The U.S. ended the war in Iraq. However, there is another war raging and I’m not talking about Afghanistan. The war I’m talking about is the global currency war. The U.S. needs a weak currency to stimulate exports and if the U.S. Dollar get devalued, other currencies must get stronger. It is a self-contained system that seeks an equilibrium of sorts. In the global basket of currencies that allow trade among nations, they all have exchange rates that float on a daily basis. Since there is currently no gold standard, the central banks will use the printing press to move their currency up or down. If the U.S. wants a stronger currency, they slow down the printing presses and provide less dollars to the system. Both the U.S. and China want cheaper currencies. On the other hand, Europe needs its currency to rise because it is getting too cheap. The sovereign debt crisis in Europe has reduced the demand for Euros as the big money has moved to the U.S. Dollar. In the electronic age, money moves in microseconds, no ships needed.
The challenge of keeping currencies in balance is huge. Central banks must do a balancing act with domestic employment and inflation on either side. Without the gold stabilizer factor, this becomes a highly complex affair. When one country begins to suffer high unemployment, the money printing presses start up. Actually, the printing presses have been replaced with the stroke of a computer key. That is the only simple aspect of this system.
Since 25% of the world’s GDP is the U.S., Bernanke wields the biggest stick. The global commercial money is the U.S. Dollar thus the Federal Reserve Bank can fine tune the global payment system to the benefit of the U.S. Each and every time another nation attempts to circumvent the current system, they tend to come up against insurmountable issues such as war, a military coup, UN sanctions, sudden death by lead poisoning (bullets), etc.
The strongest and most advanced military in the world polices the compliance requirement of the current system. It is like I always say about those in control: if they have a gun, badge, and a prison, they make the rules. Theory is does not matter when they show up at your door.
Nobody wants a strong currency when their economy is not growing and that is the case in most every country around the world. A currency war creates a downward spiral in value of all the currencies around the world. The currencies decreasing in value relative to what? Commodities. Real assets. If the downward spiral occurs to quickly, it is called hyperinflation. If at the same time the currency devaluation has no effect on employment, the result is higher prices and higher unemployment. If companies are paying higher prices for goods and services, they will cut staff and further exacerbate the problem. The final outcome is a hyperinflationary depression. If this occurs, the strongest country will confiscate hard assets in an attempt to stabilize the system. Gold will be the target just as it was in the 1930’s. This is why I prefer silver as part of my insurance policy. Even then I have no guarantee that they won’t touch it or severely tax it as well.
Since much of the official gold of many countries is physically located in New York City, confiscation for stabilization purposes will be easy. This concentration of reserves would allow the President of the United States to exercise his power for the “greater good” and move the reserves to a secure location away from NYC. If that were to happen, you can be assured that the current financial system is in the final hour of its existence.