For the last week, my lovely wife and I were traveling New England and doing a little bit of leaf peeping. We are doing the last half of our trip at “Bretton Woods.” We had planned this trip twice before, once for our honeymoon 7 years ago and then again last autumn. 7 years ago my Mom died on the 2nd day of our honeymoon, last year our house burned down in the Texas wildfires, we’re finally getting our honeymoon done 7 years after the fact but well worth waiting for.
Back in 1944, 44 nations gathered at the Mount Washington Hotel with some 700+ delegates to make the U.S. Dollar the reserve currency of the world. This was called the Bretton Woods agreement. The room where the documents were signed has been preserved and is humorously called the “Gold Room” where there are many pictures of the historic event and even include some of John (Mr. barbaric relic himself) Maynard Keynes. I have wondered this week why they didn’t name it the “Dollar room”.
If you recall, Gold was “pegged” at $35 per one ounce at this accord. The Dollar was elevated to the reserve currency of the world and was to be used to settle international trade. From that point forward, the Dollar has gone on to lose more than 98% of its value versus Gold which lead me to ask a few questions. After a few beers one night, I went and stood outside of the Gold Room. As people would walk up to take pictures I made the remark, “This is the room where they made the Dollar the world’s reserve currency,” then I made mention that those Dollars had lost over 98% of their value versus Gold. I heard all sorts of replies like, “Yeah, but Gold is just so high right now,” “Gold is so risky,” “Gold doesn’t pay any interest,” and the topper was this,”But the government doesn’t back Gold, I’d rather stay with something that’s government guaranteed.”
The last person I spoke with was an Aussie, he put it all in perspective. He said, “You Americans have put Mr. Ponzi to shame, you import goods and export inflation. Now you don’t even pay any interest for your privilege to steal.” He knew the game inside and out and was a breath of fresh air to talk to, not to mention down a few beers with. In any case, the “obliviousness,” 12 years into the final collapse of the Dollar (Gold’s ultimate bull market) still astonishes me. For the general sentiment to still be “fear” of Gold shows just how well the puppeteers have done their jobs!
As I’ve traveled for the last week+, I’m still catching up with current events but I did want to comment on the unemployment numbers. The “drop” to a 7.8% rate is simply laughable. Between the additions of phantom jobs from the birth/death model and the “tally” methods used where the rolls of the unemployed are lowered because people just give up looking for work, the numbers are now completely meaningless. Many have concluded that the numbers have been falsified because of the upcoming election, yes, this is true but are they only now waking up to this epiphany?
EVERYTHING is falsified today. The stock markets are propped up, commodities are suppressed, the Dollar is supported and interest rates are laughable in the best case. Think about it, the U.S. Treasury is like a “functional drunk” and functions only because the populace is also drunk on the same Kool Aid. Interest rates have dropped at the same time that debt ratios have grossly decayed and even the bought and paid for ratings services have downgraded ratings. Risk has expanded greatly in the last 5 years, rather than rates increasing to compensate for this risk, they have fallen to nearly zero. Nothing is priced correctly, nothing is reported as it really is and risk, everywhere, is being cloaked.
It is only a matter of time before reality “shines through”. If I had to guess how it will be done, we were “warned” last night by Leon Panetta that a “cyber Pearl Harbor” type of event is a very real risk. Think for a moment, if you knew that you were going to “lose control,” wouldn’t you look for something, ANYTHING to blame it on? Do not be surprised one bit if you wake up one morning to find that we were attacked. This “attack” knocked down computers far and wide, the banking system and Wall Street got closed and account balances in many cases wiped clean. The system is in a position where a “re set” MUST happen but there also has to be “cover” as to why. A supposed cyber attack fits the bill perfectly and also puts forward “cause” for the numerous (onerous) executive orders to be used against the populace for our “safety.” Keep your eyes open and don’t be caught napping.