Not what is “a” dollar, because there is only one answer to this and unfortunately “is” no longer. The legal definition of a dollar is 371.25 grains of silver. What we use today has no link to silver whatsoever, and is merely a promissory note issued by the Federal Reserve. “The” dollar on the other hand is the currency of the U.S. yes, but more importantly it is the “stock” of the U.S. It goes “up and down” versus other currencies, other monies (gold and silver) and against commodities. The dollar goes up and down based on many factors, supply and demand of course but “confidence” is the largest factor. In essence the “price” of the dollar is determined just as the price of any stock is determined. Global investors look at the current financial status and look into the future to whether it is bright or dim. They then place their bets, which will push the price up or down.
So why is any of this important? Because, if we had not done enough for years and years to piss off the rest of the world, we have now done so. We have bullied our way around the world “lending” to borrowers at terms that we knew could not be met. We then foreclosed and took possession of raw resources. We have toppled “unfriendly” governments and rigged or “helped” in foreign elections to those who would do our bidding. Everything was “priced” in dollars so before any trade could occur…dollars had to be bought. This has recently been changing as foreigners are making deals amongst themselves to settle trade without using dollars.
The world might not have “liked it” (not even on Facebook) but it was the way it was. The U.S. had the gold, the power and the military so “that’s the way it was.”
“Was” being the operative word here. Now, we are aiding Al Qaeda to fight against Syria’s Assad which when you pull their pants down is all about a gas pipeline. Russia and China are backing Assad so we are now squaring off. China and Russia DO have gold and have been buying for years now while we may not any longer…time will tell. China by the way is our biggest creditor. They were our biggest lender throughout the 00’s and have basically stopped buying which is why the Fed is now the buyer of nearly 70% of Treasuries issued and are now the last buyer of any resort.
OK, so over the weekend it has been “insinuated” that Edward Snowden may be a Chinese spy. Dick Cheney even surfaced on Fox news and even mentioned this as a possibility. China until today had remained silent, China asks U.S. to explain Internet surveillance. The Chinese (our biggest creditor) have sat back and watched us over the years. They watched and had little to no comment. They must have been particularly amused over the last few weeks as scandal after scandal arose from the IRS, the AP, Benghazi and the NSA. That was until the story broke that the U.S. has been snooping foreign nations, citizens, corporations, diplomats and even presidents. The Russians cannot be too pleased to know that former president Medvedev was monitored nor can our allies at the G-20, NSA, UK Spied On Politicians, Intercepted Emails, Eavesdropped On Russian President’s Phone Calls in 2009 London conference. The Chinese have now told us “you got some ‘splainin’ to do Lucy!”
So connecting these dots you can see a few things. First, the world and in particular Russia and China are pissed at us…and with good reason I might add. The Russians and the Chinese have been documented (and probably even more “un” documented) buyers of gold. The Chinese have more dollar reserves (Treasury securities) than any other entity (with the exception of our own Federal Reserve) in the world. Going back to the top of this writing, the dollar is a “confidence” currency and I would submit to you that we, the U.S., have now “broken confidence.” We have broken trust plain and simple AND done so at a time where we are financially very weak and very fragile. I would also say that the momentarily we have spread ourselves thin.
I put this in front of you because I want you to see the potential dangers here. The dangers are many folds but in a nutshell the Chinese and Russians can rally an anti U.S. consensus with ease and probably at will. They know that we are overstretched financially and militarily. They know that we are running low on gold, they can do math as well or better than anyone. They can pull support for the dollar and dump Treasuries to pressure us financially. In effect, they will be “dumping” our stock because they have lost confidence in us as a debtor. THEY can revalue gold on their own and tell everyone to put their “Gold” cards on the table if they want to sit in on the game. An audit from 1956 will not however gain us entry to this “game.” I’m pretty sure that this is not the “New World Order” that average Americans had envisioned.