How Can the US Dollar Affect the Rest of the World's Currencies?

Here is a rare article from the Gold Tribe Newsletter - There is no direct link as this is a private newsletter). This is a wonderful essay that exemplifies the notion that even if you do NOT live in the USA, you really SHOULD worry about what is happening with the US Dollar today and look where it is going.

As we know all too well, the world's fiat currencies are backed with nothing but faith - and as soon as that confidence begins to wane, this whole thing will begin to unravel quickly. In times like this, people historically run to something more stable and of a store of value. I continue to encourage people to continue to buy gold and silver. Here is the article written by Simon Heapes:

My Country Does Not Use the US Dollar, So Why Should I Care? By Simon Heapes

I will attempt to explain here why you should care. Let’s begin by looking at one of the symptoms of inflation known commonly as “debt‟ in simple terms.

The reserve currency of the world is the US Dollar. As I have stated be-fore, money creation of the US$ has doubled in recent times compared to the last 50 years of the US Dollar’s inflated rates. The reserve banks for every country in the world hold the vast majority of their reserves in the form of US$ Treasury Bills, bonds and notes. These are financial IOU instruments similar to certificates of an underlying asset. This came into effect in the early 1980s when all western nations floated their respective currencies against the US Dollar. It’s interesting to note how politicians and media put a spin on words calling what was effectively backing all nations’ currencies with US Dollars as "floating" them!

The US Treasury creates this money simply by asking Congress to increase the debt ceiling whenever the debt it has already issued reaches that ceiling. It is currently raised to above $14.5 Trillion. That can take varying amounts of time depending on how much inflating the Treasury is doing at the time. For example, the debt ceiling has been lifted year in and year out now for the last three years and will probably be raised again and again.

So what happens with foreign central banks? A nation's exporters receive US Dollars in return for their exports to the US as well as others nations. (Nations are currently forced to use US Dollars, because it is the world’s reserve currency in exchange for goods and services between them.) Then the exporters go to their own bank and exchange the Dollars for the local currency. Their bank does the same thing by going to the central bank of its own nation. The central bank then takes the Dollars and uses them to buy Treasury paper. Thus, the Dollars the US spends on imports are recycled back to the USA.

In essence, the asset backing for the world’s economic system is nothing more than a borrowing operation from the US to foreign nations’ reserve bank treasuries.

It is US Dollars in foreign nations‟ reserves which back their own Reserve Banks thereby underpinning all nations‟ currencies around the world with a few exceptions. The central banks of these foreign nations then use these reserves as a base upon which they inflate their own currencies.

There are two limits to the amount of money avail-able to be borrowed:
1) One is the 'debt ceiling' that must be ap-proved by Congress determining the over-all limits.
2) The second is the amount of money that a Treasury is prepared to spend its own currency on to top up the borrowing.

At this stage there doesn't seem to be a political limit to raising the debt ceiling if the last few years are any example of it abating. Inflation was and is inevitable.
The amount of Treasury Bills purchased is used as a device to manage the value of foreign nations‟ own currencies against the US$ thereby being able to inflate their currencies as a due process.

Something to think on:
1) As of 2005, Gold measured in all currencies was steadily increasing.
2) You cannot study the subject of Gold and Silver without studying its counterfeit, that being the world’s paper currencies.

Until next time, Simon HeapesTreasury Secretary of YOUnique
END
Best to you,

Kirsty Hogg

http://www.fundsingold.com/

Goldvestments Copyright © 2011

MELTUP - A New Documentary by The National Inflation Association

Hello Everyone,

I just thought I would post the new documentary by NIA – “Meltup” for all to view. Any discussion or comments are welcome.

The Eve of Destruction?

Well it’s been 2 years since the whole notion of the importance of acquiring inflation proof assets entered my world, and let me tell you, it couldn't have happened at a more opportune time. I sat wide-eyed as I watched the whole Fanny Mae and Freddy Mac saga unfold before my eyes. This was what the likes of Richard Martin, Peter Schiff and Marc Faber had been predicting for months, and I had just finished taking it all in when it hit the mainstream media. I was on the phone with a friend when the news feeds hit the net. We could not believe our ears. “Is this it?”, I thought, “is this the beginning of the end of life as we know it?”

Then the ensuing images of regular families who so ill-advisedly “bit off more than they could chew” ending up in homeless shelters, motels, parking lots, or “tent cities” were unbearable. And to watch the audacity of the media as they blamed the families for purchasing something they couldn't afford, all the while, begging for a bail out for Fanny and Freddie; the culprits who caused the crisis to begin with.

Well it turns out that that the sky was not falling that day, but it was definitely a warning shot. With the Federal Reserve continuing to print money into existence, and the Federal debt growing exponentially, the foundation of this 100 year experiment called “non-gold backed, fiat currency” has been eroded and the economy is definitely on its slow decent into hyper-inflation.

Many seem to argue that things are turning around, the economy is getting better. We are told to cheerfully continue buying stocks and watch the stock market “rally”. But common sense simply dictates to take a look around you. What are we actually seeing in our lives today? Increased unemployment, record inflation, increased homelessness and the existence of “modern day shanty towns” N.America.

Can we rely on the government to rebalance the economy? As Chris Martenson so succinctly described it in the “Crash Course”, he states we are now in a situation with an outcome, and it is just a matter of how we are going to handle the “outcome”. What are some things we can do to lessen the blow of the outcome?

More and more it makes sense to store your wealth in something that is inflation proof. I for one will be buying gold and silver in a variety of forms.

Kirsty Hogg
http://www.goldvesting.com/
http://www.fundsingold.com/
http://www.goldvestments.com/

Government Issued Coins VS. Non-Government Issued Coins – You decide!

I get asked a lot about where to buy the best small denominational gold/silver bullion coinage. An argument that often arises is should one stick with government issued coins like a Maple Leaf or American Eagle, Krugerrands, etc. Let’s take a look back in recent history. In 1933, Franklin D. Roosevelt by Executive Order, confiscated all gold coins and bullion from US citizens. By law, private gold ownership was forbidden in the US from 1933-1974. In 1933, it had to be sold back to the Federal Reserve Bank. This is an important point to remember when we start discussing “non-confiscatable” gold.

Many people are unaware of this fact: Government issued coins are not yours, you are only the BEARER of the coin, NOT the owner, as it is actual currency owned by the government. Just like on a dollar note, it says you are “the bearer”. This applies to all government issued currency.

One of the forms of gold that was not subject to the executive order for confiscation was religious collectable gold. Such as religious relics, medallions, etc.

Read the order here.

Gold has been money on this earth for over 5,000 years. Throughout history 2 distinct types of coins have circulated; Monopoly Coins and Open Exchange Coins:

1. "Monopoly Coins" identified by:
Government and/or 3rd party monopoly ownership (e.g. by various coinage acts and decrees.)
- A monetary face value determined by statute (e.g.1 Denarius, $1, or 50 pence)
- Government inscription (e.g. Image of "Caesar" or state "ID".)
- Little or no integrity of precious metal content.
- Little or no intrinsic value.- Being merely tokens of inferred value.
- Government can buy back at anytime for face value only - $50 gold coin (you'll get $50).

2. "Open Exchange Coins" identified by:
- Private bearer ownership.- Intrinsic value in their own right.
- Integrity of precious metal content.- Absence of a monetary face value.
- Absence of government or third party encumbrances.
- Open market assessment as to their value and tradability.
- Bearer's liberty as to usage or hoarding.With the benefit of historical hindsight, the civilizations that have embraced a system of just weights and measures and an open exchange of gold and silver coinage, not only enjoyed longevity as a power, but their citizens and those who chose to trade with such currency of integrity, enjoyed the prosperity and security it ensures.

MAXIMUM BENEFIT TEST

In order for gold and silver coinage to enjoy maximum benefit in the market place it must pass the following 5-point test.

1. The coin must be your property (Government issued coins are not yours, you are only the BEARER of the coin, NOT the owner, as it is actual currency owned by the government).
2. It must be a stipulated weight (Grams or troy ounces are preferred)
3. It must be a determined purity (Preferably pure gold, pure silver or a mixture)
4. It must be in small denomination of weight (2-30 grams, or 1/10th -1 troy ounce)
5. It must be internationally recognized (Via a reputable hallmark or trademark)

Based on the points above, here are other things to look for when shopping for gold;
* Mint fresh and un-circulated, issued with their refiner's certificate of fine weight and purity which makes it 100% standardized.
* Stipulated weight and purity, insuring their determined international value.
* Small denominations of weight making them liquid and easily tradable.
* Bear an internationally recognized Hallmark, attesting to their internationally reputable purity and minting.
* Fit the description of 'free market commodity' (sometimes referred to as free-market money).
* Ownership rights: 100% private Gold, non government issued.

If you have doubts that gold confiscation will ever take place again, think again. There is approximately a half an ounce of gold above the ground today for every living person on the planet. When fiat currency deflates, a logical step for the government is to reclaim their gold as their currency could be rendered worthless. Also, confiscation is such a serious downside, that I would not want to take my chances.

Tune in next time when I discuss another form of wealth confiscation that many people are not aware of. This happens globally, everyday, even while we sleep.

Kirsty Hogg