"A Tremendous Secret" (resetting the monetary system)

[Athina]

http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=96

[Jeromie]

Very Interesting  link Athina.   Assume for a moment that Nixon did not drop the link to gold but instead required all those settling debts in the United States to settle in Gold and at market prices . Both ways. That the US would   accept  all future settlements only in gold. That is,all international bank settlements  with the United States had to be in bullion.     This way gold flowed into the United States  , as well.   

If we paid out in gold, everything that came in had to be in gold too .    The implications are awesome. The  bulk of the rest of the world could not have settled in physical bullion in 1971.     


Instead, Kissinger and others concocted Petrodollar Recycling which provided a way to finance the deficits without raising taxes .

[Athina]

Jeromie, let me see if I have this straight. If Kissinger et al. had not concocted the petrodollar recycling program, the crash we are now facing would have started happening in 1971?

[alan2102]

  The US and Canada are wrecking a good deal of their arable land to provide cereals and other agricultural products to keep
vast areas of the world from imploding.  What would be the effect of total cessation of exports of these products on
third world populations?

Jeromie, the U.S. is a net food importer.

What would be the effect of total cessation of  exports? Depends on what
that action was accompanied by, if anything.  If it were accompanied by a
program for breaking up the system whereby third world countries devote
large portions of the agricultural production capacity to luxury exports -- consumed
by you-know-who -- devoting those same resources to local production of
food NECESSITIES (staples for local consumption rather than exotic luxuries
for export and corporate profit), then the effect might be pretty good.

It is all a matter of CONTEXT, you see.

[Jeromie]

No, but  crash became inevitable because of the guarantee of eventual trade deficits from his  policy change. Had Nixon not changed to free float dollar not tied to gold, we would have been required to maintain export production and would have been forced to limit imports.     Nixon and Kissinger needed to pay for Vietnam and literally could not raise tax rates because they were practically at the ceiling point.  They would have been forced to go back to the 92 % top income tax rate .   Petrodollar  recycling forced the high dollar by deliberately forcing all non  United States  oil contracts to be SETTLED in Dollars. Thus, everyone in Japan buying oil from Saudi Arabia had to sell Yen and buy Dollars  so that SA could buy Treasuries.    Thus,  US manufacturers were priced out of their own country because  importers into the US could buy far more   Yen in the case of imports from Japan.   They got screwed in their own country  to enable financing the war without raising tax rates. The result was the collapse of major segments of US manufacturing.    


It took 35 years for the shit to hit the fan irrevocably although it might have hit in 1987  but for the Maestro's liquidity moves in late 1987. They were peanuts compared to what Bernanke has  correctly done under the circumstances. At least in principle given the hollowed out system he acquired from the Maestro.

[Jeromie]

 Note that I confined myself to our Cereal Exports. Our food imports are highly discretionary to our economy.  Cereal imports to third world nations are not discretionary imports. We could get rid of most of the discretionary food imports almost instantly and still survive.    Our food imports are not much different than the junk sold at Pier One.  It will piss off a lot of people though. Enough to get them riled up?


If push comes to shove and we lose the huge foreign exchange substitute that comes with reserve currency status, food imports will be mostly in the same class as literally plastic pumpkins.     The moment the dollar is not universally accepted and we must buy foreign currencies to settle up our imports we are up the creek without a paddle and cannot have a trade deficit.

So we do without imports in excess of exports or we kill off these  drop the dollar  schemes.   

[Jeromie]

ninakat, The dollar at present is tied to nothing but the market value. What amount of currencies the dollar is worth at the moment.   
Look at what speculation in currencies did in Southeast Asian economies a  dozen years ago or what people like George Soros did to the Rouble.   A free floating dollar has no  official peg to something tangible.   There can be no legal devaluation, even in gold because the United States has not settled in gold or silver since 1971.  Thus it is impossible for Congress to revalue the dollar except in one moronic backhanded way.  They could fix the values of every currency on earth in exchange for the dollar and say this is the conversion rate like it or not.   That would be a unilateral take it or leave it proposition.  You deposit Yen for Dollars, you get X to the dollar no matter the market rate. The problem  with that is when the US buys  Yen they can only pay the fixed legal rate  if that is acceptable to the seller of the Yen. In short, it does not work.

Only backed currencies may be revalued practicly  and only if they can take in the backing asset as well as pay out the backing asset.     

[alan2102]

Note that I confined myself to our Cereal Exports. Our other food exports are highly discretionary to our economy.  Cereal imports to third world nations are not discretionary imports. We could get rid of most of the discretionary food imports almost instantly and still survive.    

You're right... AND I stand by what I said. If our getting rid of food imports
was done in the context I specified, then the effect on them would be GOOD.
That was in answer to your question about the effect of total cessation of
exports.

You made it sound like we were being really great, stand-up guys to
be "wrecking a good deal of our arable land to provide cereals" --
out of the goodness of our hearts -- to feed people in the third world.
Unfortunately, that is not so.

[Jeromie]

In the previous post I laid out the  Bretton Woods arrangement only on a unilateral basis.... that makes it moronic.   The Bretton Woods arrangement works if the major states agree to fixed rates and if they settle between state central banks in gold.  That  guarantees that you have gold coming in to pay for gold going out and assumes you have a starting base horde.  The other aspect of this is that incoming loans and outgoing payoffs of loans get net settled between  state central banks too.     A bit of reflection about this means that there can be    no average trade deficits  and no average borrowing deficits. How long the average period?   Not more than several years. The other problem is that many states do not have a starting base stock of gold. Those countries would be in an awful fix. Gold producing countries would have a tremendous advantage.


So, if anything at all happens, the G20 will re institute the Bretton Woods deal without gold. Just fixed rates of exchange guaranteed by Treaty.  The other nations then fall in line or else.

But no currency that is fiat can be revalued except unilaterally by a state to other currencies by law.  The rest of the world can accept it or not do business with such a state.

[Jeromie]

It was out of the goodness of our heart when you take debt forgiveness to states that could not pay for their food imports into  consideration  with all the foreign aid in the 40's , 50's and 60's.    Hey, this is the nation of "Prosperity  Christianity" is it not?

[kats]

You made it sound like we were being really great, stand-up guys to
be "wrecking a good deal of our arable land to provide cereals" --
out of the goodness of our hearts -- to feed people in the third world.
Unfortunately, that is not so.

It was partly altruistic, but we get paid for vast amounts of grain. It's a huge dollar value export. ALSO, it permitted TPTB to keep the irritating reps from the farm states quiet by enacting legislation that enriched outfits like Monsanto and ADM.

[rowdymike]

Can anyone remember when the last time the US has forgiven debt to another nation? I am not savy on this but simple money practice makes sense to me. When you recieve funds, you pay it back. When you can't pay the debt back you offer relief or trade right? I remember years ago the US was relieving debt to other countries left and right and could not believe it. This is the only link I could find and would greatly appreciate anyone that can expand on this. Thanks, Mike

Chelsea Standard 20031106
INSIDE
Speaker gives presentation on Third World debt


Marie Brill, coordinator of Jubilee USA Network, spoke at St. Mary Catholic Church in Chelsea Oct. 19 about the debts owed by poor countries.

Her statistics show the staggering problem of debt, especially in Africa and Asia.

More than half the countries in Africa spend more on debt than health care, she said. Many of those countries are also decimated by AIDS.

Interest rate and compounding have sometimes increased the amount owed so much that a country cannot pay it off. In some cases, there is a question of whether, legally and morally, a debt is owed at all, she said. Brill referred to this as an "odious" debt, such as when a corrupt leader borrows money, then uses it to enrich himself and abuse citizens.

Jubilee USA Network is part of an international group formed in 1997. The organization saw the new millennium as a time to forgive debts of poor nations. Members pushed for debt relief, and the United States forgave $700 million of debt.

Ireland is another country that has taken a strong stand on debt relief.

There is still much owed, Brill said, the majority to the International Monetary Fund and World Bank. Brill said these organizations have not done their share. Since the United States is the major shareholder, Jubilee is asking representatives to the IMF and World Bank to work for debt relief.
http://archives.heritage.com/ch/20031106/B01ISMP.htm
Brill said Iraq has a $120 billion debt that will hinder efforts to create investments to rebuild it. There is a bill in Congress that would attempt to cancel some of Iraq’s debt, she said.

Jubilee USA Network worked to get the African AIDS bill, which includes debt relief, passed by Congress, and wants to ensure it is implemented by negotiating with rich countries and with the IMF and World Bank.

Brill encouraged the Chelsea community to get involved by urging creditors to forgive debts. She said people can write letters to leaders and newspapers, financially support Jubilee USA Network and contribute money to directly help people within a country.

[Lagavulin]

Can anyone remember when the last time the US has forgiven debt to another nation? I am not savy on this but simple money practice makes sense to me. When you recieve funds, you pay it back. When you can't pay the debt back you offer relief or trade right? I remember years ago the US was relieving debt to other countries left and right and could not believe it.

rowdymike,

Whether you're seriously interested in this question or not, I'd suggest you find a book called "Confessions of an Economic Hitman" by John Perkins.  It's easy to read and quite enjoyable, and it outlines how several American financial firms came to the discovery in the late '60's that they could simply con the leaders of most third-world nations with a host of economic mumbo-jumbo into borrowing vast amounts of money from the US -- far more than they could ever repay, which was the intention -- and then convince the countries to use those loans to build the infrastructure that US corporations needed to move their own operations there.  Plus, the companies that built that infrastructure were all US companies (i.e. Halliburton, Bechtel, etc.).

But the supreme evil of the deal was this: in the end, when the countries finally HAD to default on the astronomical debt they'd been convinced they really needed to improve their way of life, still other US firms could swoop in, call in the loans, accept rights for all sorts of irreplaceable resources (and the needed infrastructure that had already been built) in lieu of payment, and VIOLA....US Corporate savvy had effectively bought the whole country for next to nothing....if not at an outright profit!

This happened all over the world, as quickly as possible....for oil, food, minerals, labor, whatever....  Most of these foreign countries only began to catch on to the scheme in the past 15 years. 

And in a macro-nutshell, that's also why much of the world is down-right PISSED at the US.

[mtlouie]

I haven't read everyone's comments yet.  This is a great thread!!  I always love it when Robert AND Jeromie are on the same thread!

Anyway, What can you do? EXHANGE THOSE SOON TO BE WORTHLESS pieces of paper in for real things. That is my plan.

AMEN!  I'm going to order some more seeds and spices for barter.  Wordy- Go to San Francisco Herb and Spice.  They have stuff CHEAP!!  It's unreal how much all those little spice bottles are marked up.  Anyway, order what you can and it will be good to use for barter and selling.  Salt and pepper- people will barter their children for simple things like that here in the near future.

Edit:  Seeds and spices are both  light-weight in the event one has to bug out.  Good bug out barter stuff that can be carried and not take up a horrible amount of space or weight.


Also:  I don't know anything about economics, except what you guys tell me, what I read, and what my ex tells me, but I know this:  things are changing.  The old paradigm is dying and trying to portend things that are going to happen according to the old pattern and way of doing business and how things have happened before, is going the way of the dinosaur.

A new wind is blowing!

[shaleoh2]

A new wind is blowing!

and you will be the nice cool breeze!!!

(a compliment, sym·bol·i·cal·ly speaking)