling that much of this adds up. Although portions of the posts can be rebuked, and some just say bahh,..Until much of the history, events leading up to including the present, as well as current events say otherwise, or are logically rebuked with substantiation, I will be continuing.


Since 2001, many things have been coming apparent to me thru reading, news, etc,..that either some major change is going to be forced, preventing the title of this thread from coming true, or it will eventually come true.

For Example...Today AP headline news....

U.S. Faces Up to $2.2B in EU Sanctions

GENEVA (AP) -- The United States is facing up to $2.2 billion in European Union trade sanctions within weeks after a World Trade Organization appeals panel ruled Monday that U.S. tariffs on imported steel are illegal.

The appeals body is WTO's highest tribunal, and the decision is final.

In a joint statement, the countries that brought the case said the United States had "no other choice" but to remove the import duties without delay. The European Union said it will impose retaliatory sanctions of up to $2.2 billion by introducing 100 percent duties on some U.S. imports, effectively pricing those goods out of the EU market.

Rep. Bob Ney, a Republican from the steel state of Ohio, added that it is "absolutely unconscionable for the WTO to target needed U.S. tariffs on foreign steel while nations such as China are manipulating its currency, paying its workers pennies per hour and flooding the marketplace with their cheap goods."

The European Union plans to target its tariffs at goods that are produced in important swing states in the 2004 presidential election. It says it will start retaliating if the U.S. steel duties are still in place five days after the report has been formally adopted by the WTO, which must happen within 30 days.

In addition to the European Union, complaints were filed by Japan, South Korea, Norway, Switzerland, China, New Zealand and Brazil. All of those countries also could now seek to impose sanctions on U.S. imports if the duties are not removed, and Tokyo already has warned it may retaliate.

I know this can be somewhat a dry topic compared to war, and ufo's, etc, but this is just another movement that the European Union has taken, and the first direct threat to the US economy from the EU. This appears to be much more than posturing, especially considering all the other supporting countries.

Note that Tokyo is already considering retaliation.

As our economy shows some, but not much, in the direction of a stabilizing, one has to wonder the overall effects of tariff's nearing or at 100 percent, would do to our already unbalenced export market. Our trade defecit would be damaged severely, even with that 'wonderful new market' - China.

This would also make european and asian manufacturers even more attractive to the other importing markets.

I wasnt planning on adding much until news and numbers made a large change...

But todays AP news prompted me to post.

1- With the EU, several other countries, and the World Trade Organization, preparing to make good on the ruling against illegal tariffs on steel imported into the US, an interesting development has been reported. Although this was something that has been in the works since declaring bankruptsy, so has the international steel tariff issue.

It seems that the timing of this government bailout, implies a government subsidy of the US steel industry in the USA is beginning. Since foregn competition has been damaging exports, as well as increasing imports of steel, companies have been beginning to struggle. The timing of this government loan indicates to me that this may be a sign of the US tariffs being reduced or dropped in the near future. It does not seem likely to me, that a protected market such as steel in the US, would need to be rescued by the government, unless the outlook gave the appearance of a negative change in the US steel manufacturing industry.

Federal Board Approves $145 Million Loan for Weirton Steel


MORGANTOWN, W.Va. (AP) - The Emergency Steel Loan Guarantee Board conditionally approved a $145 million loan for bankrupt Weirton Steel Corp. late Thursday, buoying the company's plans to emerge from Chapter 11 protection by year's end.

The federal government can guarantee up to $1 billion in loans to domestic steel producers. Guarantee rates range from 85 to 95 percent. In Weirton's case, the board guaranteed $128 million, or 88 percent.


On a different note..

Japan has been stuck in a slowdown for more than a decade, sinking into recession between periods of weak recovery. But recent data show the economy is being boosted by a rebound in the United States and the rest of Asia, especially China.

The data also showed the world's second largest economy continues to be plagued by deflation, or the spiraling down of prices that deadens economic activity by reducing profits and paychecks. When accounting for price falls, the economy barely grew.

One danger is the strengthening of the yen, which erodes the value of companies' overseas earnings. The dollar has dropped from about 120 yen earlier this year to 108 yen levels recently.

Tokyo Stocks Open Higher, Dollar Down

And finally a bit about our economy, related to the top of this post.

U.S. Trade Deficit Up to $41.3B in Sept.

WASHINGTON (AP) -- The U.S. trade deficit widened to $41.3 billion in September as imports climbed to an all-time monthly high, a fresh sign of Americans' hearty appetite for foreign-made goods.

Separately, new claims for unemployment benefits rose by a seasonally adjusted 13,000 to 366,000 last week, the Labor Department reported.

Bush said Thursday he would decide "within a reasonable period of time" whether to lift the tariffs.
He said he had imposed the penalties on the basis of the International Trade Commission's finding that the U.S. industry had been harmed by foreign competitors. "Therefore I imposed some tariffs in order to allow for a restructuring of the industry," Bush said. "I'm in the process of reviewing the extent to which the industry has been restructured."

Well sure, the process of the industry being restructured, is being finance by some very large loans, to prevent the companies from becoming bankrupt !

Thursday's report also showed the U.S. trade deficit with Japan widened to $5.1 billion in September, up from $4.8 billion in August. America's deficit with Canada climbed to $5.2 billion in September, the highest level since January 2001.


I find all this information, and money shifting, very contradictory, comparing to the claimed economic recovery we all hear about so much. Unemployment still rising, and yet the stock market on an uptrend, and yet no longer running on a strong USD policy.


I honestly cant imagine the directions of all these markets and indicators contributing to a prosperous future.


.

[Edited on 13-11-2003 by smirkley]

This seems to be the next card played.

While the WTO has imposed it's decision against the united states, concerning steel tariffs, the US strikes back..

U.S. Raises Trade Tensions With China With Textile Quotas

The action was the latest response by the administration to America's soaring trade deficit with China, which hit a record $103 billion last year, and which American manufacturers believe is largely to blame for the hemorrhaging of U.S. factory jobs over the past three years.

Critics warned that the decision would drive up the cost of clothing in American stores. Trade expert Gary Hufbauer of the Institute for International Economics said protections already in place for textile and apparel companies cost the typical American family $400 in higher clothing costs annually.

"This ruling will create shortages that could lead to dramatic increases in prices for American consumers while doing nothing to protect American jobs," said Erik Autor, a vice president of the National Retail Federation.

Ahh yes, it seems this might be a possible source of infation at the consumer level.

But interestingly the article goes farther...the WTO decision !

These sources said a variety of ideas were being considered in discussions with the domestic steel industry. The Wall Street Journal reported Tuesday that the steel industry has agreed reluctantly to a proposal to trim the current peak tariff of 24 percent by about one-third immediately, then by another one-third in March 2004. The tariff would be phased out completely in autumn 2004.
Dan DiMicco, president of U.S. steel producer Nucor, said Thursday, however, that the administration had notified him of no compromise proposal. Nucor began running newspaper ads Thursday in the Washington area urging the administration not to back down under the threat of EU retaliation. "The president made a promise; we're counting on him to keep it," the Nucor ad said.


The European Union has maintained a hard line, saying the only way to avoid sanctions is for the United States to remove the tariffs before a World Trade Organization ruling against the United States become final in mid-December.

The EU is taking a hard stance here, and the administration is apparently not yet ready to suggest their decision of action.

Apparently there are also some WTO issues arising and splitting the ranks at the big trade meetings in Florida.

It seems that some countries, particularly Brazil, do want the WTO to regulate certain trade practices, and not include them in 'their' discussions. It also appears that there may be two trade treaties being made instead of just one, in the attempt to secure a trade force in the west, that could counter any trade force in the east. Notice China now brought into the picture again.

The draft attempts to combine several competing proposals by outlining a two-tiered free trade proposal. It lays out a common agreement, but allows countries to decide whether they want to participate in a second level of negotiations on the controversial issues like investment rules and removing agricultural subsidies and tariffs.

Compromise Draft Aimed at Moving Stalled Trade Talks

The U.S. and Brazil have proposed a more general draft that would allow countries to pick and choose among the more controversial issues being negotiated, but it doesn't spell out what those issues are or how they would be negotiated.

Talks leading up the this week's FTAA negotiations were tense, with Brazil criticizing the U.S. position that agricultural issues should be decided by the 146-member World Trade Organization.

Publicly, however, most of Latin America is eager for an agreement with the United States, hoping that increased access to the world's largest market will help create jobs and boost the region's competitiveness with Asia, particularly China.

Notice not one mention at all of Venezuela, the 2nd largest oil producer in the world.

All while my local news reports the growth af China as a source of trade to HELP our economy with export shipments of products we produce.

And again...todays USD opinion projections..SELL
quotes.barchart.com...$DXY
quotes.barchart.com...$DXY





Keep in mind that today the dollar hit an all-time low against the Euro, this while the Euro economy is still entering it's recovery cycle.



Just an update,...showing a trend, coupled with the current news....Stay Tuned...

as this is what I see as an alternative mothod of 'fixing' the USD 'problem'.
United States to go with the Euro?



.

[Edited on 19-11-2003 by smirkley]

Almost forgot...Metals are 4 of the top 9 sectors performing right now.


www2.barchart.com...




[Edited on 18-11-2003 by smirkley]

Just bringing up to date.....

Gold is now over $400/oz

from $380 in just a month since I started this topic.
charts3.barchart.com... sym=GCY0&data=A&jav=adv&vol=Y&evnt=adv&grid=Y&code=BSTK&org=stk&fix=


And the USD hit NEW lows against the Euro.
ap.tbo.com...



The trend continues, and into new territory.


Someone better change the terrorist alert to Orange !

smirkley, your vast knowledge on the subject is very impressive and informative. You have put some serious light on this subject. Thanks for such a great job...


P.S. Now that I said all that will be around when it is time for me to take my econmics class, I think you could get me an "A+"

Great thread good articles I love doom and gloom. Only problem I have is paper money isn't worth anything anyway. We all are slaves who think we are free the best kind of slave what we work for is really worth nothing. So I can't see why they would want to ruin the slave quota maybe for cheaper ones? But cheaper ones how so when money isn't worth anything anyway. This # is to deep.

Time for a running update...

Well nothing has change much.....

Still in the wrong directions !

Gold is up 12% since the start of this thread,...with a trendline that is not wavering. Actually, quite a pop to the upside today. Thinking about this, I wonder why....gold being usually a flight to preservation, when heading into an inflationary period. But the inflation isnt there yet ! Possibly pre-emptive? The dow jones doesnt seem to be wavering either, but with the nasdaq up 50% in the last run, I have heard the projections for a market correction soon to be expected. (Dont know what that means, analysts can be wishy washy sometimes).


**edit...removed old dynamic picture link for graph**

And the Euro seems to see no ceiling either...


**edit...removed old dynamic picture link for graph**

Especially notice the US dollar, took a hard pop to the negative side...In its never ending conquest for the bottom. I guess we can all be pretty sure the 'strong-dollar' days are over for now.


**edit...removed old dynamic picture link for graph**


Folks, the trend is obvious, the pattern exists in the numbers, something is (has just) changing. Before 911 the USD was king, strong, and with a broad reach. In the last two years, gold prices are indicating where the money is starting to flow, for safety, and what currencies are changing their stature in the world.


Now I have to wonder where the next move will be in the war waging over coin supremacy. I have to stick with my gut, and say the Rupee, Pakistans in particular. The Rupee is in the process of being established in a Third trade pack, with a third region and groups. This new multi-country trade agreement will be weak and vulnerable......and may need some USD dollarization to float it...


..

[Edited on 6-1-2004 by smirkley]

Correct me if I'm wrong, but isn't this the same theory that includes the "secret lawyer oath" to uphold the bankruptcy? That's a ridiculous claim that no drunken and/or disgruntled lawyer has ever come forward with such a big secret. Also, there are people who are related to lawyers. As much as one would like to believe in confidentiality, anything like this could easily be leaked to family and friends. I'm sure it happens all the time. So, the entire thing rides on the ability of every lawyer in America to keep this big secret? Give me a break!

[Edited on 1-5-2004 by Satyr]

According to Bloomberg, "A weak dollar at the moment serves the interests of the U.S."

A. Greenspan is seeing just who will blink first; like a big game of chicken. My bet is that the EU will be forced to cut rates.



regards
seekerof

There is a way to bring about(peacefully) the demise of the dreaded federal reserve system, and that is by using good old-fashioned American competition. All we need to do is simply stop using "their" money. As mandated by our Constitution, only gold and silver shall be tendered in payment of debt; luckily, such a currency already exists: www.geocities.com/stopinflation

Well, sorry for bringing up an old thread, but I was re-reading this and wondering about how we stand some 2 years after this post was made.

Gold is up around 50 percent of what it was wayyy back in 04, and the euro has in fact become more stable since then too.

Interest rates are climbing and upon every hiccup the 'new' Fed implies another hike here and there.

I know alot of the old links may be dead or outdated in the posts in this thread, but after re-reading I have to consider a new analysis based on todays markets, of where we stand. Me guts tell me that we havent changed path's one iota.


Headed to bankruptcy?.. doom and gloom proficy?..fear mongering?....

or distant reality.

I don't know, but if this were my personal budget, I know I would already be in jail.