classical economics
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Strong Dollar Fools Gold

Demand for U. S. Currency is Phony

By Wayne Jett © February 1, 2016

      When U. S. economic and monetary policy gets into serious trouble, as at present, grab your wallet. Payrolls are being cut and businesses closed, unemployment is at depression-level 25%, while savings earn near-zero interest for the past seven years. Major media jargon is flying thick and fast telling you the Federal Reserve Board is working hard to find a solution beneficial to the public. By this time, you should be certain the talk is deception aimed at robbing more value from your savings and invested capital.

      Fed policy and U. S. economic policy are designed to destroy the main street economy and leave the public with enormous financial losses. This is most certainly true in the current fuss about the “strong” dollar. Current U. S. monetary policy is as phony as a three-dollar bill and just as incapable of providing anything good.

                                                                            Theft By Monetary Policy

     Let’s have a brief review of the deviltry flowing from keypads and databases of the minions running the Federal Reserve. The Fed – you must understand – is a privately owned and operated enterprise given power by Congress to create currency used in the U. S. But no official of the U. S. government is authorized to know how many dollars are created or how the Fed uses them. The Fed issues financial statements to serve its purposes as it sees fit, but no one can be certain the statements are accurate or comprehensive.

     By August, 2008, Fed reports showed a total of $845 billion issued comprising the entire U. S. dollar monetary base. Presently the Fed reports having issued monetary base of about $4.5 trillion or, stated another way, about $4,500 billion. Thus, during the past seven-plus years, the Fed has issued more than four times as many new dollars as were created during the previous history of the U. S.

     These seven-plus years experienced no growth. In truth, honest numbers would show U. S. recession/depression throughout the period. These numbers alone indicate Fed actions have reduced the dollar’s unit value by about 80% since mid-2008. The value taken by the Fed from your savings and capital is now in the accounts of the firms and individuals to whom the Fed wired the newly created dollars.

     This is only the beginning of the Fed’s money crimes. A limited audit of Fed records obtained by Congress found the Fed had distributed $23 trillion to financial firms of its board members and owners during 2008 and 2009. Those numbers are not shown in the Fed’s public financial reports, nor are the names of parties receiving the funds or the terms on which the funds were provided. The $23 trillion, or more, may have been transmitted as outright gifts to entities which own the New York Fed, so far as we know.

One thing we know for certain, however: each and every new dollar issued by the Fed gained its value from the same source. Not from the Fed, which adds no value whatever to the paper, ink and engraving. Certainly not from “thin air,” as some who don’t understand suggest. The newly issued dollars get their value instantly and automatically from all of the dollars previously issued and earned by people using the currency. In other words, the Fed’s new dollars suck their value from the value of savings and capital earned and owned by you and me.

      By law each dollar is legal tender for all debts, public and private. So every dollar is worth the same as each other dollar. Dollars are “fungible.” Thus, all the Fed has to do to make each new dollar worth precisely the same as each dollar you and I earned and saved is to print or “wire” the funds.

                                                                       Brer Fed: “Don’t Throw Me In That QE Briar Patch”

      This, in a nutshell, is how and why “quantitative easing” by the Fed is out-and-out looting of the public’s savings. QE is not at all benevolent striving by the Fed to achieve economic recovery and general prosperity, as major media present it. Remember, major media are owned and controlled by the same looters who own and control the Fed.

      Of course the Fed is “willing” to embark on another campaign of creating trillions of dollars monthly for their cohorts! The Fed’s owners are living the nirvana of which they dreamed 100 years ago. The longer they do QE and other money creating schemes, the more wealth will be accumulated by the criminal ring running the Fed and other central banks, and American users of the dollar will be the poorer for it.

      Does this scenario resemble at all a formula for creation of a “strong” dollar? Of course, it does not. Then how have we arrived at a time when so many economic observers insist that the dollar’s rise in value relative to other fiat currencies is proof of “deflation?” Deflation is a rise in purchasing power of the dollar monetary unit due to purely monetary reasons – meaning not due to price changes arising as responses to fluctuating supply and demand. Some mistakenly see falling prices of commodities and other products as deflation, missing the collapsing demand due to high real unemployment and related economic weakness. But other controlling factors are at work to create the false interpretation of the dollar as a “strong,” deflationary currency.

The “Strong” Dollar Deceptions

      Stated briefly, the Fed, the Treasury and their primary banks have schemed to extend the dollar’s life as the world’s reserve currency for trade and commerce by creating the appearance dollars are retaining value more reliably than is actually true. This uber deceit is accomplished in two ways.

      First, interest rates on Treasury bonds are suppressed by using interest rate derivatives sold and bought by the big banks (probably with secret Treasury underwriting of liability), protecting buyers against loss of capital invested in Treasury securities due to rising interest rates. Nominal amounts of these derivatives total well up into the hundreds of trillions of dollars. Low interest rates on Treasury securities give the false appearances that U. S. debt is a safe investment because it will be repaid, and that investors believe the dollar is trusted to retain its purchasing power. Many investors know neither of these premises is true, because the Fed itself is really the only major buyer of Treasury securities.

      The  heavy trading in interest rate derivatives does something else equally significant. It creates demand for dollars to service the needs of parties trading and rolling over the derivatives as they mature and are renewed. These financial transactions use trillions of new dollars created by the Fed, keeping them out of the main street economy. This demand for dollars accomplishes nothing in terms of increasing economic production, other than keeping the hyper-inflation wolf from the door temporarily.

      Now we get to the creation of deflation by deceit. Remember, deflation ordinarily results when a central bank fails to produce new money growth equal in value to real economic growth. Now, however, the Fed’s cabal has learned to create demand for dollars, not from economic growth, but from interest rate derivatives. And, by simply revving the interest rate derivatives engine slightly faster than is necessary to soak up the trillions of new dollars actually created by the Fed, the derivatives’ artificial demand for dollars edges the currency past steady value into apparently deflationary territory.

      Why would the Fed and Treasury allow artificially created demand for dollars to create the appearance of deflation? Count the reasons.
(1) The Fed gains further public approval for flooding trillions more dollars into the world, thereby looting more of what remains of American private capital and savings.
(2) The artificially created deflationary conditions bankrupt more American businesses, as occurred during the “longest contraction” of the 1870s, and during the Great Depression years when federal policies stripped capital from the private sector.
(3) European and developing economies are depressed by a deflationary dollar more severely than they were by manipulated LIBOR interest rates – said by some to have been perhaps the largest financial fraud in history, though surely that is not the case.
(4) The falsely “strong” dollar provides perfect political cover for the U. S. and the Fed to declare one or more devaluations of the dollar relative to other currencies. This is likely to occur as soon as China has bought as much gold as the U. S. has to sell, after which China will require a 50% devaluation of the dollar to continue selling products into the U. S. market.

     With these implications of the “strong” dollar operating, the global predators controlling the Fed and the international banks gain more free capital and opportunities to deploy it in acquiring assets at bargain prices in collapsed economies worldwide. This is their agenda in action.

                                                                                                                       The Second Deception

      All of this could be easily recognized and proven to be deceit unless a second major manipulation of markets occurred simultaneously. Thus, we have just now arrived at the second primary means of giving the dollar a false appearance of being “strong” in retaining or increasing value. To achieve this objective, the cabal of Fed owners had to suppress the dollar prices of gold and silver.

      A soaring price in dollars for gold especially would be a dead-bang giveaway that the dollar’s purchasing power is unstable – indeed, falling like a rock. To overcome this threat to the scheme for extending the dollar’s retention of global reserve currency status, again the solution was financial instruments in the nature of futures contracts for the purchase of gold and silver.

      Contracts promising future delivery of stated amounts of the precious metals are bought and sold, with profits or losses realized, ordinarily without either party delivering or taking possession of metal. Speculation and institutional participation in these markets magnifies the volume of “paper” metals far in excess of amounts of physical metals actually available for delivery. In heavy trading of these financial instruments, unconstrained by necessity to delivery metal, price manipulation is child’s play for the Fed cabal. The high volume of futures trading was said to justify setting the daily “spot” prices for gold and silver based on futures pricing. With futures trading promising to deliver many times the amount of metal actually available – but often insisting upon settling contracts in cash instead of metal – the price suppression was accomplished, despite recurring embarrassments and increasing risks of collapse of the futures exchanges.


      The bottom line is this. These twin deceits of trillions of dollars in false demand for the Fed currency and the suppressed prices for gold and silver will not stand much longer. Many other nations know the Fed’s game is to cheat them of their savings, and they are acting to create an alternate financial and monetary system.

      A stable monetary system is one which provides currency which maintains a stable value – best measured in gold – over the long term. The BRICS alliance of 100-plus nations are well along the road towards getting the Fed’s tentacles out of their savings accounts, and they are almost certain to be joined by Germany, France, Hungary, Britain, Japan, Taiwan and South Korea. The best Americans can hope is to join that system sometime down the road, but we will not likely be allowed entry unless we first depose the Fed cabal which has controlled the U. S. government so many years. ~