Holders of US Federal Reserve Notes, by Farah Bazzrea
Holders of US Federal Reserve Notes (USD) bear nothing more than face-value paper representations of the US Federal Government debt. Dollars are US public debt instruments gained by the bearer in an exchange, i.e., labor, goods, services, etc., as a store of value for future use. And this future use relies upon future production of which there is no guarantee. So to be clear, dollars are not money. They are a curren(t)cy (flow in time and space). The confidence that dollars are as good as money (gold/silver) was based solely upon international agreement at Bretton Woods, Coram, N.Y. that the US Treasury would back the currency with US Government gold reserves held deep within the vaults of Ft. Knox and the New York Federal Reserve. Otherwise, the world wasn’t going for it. History has widely proven undesirable outcomes of unbacked fiat currencies unavoidable. Clarifying, it was not the printed paper currency or the full-faith and credit of the American people but the securely vaulted gold bullion backing that provided dollar stability suitable for an internationally recognized store of wealth as global currency reserves.
But once Nixon closed the government’s gold-exchange window to foreign sovereigns, namely France, paper dollars have been growing in abundance as their purchasing power inversely declines. Ironically, US-denominated capital investments, in whatever form, are not only depreciating relative to the world’s physical form of real money, precious metals, regardless of fraudulent paper-market price fixing, but also represent face-value liability for the debt which those instruments represent. In essence, the holders of wealth in USD pay for the privilege of assuming US government debt by offering up services or goods in exchange. Of course, except those to whom the Fed passes out clandestine off-balance-sheet dollars for free–Audit the Fed.
But one must give credit where it’s due. As such: Charles Ponzi falls far short of title to world’s greatest swindler. The likes of Rhode Island Senator Nelson W. Aldrich, CFR Director Paul M. Warburg and Assistant Secretary of the Treasury and US Mint Director A. Piatt Andrew belittle the ambitions of the notorious Mr. Ponzi, whom bears such disparaging commonplace. These gentlemen and their co-conspirators successfully turned liabilities into assets, up into down and black to white as unimaginable riches were systematically bled from our nation for more than a hundred years. Now that’s a Guinness World Record to make even Mr. Ponzi green.
Alas, the proverbial gig is up. And none too soon. Aaaand the current generations wallowing in the windfalls of these ill-gotten gains should not be expecting to much longer enjoy their Fruits of Graft, respectfully bowing to the venerable author, Mr. Wayne Jett. Flowing in further allegoric fashion, the chickens have come home to roost. No longer will the American citizens allow this inevitable monetary train wreck to lie quietly ahead as we plow full-steam ahead into God knows anything other than an economic happy ending–at least, short to mid-term. It’s going to take some time.
Major world governments are walking away from the dollar, selling Treasuries and buying gold bullion, building bridges, both metaphorically and real, and investing in infrastructure and commerce in dollar-denominated debtor nations seeking an alternative non-politicized monetary system. Of course, these EM nations will default against the ever-rising US Dollar once China’s BRI liferaft fully arrives upon their shores. The Fed and its many IMF/BIS siblings, ECB, BOJ, et al, will reshuffle cards and buy each other’s debt to continue the financialization of Western assets, but sooner rather than later, even this will fail as the rest of the world moves forward despite threatening tantrums of sanctions and tariffs. When that likely day finally arrives, global monetary madness will reign supreme, if one can imagine anything paling the current extortion-based system.
Whether the US Treasury holds ~8200 tons of the yellow metal in Ft. Knox and beneath the New York US Treasury Building is anyone’s guess. But a day of reckoning approaches when cryptos will shine. If on this day the vaults are full of the real deal, Americans’ transition into a new economy will be somewhat eased, though there is no escaping considerable suffering. However, if the cupboard is bare, not only will we be faced with an $800 billion annual trade deficit, meaning negative cash flow, but we will not possess reserves (savings) to cover the first few years of a near-trillion dollar trade disparity while our domestic industrial sector rebuilds. Furthermore, the US federal government will have to cut spending roughly $1 trillion annually at the same time.
Let me draw this a little clearer. There will be almost a trillion dollars less imported goods at the same time the federal government is reducing their spending into the economy by another trillion dollars. Why? Because the world is going to stop giving us their goods in exchange for worthless instruments of debt that can never be paid–except by hyper-inflating the value of the dollar. Either way, holders of dollar-denominated wealth lose: outright default or grossly devalued currency.
Remember I mentioned cryptos shining? Well, here comes the sun. For those with foresight to take out some insurance against this type of calamity in the form of precious metals and cryptocurrencies, the world will continue to turn, albeit much slower and with less pomp (thankfully). Unlike the awakened, those long-legged, flightless birds with their heads in the sand will find their existing lifestyle rapidly deteriorating into third-world status. No job. No income. No savings. And soon, no home or possibly even no life. I don’t want to be a doom ‘n gloomer but what we’re facing has never been confronted on this massive scale before, as far as existing recorded history reveals. To those that might hope “the government” will bail us out, I ask who got us in this mess to begin with? We saw their solution to too much debt in the Great Financial Crisis of 2008. *drum roll* You guessed it… more debt.
So, back to shining… short of outright apocalyptic failure in American society, bartering will be the means in which people survive in a day-by-day existence. Pensions, private and public, will have collapsed with the markets–both debt and equity. The massive deflationary forces initially loosened upon us will be reminiscent of the Great Depression. Goods will be relatively cheap in nominal dollars but few will have the money to purchase them. Again, that is unless you’ve been amassing assets in PMs and cryptos. Gold and silver have over 6,000 years history as money while certain decentralized cryptos are functioning trustless digital assets for a 21st-century world. Each has its pros and cons so diversify. Own both and keep them in your own possession or second best, in contractually entrusted hands. Use your own judgment but consider “If you don’t hold it, you don’t own it” as a baseline position. Prudent investing/hedging demands diversity within these two investment classes, as well.
I truly wish there was a way for Americans to reset our economy and return our nation to a free-market, laissez-faire republic without enduring great hardship and pain. There are many smart people who have written much on this subject, but so far, I’ve not read one version that opines escape without serious injury. Sure, some MSM shills totally deny anything is wrong. “Move along. Nothing to see here.” But if we follow the money trail to those deniers, there’s always an “ah-hah” moment at the foot of their hyperbolic rainbow. But there’s nothing magical about their proposed unicorns and lollipops. Just more fake news buying another day for the banksters to continue filling their coffers before their inevitable comeuppance.
Of course, this is a very American-centric viewpoint but for those conversing in English, much of this will directly or indirectly affect you if you live in the West, regardless your locale. And I believe there is a light at the end of the tunnel where decentralized currencies of all shapes, fashions and forms will co-exist interminably around the world. There is a better future awaiting mankind. We just have to power through and survive the transition. Cryptos will be an integral part of this journey, refilling liquidity in global markets and supplanting centralized fiat currencies for personal transactions. Go long.