Quote: “The gold standard has one tremendous virtue: the quantity of the money supply, under the gold standard, is independent of the policies of governments and political parties. This is its advantage. It is a form of protection against spendthrift governments.” - Ludwig von Mises.
Contrary to Mises wise statement; a new round of quantitative easing QE3, without a defined limit, because it will continue until the outlook for the labor market gets better, says Ben Bernanke. However Bernanke, and Draghi too, should know that money printing doesn’t create jobs at all!
As a few days earlier ECB’s Mario Draghi said, he is going to print more money as well, to save the EU and the Euro. But his crisis was already developing almost from the EU’s conception, and now creating events reaching potentially catastrophic levels; most people have no idea how dangerous this situation is going to be. The real doomsday may lie in the destruction of the euro and the breakup of the EU. Should the euro collapse, the effects would be long lasting and devastating, for the entire global economy.
Recapitulating: the ECB prints unlimited quantities to support EU sovereign bond markets. The FED prints $40 billion monthly for bond purchases for an unlimited period of time, and keep interest rates near zero until 2015. This really is shamelessly inflationary!
The fact is, no matter where you keep your dollars and euros; they now are being devalued by the second. The central bankers’ "print and promise" actions in trying desperately to keep the U.S. and EU economies afloat are flushing your savings down the drain. What is to happen next?
o Real purchasing powers of wages are falling.
o Government deficits are growing.
o Interest rates are rising – depending manipulation by both the ECB and the FED.
As Marc Faber explains below: "the asset values of his holdings will go up," but as a responsible citizen he is worried because "the monetary policies of the U.S. (and the EU) will destroy the world." It is class warfare under a veil of "it's good for you," as he notes: "the fallacy of monetary policy in the U.S. -and the EU- is to believe this money will go to the man on the street. It won't. It goes to the well to do."
The end surely is near because; “China and Russia ruthlessly are cutting the legs out from under the US Dollar: The end Is coming: The party is almost over”.
The U.S. dollar is the world’s reserve currency. Even with its reduced status in recent years U.S. dollars still make up about 60% of all foreign currency reserves and is held by all countries over the world. Most international trade, like oil and minerals, is conducted in U.S. dollars, and this gives the United States a tremendous economic advantage. That’s why there is a constant demand for more dollars all over the globe from countries that need them for trading purposes.
Until now the FED was able to flood the financial reserve system with dollars without causing a great amount of inflation because the rest of the world soaked up most of those dollars. But that is changing: China and Russia are shifting away from the U.S. dollar in international trade. When that tipping point is reached, the global demand for U.S. dollars absolutely will diminish, causing a terrifying inflation to the US and the rest of the world. If this scenario sounds far away, then you have missed recent developments. In fact, China and Russia - not the “cronies” of the US have started working long ago, to move the USA to such a situation. The truth is that they are both ruthless competitors of the United States and their leaders already have been calling for a new global currency for many years.
China and Russia don’t accept that the USA has misused its advantage of having the reserve currency of the world, and over the past several years they have been busy making international trade agreements to avoid payment in US Dollars. Even during Merkel’s recent visit, China and Germany agreed to start conducting an increasing amount of trade based on their own currencies. Such international agreements are nails in the reserve dollar’s coffin. With the next consequences:
· Oil is going to be more expensive in dollars.
· Generally everything is going to cost a lot more.
· Less foreign demand for U.S. government debt.
· Interest rates on U.S. treasuries will rise.
· Interest rates on everything in the economy are going to rise.
No doubt, China and Russia are continuing to undermine the dollar; how are you prepared for the coming fiat currency crisis that your hard work eventually will reduce to cero? Think about your protection:
§ Gold and silver as an inflation hedge.
§ Gold and silver as a currency hedge.
Marc Faber: “My worry about gold, and I hold a lot of gold, is the governments will one day take it away. Because you look at the clowns that are at the Democratic convention, and at the Republican convention, I mean these people don’t own a single ounce of gold.
“Mr. Bernanke doesn’t own a single ounce of gold, and Mr. Paul Ryan doesn’t own a single ounce of gold. So what will they do one day? They take it away from a minority that owns it. That is the threat that gold owners should be aware of.
“If the price really starts to go ballistic, they’ll take it away. So the best as a gold owner that you can hope for is that it goes up, but not too much. Just a regularly 5% to 10% per annum, but no more. If it really goes up ballistically one day, I tell you then that the biggest threat will be that the governments will take it away.
“And you can’t hide (your gold) because the US government will knock on the door of the stupid Europeans, the bureaucrats in Brussels, that completely messed up the eurozone, and these bureaucrats in Brussels, they also don’t own any gold. So they’ll be happy to take it away from the minority that owns it.
“Then they’ll knock on the door of the Swiss. The Swiss, they have no backbone. They open the books to any politician in the US and say, ‘Please take it.’ And so they’ll take the gold away as well. Then the Americans will come to Asia. That’s where I think the Asians will not open the books. But who knows?”
Be prepared as gold owner what eventually must be done, storage of your gold in Hong Kong or Singapore is safer, otherwise go into silver or even platinum at the right time to maximize your gold profit. Because it is very unlikely that silver or platinum will be confiscated due to their widely industrial use.
Watch Marc Faber’s interview here: