Posted on 04/14/2006 5:24:17 AM PDT by patriot_wes
Crisis and Repudiation
A dollar crisis erupted in 1970-1971 when foreign central banks, who had been flooded with dollars funding U.S. deficits, began to demand payment for their dollars in gold according to the Bretton Woods agreement. The U.S. had printed so many dollars and borrowed so much money from foreign banks that U.S. gold reserves were rendered insufficient (by a ratio of over five to one!), making full payment in gold impossible. The crisis required an immediate solution to save America from default and bankruptcy.
The U.S. resorted to immediately severing the link between the dollar and gold, making it abundantly clear to all its creditors that America would never repay any of the billions of dollars it had borrowed with physical gold, so the depreciating paper dollars were then backed by nothing but the ''reputation'' of the U.S. Government. The act of severing this link was functionally equivalent to an act of bankruptcy by the U.S. Government.
Note... the US hasn't had gold backing its money supply for close to 50 years.
I hope we invaded Iraq to: (i) depose Saddam, (ii) maintain a military presence in the most strategic geographic location in the world, forever.
Article is crazy stuff.
and (iii) allow continued growth in the Gulf region unhindered by tyrants
Of possible relevance:
. . . What did break down was the rules of cooperation for the convertibility of the dollar into gold and the exchange rates regime. After the war, the US dollar became the international reserve currency. The US also went from being in surplus to running trade deficits. States at first wanted US dollars to meet their trade obligations. They were also happy to let the US run deficits since this provided liquidity in the international monetary system. This situation led, however, to a crisis first anticipated by the economist Triffin in 1960 (R. Triffin, Gold and the Dollar Crisis, New Haven CT, 1960). The problem was that if the US attempted to correct its balance of payments deficit it would cause a liquidity crisis. If it allowed its deficit to continue, other states would lose confidence in the dollar as a reserve currency and seek to convert their dollars into gold. US deficits continued to increase, partly because the US had to pay for its war in Vietnam. Confidence in the dollar started to slide. States began to seek, as the gold standard allowed them to, the conversion of their dollars into gold. The US reacted by announcing in August 1971 that it was going to abandon the convertibility of the dollar.
This unilateral action ended the exchange rates regime that had been negotiated by states at Bretton Woods. Other states were more or less forced to float their own currencies. . . .
Those eviiil Jooooish bankers...............
What, no mention of Kissinger and the Bilderbergs?
I think that is certainly part of the equation, a part that is long, long overdue. However, I beleive the main reason has more to do with uninterupted flow of oil coming from the region to the world market at reasonably stable prices. I, for one, would very much like to see this side of the puzzle promoted. Folks need to understand that, without oil, everything comes to a grinding hault. I really don't fancy returning to the days of having a closeup view of the a$$ end of a horse to get where I need to be.....
Don't forget the trilateral commission!
I mentioned that very thing yesterday at lunch. There was an ultra-leftie there that doesn't believe any war is worth fighting. He also is of the ilk that believes the US has no right to be the only super power. The rest at the table were all conservatives and many were ex-military. It was a lively conversation to say the least.
"THE" Reason We Went Into Iraq
http://www.freerepublic.com/focus/f-news/1140929/posts
I understand this guys point about the dollar being backed by gold and all... but soon as I keep seeing him mention the bible you know this is just crap hysteria... surprised there wasnt a link at the bottom of the page to donate to the church of jesus christ of latter day saints or something.
Everyone knows it was to keep the truth of the Roswell crash from being exposed.
Big time.
Once Nixon dropped the Gold Standard the U.S. Economy was doomed for the next ten years.
I hope so.
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