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The World Is Getting Tired of Dollar Orchestrated Theft

Thursday March 27, 2014 12:37

The Achilles heel for the U.S. is its financial condition. It is in debt head over heels and much of it is owed to unfriendly countries most notable of which is China, which is an ally of Russia, even though it is trying desperately to stay out of international conflicts. When Nixon took us off the gold standard, he paved the way for the U.S. to print money to fund socialism and its military industrial complex.

So it is not surprising to me that as the U.S. continues to ratchet up the rhetoric toward Russia, it is becoming increasingly likely that the vision that Jim Rickards voiced on my radio show and elsewhere, will come into play. Rickards said that Russia and China are not able to compete with the military might of the U.S. but they may be able to use financial weapons to checkmate the continuous expansion and one-world government program of the U.S. and the Euro zone. When Putin recently said that sanctions would boomerang against the U.S., I believe he knew what he was talking about.  Indeed, as a leading economist of Putin recently said, “If sanctions are applied against state structures, we will be forced to recognize the impossibility of repayment of the loans that the US banks gave to the Russian structures. Indeed, sanctions are a double-edged weapon, and if the US chooses to freeze our assets, then our equities and liabilities in dollars will also be frozen. This means that our banks and businesses will not return the loans to American partners.”

52-Week Percentage growth of GUSDL      

                           Cumulative GUSDL Growth

I have frequently shown the chart directly above on your left because its shows the acceleration of GUSDL or Global U.S. Dollar Liquidity (defined as the U.S. Monetary Base Plus Foreign Holdings of U.S. Dollars) at various times as the Fed has pumped huge amounts of money into the international banking system when the system faces various periods of stress as it did after the Asian crisis, the dot com crisis and the housing/Lehman Brothers crisis.  However, I only recently constructed the chart above on your right which shows total growth of GUSDL since July of 1997. The point of this chart is not only to show the enormous debasement of the U.S. dollar but more significantly the lack of participation in this aggregate on the part of foreigners, which is depicted by the blue line. Now GUSDL is dependent mostly on Quantitative Easing by the Fed. The red line is the amount of GUSDL that the Fed is pumping into the Monetary Base.  The percentage of foreign holdings of GUSDL has fallen from 73% in August of 2008 to just 45% as of last week. What this tells me is that the rest of the world is getting quite queasy about the U.S. financial situation and they want out of the dollar.

But the U.S. must have the rest of the world accepting dollars or its ability to continue printing money to fund its clandestine activities and fund its military to take over country after country (in favor its U.S. corporate interests) cannot survive.

Russia on the other hand wants its own sovereignty to remain intact. So now that we have pushed the Russians up against the wall, guess what? They are going to pull out all the stops. As James Sinclair points out, they won’t need to use nuclear weapons. They have financial weapons they can use as suggested by a Putin economist as noted above. 

As Daniel McAdams of the Ron Paul Institute for Peace and Prosperity said on my show (http://jaytaylormedia.com/media/taylor20140325-hr2.mp3), this is the most serious international conflict the world has faced since the Cuban Missile Crisis. This is not what any sane person could wish for. But it is what we have. And all other things being equal, it should be very, very bullish for gold, especially if what we are seeing is a threat to an end of the U.S. dollar as the world’s reserve currency. That, ladies and gentlemen, will turn the world upside down! 

Jay Taylor



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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