In 1944, during World War II, 44 Allied nations gathered in Bretton Woods, New Hampshire to establish new rules for the world’s financial system. At that meeting they agreed that the world’s reserve currency would be the United States dollar backed by gold at $35 per ounce. This meant that you could exchange your dollars for gold anytime at $0.88867 grams of gold per dollar.
Sometime closely after the war, it was agreed that the US would house most of the gold for the Central Banks of the world at Fort Knox as Europe always seemed to be at war, and it would be safer in North America. The US purchased the gold at US$35 per ounce with an agreement to sell it back to them at the same price anytime they wanted it back.
The USA substantially benefited financially by having the world’s reserve currency as most trade was then conducted in US$. Being that the US$ was backed by gold, if the US wanted to print more money, they would have to add more gold to their reserves to keep the currency “riskless.” (That seems so foreign to us today as the printing presses go willy nilly, day and night) The Allied nations agreed that this helped stabilize trade by stopping countries having currency wars by pegging all of their currencies to the US$. But in 1971, everything changed.
In 1971, President Nixon took the US off the gold standard effectively changing the US dollar from money to currency called “fiat currency.” Fiat currency is backed by nothing except the credit worthiness of the issuing country and is defined as money without intrinsic value. Slowly other countries around the world rid themselves of backing their money with a commodity and went to the fiat currency system themselves.
The difference between currency and money is best described by Mike Maloney in his 10-part series, The Hidden Secrets of Money. Hidden Secrets of Money, Episode 1: Currency vs. Money (goldsilver.com) He states that currency is a medium of exchange that is portable, durable, divisible and interchangeable. “Money” is all of those but also a store of value. Or better put, a “fiat currency” is backed by a country with a promise while money is backed by a physical commodity such as gold.
In 1973 the US$ became even more popular with the signing of an agreement between Nixon and Saudi Arabia, which was, in exchange for military protection for the OPEC nations, the Saudi’s and other OPEC nations would only accept US currency for oil and they would invest their profits in US treasury bills. This is why the US dollar was until recently referred to as the petro-dollar.
The obscene printing of currency by Central Banks around the world is a direct result of not having to have gold to back up a fresh batch of cash to be produced to give to whoever they want. There have been no rules since 1971 and the world is now grotesquely awash in cheap, debased currency that has no intrinsic value. This is the biggest difference in today’s economic predicament than any economic calamity we have had before us.
Every fiat currency in the history of the world has eventually become worthless and today there is a move afoot by the BRICS (Brazil, Russia, India, China, South Africa) nations along with Saudi Arabia to create a new world currency that is actual money, thus, backed by a commodity or commodities such as gold. If this happens, or should I say when, it will place immense pressure on the US currency and cause turmoil in the global stock markets, namely the USA.
The US dollar may be having its last hurrah and make no doubt it is severely injured. And to add insult to injury, the day after the USA abandoned Afghanistan, supposedly taken over by a 4th century army with 1985 Toyota trucks and a couple of old machine guns, the Saudi’s broke their deal with the USA and signed a military agreement with Russia to protect them. In exchange the Saudi’s and their OPEC nations no longer deal specifically in US dollars. They are only trading with Russia and China in, you guessed it, gold, or at least a gold backed currency such as the Russian ruble or the new digital Chinese yuan. It was one of the world’s most famous divorces, the Saudi’s and the American’s and the media never covered it. Maybe had it been a Royal or a Kardashian they might have?
The world is currently divided economically and ideologically between East and West. If you read the Bible you will see that much of what is unfolding is happening as it is written. We see alliances formed such as the BRICS which represents 75% of the world’s population and 45% of the world’s GDP, walking away from the Western hegemony.
From 1947 to 2021, the US dollar was the world’s only tier 1 reserve currency as decided upon by the International Bank of Settlements (IBS) which is the Head of or the Central Bank of Central Banks, located in Basel, Switzerland. Tier 1 means it is a “riskless” currency, but I think we all know that this is hardly riskless considering the massive debt the US has, which might very well be why in 2021, with no press release, the IBS quietly elevated Gold from a Tier 3 asset/currency to a Tier 1 reserve currency on the same level as the US dollar! Wow! Now isn’t that big news? But Gold has one distinct difference, it has tangible value and as such it is defined as money versus the US dollar, which is a fiat currency, is backed by only hopeful promises.
An interesting observation is that in 2020, the Central Banks started repatriating their gold from the USA at that agreed upon $35 per ounce from the USA. I wonder if that was a coincidence as the elevation of Gold hadn’t been announced yet? There couldn’t possibly have been a “leak, could there?” And, it has been told that they have bought back all of their gold and in 2022 these same central banks bought a record amount of gold and continue to accumulate it.
Is it a coincidence that as we face the biggest asset bubble in history, a time where all assets are inflated due to the mammoth printing of currency that the IBS quietly elevated Gold to Tier 1? Do they know something we don’t know regarding the future of the US dollar? With all this easy cash floating around and record low interest rates, everything; stocks, bonds, real estate and even currencies are overvalued and tangible assets such as farmland are the last vestiges of safety. Gold and Silver are tangible assets. Oil is a tangible asset as is copper, wheat, nickel, uranium and so on. I believe we are heading for a real economy based on commodities from this phony money economy. The fiat currencies like the US dollar, the Yen, the British Pound, the Euro, the Canadian, Australian and NZ dollars are all at risk. The shift will be painful but well worth it.
Our Babylonian system is about to change for the better. It will be the greatest wealth transfer in the history of the world, and it is upon us. I hope you are on the right side of that trade.
Yours in Faith, Family and Finance,