State Department memo explains U.S. policy to drive gold out of the financial system

A long memorandum written in March 1974 by a U.S. State Department official for Secretary of State Henry Kissinger and copied to future Federal Reserve Chairman Paul Volcker, then the Treasury Department’s undersecretary for monetary affairs, describes the desire of the United States and its options to prevent European countries from increasing the use of gold in the international financial system.
The memo, titled “Gold and the Monetary System: Potential U.S.-E.C. Conflict,” was recently discovered in the State Department archive by GoldMoney Vice President John Butler and brought to GATA’s attention this week by GoldMoney research chief Alasdair Macleod. It emphasizes the longstanding U.S. government policy of subverting gold as a reserve currency in favor of the Special Drawing Rights issued by the International Monetary Fund, an agency then and now largely controlled by the United States.
The memo’s author, Sidney Weintraub, deputy assistant secretary of state for international finance and development, wrote:
“To encourage and facilitate the eventual demonetization of gold, our position is to keep the present gold price, maintain the present Bretton Woods agreement ban against official gold purchases at above the official price, and encourage the gradual disposition of monetary gold through sales in the private market.”
“An alternative route to demonetization could involve a substitution of SDRs for gold with the IMF, with the latter selling the gold gradually on the private market, and allocating the profits on such sales either to the original gold holders or by other agreement.”

This post was published at GATA

Trump Left Saudi Arabia Off His Immigration Ban… Here’s Why

Submitted by Nick Giambruno via InternationalMan.com,
On August 15, 1971, President Nixon killed the last remnants of the gold standard.
It was one of the most significant events in US history – on par with the 1929 stock market crash, JFK’s assassination, or the 9/11 attacks. Yet most people know nothing about it.
Here’s what happened…
After World War 2, the US had the largest gold reserves in the world, by far. Along with winning the war, this let the US reconstruct the global monetary system around the dollar.
The new system, created at the Bretton Woods Conference in 1944, tied the currencies of virtually every country in the world to the US dollar through a fixed exchange rate. It also tied the US dollar to gold at a fixed rate of $35 an ounce.
The Bretton Woods system made the US dollar the world’s premier reserve currency. It effectively forced other countries to store dollars for international trade, or to exchange with the US government for gold.

This post was published at Zero Hedge on Feb 18, 2017.

Trump Left Saudi Arabia Off His Immigration Ban: Here’s the Reason Why

On August 15, 1971, President Nixon killed the last remnants of the gold standard.
It was one of the most significant events in U.S. history – on par with the 1929 stock market crash, JFK’s assassination, or the 9/11 attacks. Yet most people know nothing about it.
Here’s what happened…
After World War 2, the U.S. had the largest gold reserves in the world, by far. Along with winning the war, this let the U.S. reconstruct the global monetary system around the dollar.
The new system, created at the Bretton Woods Conference in 1944, tied the currencies of virtually every country in the world to the U.S. dollar through a fixed exchange rate. It also tied the US dollar to gold at a fixed rate of $35 an ounce.
The Bretton Woods system made the U.S. dollar the world’s premier reserve currency. It effectively forced other countries to store dollars for international trade, or to exchange with the U.S. government for gold.

This post was published at International Man

When the Money Supply Dries Up — Jeff Thomas

In 1944, the U.S. had been the primary supplier for arms for the allies during World War II and, as such, exited the war with more wealth than any of the other nations that had entered the war earlier, draining their treasuries of money. Since payment was largely demanded in gold, the US held three-quarters of the world’s gold and therefore was in a position to call the shots with regard to the free world’s economic future.
At Bretton Woods, the U.S. took advantage of this situation, setting up the World Bank and the IMF and declaring the dollar to be the default currency for all countries concerned. From that point on, the US was in the catbird seat, able to dictate economic terms to other countries and even to behave irresponsibly, eventually creating previously unheard-of levels of debt, thereby inspiring other nations to do their best to create their own debt in order to keep pace as best they could.
Eventually, of course, such irresponsible economics will cause any country, no matter how powerful, to collapse economically, no matter how many Keynesian economists such as Thomas Piketty, Paul Krugman, and Larry Summers declare otherwise.

This post was published at International Man

The History Of Money (In One Simple Infographic)

Today’s infographic from Mint.com highlights the history of money, including the many monetary experiments that have taken place since ancient times…
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As VisualCapitalist’s Jeff Desjardins notes, some innovations have stood the test of time – precious metals, for example, have been used for thousands of years. Paper money and banknotes are also widespread in use, after first being turned to in China in 806 after a copper shortage prevented the minting of new coins.
Other experiments didn’t have much staying power. The adoption of strange currencies such as squirrel pelts, cowry shells, or parmesan cheese are only remembered for their peculiarity.
Further, other attempts to stabilize the monetary system were abandoned early as well. The original U. S. gold standard lasted just 54 years, after FDR ditched it during the Great Depression. The Bretton Woods version (gold-exchange standard) lasted even shorter, abandoned after being in place for 26 years when Nixon ended all convertibility between the U. S. dollar and gold in 1971.

This post was published at Zero Hedge on Jan 31, 2017.

Is the CIA Responsible for Creating the EU?

The new conspiracy theory running around claims that the European Union was a CIA project. This serious misconception misses the entire point. It is very true that the idea of the EU was supported by the United States since World War II. However, the U. S. supported the idea of the EU as a trade union that could support NATO during the Cold War. However, the idea of federalizing Europe came, not from the United States, but from France. It was de Gaulle who blocked Britain from joining the EU because he wanted France to dominate Europe. It was de Gaulle who broke Bretton Woods by buying up dollars and redeeming them for gold to make France the economic power of Europe. Britain was only allowed to join the EU upon de Gaulle’s death.

This post was published at Armstrong Economics on Jan 31, 2017.

The Dollar Will Die With a Whimper, Not a Bang

The same force that made the dollar the world’s reserve currency is working to dethrone it.
July 22, 1944, marked the official conclusion of the Bretton Woods Conference in New Hampshire.
It was at Bretton Woods that the dollar was officially designated the world’s leading reserve currency – a position that it still holds today. Under the Bretton Woods system, all major currencies were pegged to the dollar at a fixed exchange rate. The dollar itself was pegged to gold at the rate of $35 per ounce. Indirectly, the other currencies had a fixed gold value because of their peg to the dollar.
Other currencies could devalue against the dollar, and therefore against gold, if they received permission from the International Monetary Fund (IMF). However, the dollar could not devalue, at least in theory. It was the keystone of the entire system – intended to be permanently anchored to gold.
From 1950 – 1970 the Bretton Woods system worked fairly well. Trading partners of the U. S. who earned dollars could cash those dollars into the U. S. Treasury and be paid in gold at the fixed rate.
Trading partners of the U. S. who earned dollars could cash those dollars into the U. S. Treasury and be paid in gold at the fixed rate.
In 1950, the U. S. had about 20,000 tons of gold. By 1970, that amount had been reduced to about 9,000 tons. The 11,000-ton decline went to U. S. trading partners, primarily Germany, France and Italy, who earned dollars and cashed them in for gold.

This post was published at Wall Street Examiner on January 27, 2017.

Historical Official Records Reveal Gold’s Value Should Be 20 Times Higher

According to historical official records, the price of gold should be 20 times higher than the current market price. While many precious metals investors have heard about the revaluation of gold to back the outstanding fiat currency, my analysis focuses on monetary gold stocks versus global GDP (Gross Domestic Product).
To understand how the global GDP versus monetary gold stocks has changed, we need to look at information and data published in the U. S. Bureau Of Mines 1932-33 Gold-Silver Mineral Yearbook:
As we can see from the text above, Britain abandoned the gold standard in 1931. However, the most interesting part of the text above was, ‘It is surprising to learn that within a year 42 countries have abandoned the gold standard or are maintaining it artificially.’
Thus, in all actuality, the world abandoned the gold standard in the early 1930’s, even though the United States Gold-backed Dollar became the world’s reserve currency via the Bretton Woods Agreement in 1944.
Now, the Central Banks and Financial elite had a very good reason to drop the gold standard. The financial and banking elite would profit immensely by printing money and charging interest, but only if money wasn’t gold or backed by gold. Because, the increase in above ground gold stocks was limited to its annual gold production. In addition, the industrial revolution had a profound impact on global economic growth.
In the past, international trade was mainly settled in gold or bills of exchange. However, global economic growth was surging as the industrial revolution was now being powered by coal and oil. These two energy sources enabled the world to increase economic growth at a massive scale and pace versus human and animal labor… which was the foundation of economic markets for thousands of years.

This post was published at SRSrocco Report on January 24, 2017.

Tomorrow’s Ten-Baggers From Jay Taylor

Jay Taylor’s Gold Energy & Tech Stocks Newsletter has unearthed some huge winners lately. Here’s an excerpt from his weekly update that concludes with three top junior gold miners.
The Crack-up Boom Is Ending and That’s Very Bullish for Gold Straight out of the Ten Commandments was ‘Thou shalt not steal’! But massive robbery has been institutionalized by the petrodollar orchestrated by Kissinger after Nixon defaulted on the U. S. obligations under Bretton Woods. With that, the ruling elite pulled off the biggest heist by far in human history. By combining America’s military power with the petrodollar, not only did it enable the U. S. to rob the rest of the world with its fake currency – the dollar – it also paved the way for our eventual ruin. Like a drug addict that gets addicted to crack cocaine, the American Military Industrial Complex and other government entities became addicted to never-ending greater and greater government expenditures. But there is one problem with the fiat dollar and that is that it is itself a big fat lie. The dollar has no value. It is not backed by anything of value. In fact it is manufactured by debt and as such contains value only to the extent debts can be repaid.

This post was published at DollarCollapse on JANUARY 22, 2017.

42 Years of Fractional Reserve Alchemy

It has now been 42 years since The Global Bankers successfully alchemized gold through the advent of futures trading so we begin the new year by looking back at how we got into this position in the first place.
To that end, let’s start 2017 by going back to 1974.
Over the past few years, you’ve often heard me reference the HISTORY and FACT of gold price suppression and manipulation. Whenever it comes up in an interview or presentation, it often goes like this:
After Bretton Woods, the US tried to go it alone in managing the price of gold to $35/ounce. By the late 1950s, this caused a mini-crisis when US gold reserves fell by a third as countries around the world exchanged their dollars for gold. There were hearings on Capitol Hill and decisions were made to change the way that $35 gold would be managed.
This led to the formation of The London Gold Pool in 1961. No longer would the US go it alone in providing physical metal at the $35/ounce price. Seven other countries were recruited to the effort in order to lessen the burden and drawdown of US reserves. This effort to manage the $35 price worked for nearly seven years until global gold demand finally overwhelmed the Gold Pool and the effort collapsed in 1968.
The US was suddenly on its own again and demand for gold in exchange for dollars soon grew to such an extreme that President Nixon was forced to cancel the dollar’s convertibility into gold on August 15, 1971. This is the “closing of the gold window” that you’ve heard so much about.

This post was published at GoldSeek on Wednesday, 4 January 2017.

Is This The Reason Why Gold Prices Are Plunging?

While the optics of a soaring stock market and crashing safe-havens (gold and bonds) fits nicely with the election of Donald Trump as the next US president, a closer look shows gold prices beginning to break hours earlier. As India unleashed its demonetization scheme, local retail gold prices began to surge as rumors began to spread of an Indian gold import ban. As rumors have continued, precious metals prices have plunged as the 700 tons of gold imports to India would be a major demand shock for the bullion market.
As MarketWatch reports, back in August 1971, President Nixon shocked the world by taking the dollar off the gold standard. The dollar had been on gold standard since Bretton Woods Agreement of 1944. The biggest bombshell for gold investors in 45 years since Nixon announcement may be ahead. That bombshell is a potential ban on import of gold into India. If this happens, there is a high probability of a one-day drop in gold that could reach $200.
The chart shows how Modi selling overcame Trump buying…

This post was published at Zero Hedge on Nov 24, 2016.

Why the Dollar Remains the World’s Reserve Currency

America came into the Second World War two years after it started, but before that it sold large quantities of American goods to the Allied forces: weapons, war materials, ships, and so on. The bills for all these products and commodities were settled in gold, and American gold reserves were the highest in the world.
By 1944, when a victorious outcome of the war was fairly predicted, representatives of the Allied nations and their central bankers met at Bretton Woods in New Hampshire, where it was agreed that (a) the US dollar would be accepted as the settlement currency for international trade; (b) that the US dollar would be redeemable in gold on presentation at the fixed rate of $35 to the ounce; and (c) the International Monetary Fund (IMF) would be formed to ensure that the US behaved itself and maintained the agreed ratio by controlling the supply of its dollars.
Gold: The World’s First “Reserve Currency” This is how the US dollar became the world’s ‘reserve currency.’ This term is derived from the fact that the original reserve currency was gold – in the sense that trade debts were settled from the debtor country’s gold reserves.

This post was published at Ludwig von Mises Institute on Nov 19, 2016.

The Fed’s ‘Hothouse’ Is in Danger

$8 Trillion Transfer
RHINEBECK, New York – It is a beautiful autumnal day here in upstate New York. The trees are red, brown, and yellow. Squirrels hop across the lawn, collecting their nuts. Unseasonably warm the last few days, rain showers are moving in from across the Hudson, driven by a chilly wind.
But today, we talk about money. After all, that’s our beat here at the Diary. Money. Money. Money. We’ve seen how the feds created fake money after ditching the Bretton Woods gold-backed money system in 1971.
And we’ve seen how this fake money perverted, distorted, and corrupted our economy, our government, and even our family lives. We pause here to recall how it even dodged the Constitution.
‘Money matters’ are supposed to be decided by the people’s representatives in the House, and then discussed and approved by the Senate. After all, it’s voters’ money.
But the Fed – without so much as a by-your-leave or a thank-you note – took it upon itself to decide the fate of more than $8 trillion. That is a rough estimate of the amount not paid to savers over the last eight years as a result of the Fed’s ultra-low interest rate policy.
The total transfer is much greater – since stock, bond, real estate, and other asset prices all rose in response to the trillions of dollars of new credits the Fed was putting into the system. This enriched their owners and made those who didn’t own them relatively poorer.

This post was published at Acting-Man on November 10, 2016.

The Global Banking Cycle: A Visual Guide

Analysis
After the devastating US stock market crash of 1929, the United States introduced the Glass-Steagall Act in 1933 to prevent it from ever happening again. The law separated the activities of retail and investment banks, drawing a hard line between customer deposits and speculative trading activity in the markets. This separation, coupled with the constraints imposed by the Bretton Woods system that emerged after World War II, resulted in a long period uninterrupted by major financial shocks.
But international flows of capital loosened once again in the 1970s with the end of the Bretton Woods system. The creation of the eurodollar market in London in the 1960s also helped remove constraints on capital movement, increasing cross-Atlantic money flows and transforming London into an important financial hub. Since then, the financial cycle has become more pronounced in the United States, with higher highs and lower lows.

This post was published at FinancialSense on 10/31/2016.

UN Report: The Looming Smash-Up of the World’s Economy

Ambrose Evans-Pritchard has written an article on a United Nations report on debt and default.
He is a Keynesian. He worries about deflation. Deflation is the ultimate negative sanction in his view. Like all Keynesians, he does not understand the healing effects of deflation.
But I read him because he provides data on the fragility of today’s debt-based Keynesian economy. What he fears, I look forward to: the day of reckoning on debt, which is the bastard child of central bank inflation and government deficits. Like an unwed couple, Keynesians want to continue the liaison, but without negative consequences. There are always negative consequences.
The third leg of the world’s intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history.
The Jubilee was Mosaic Israel’s mandated year of return to the land distribution of the original generation of the conquest. It applied only to rural land. It did not apply to real estate in walled cities. The heirs of the families of the conquest got back their land. The larger the families, the smaller the parcels. The law also liquidated all debt, including commercial debt. This was supposed to happen every 50th year. There is no evidence that this law was ever honored.
It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity.

This post was published at Gary North on Gary North – September 23, 2016.

Economic troubles loom: The third leg of the world’s intractable depression is yet to come.

September 2016 – GLOBAL ECONOMY – The third leg of the world’s intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history. It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity. ‘Alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion. Damaging deflationary spirals cannot be ruled out,’ said the annual report of the UN Conference on Trade and Development (UNCTAD).
We know already that the poisonous side-effect of zero rates and quantitative easing in the US, Europe, and Japan was to flood developing nations with cheap credit, upsetting their internal chemistry and drawing them into a snare.

This post was published at UtopiatheCollapse on September 24, 2016.

NEW WORLD ORDER MOUTHPIECE WARNS WE ARE ON VERGE OF GREATEST DEBT JUBILEE IN HISTORY

‘Alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion … Damaging deflationary spirals cannot be ruled out’.
This grim assessment comes from an article posted at Telegraph.co.uk, that quotes a recent annual UN ‘Conference on Trade and Development’ report. The article is entitled, ‘UN fears third leg of the global financial crisis – with prospect of epic debt defaults,’
The writer’s name is Ambrose Evans-Pritchard and he’s one of Britain’s most prominent journalists, known for his hard-hitting reporting. He’s also the editor of the International Business section of the Daily Telegraph.
Here’s how it begins:
The third leg of the world’s intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history. It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity.
Alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion. ‘Damaging deflationary spirals cannot be ruled out,’ said the annual report of the UN Conference on Trade and Development (UNCTAD).

This post was published at Dollar Vigilante on SEPTEMBER 23, 2016.

U.N. fears third leg of the global financial crisis – with prospect of epic debt defaults

The third leg of the world’s intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history.
It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity.
“Alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion. Damaging deflationary spirals cannot be ruled out,” said the annual report of the UN Conference on Trade and Development (UNCTAD).
We know already that the poisonous side-effect of zero rates and quantitative easing in the US, Europe, and Japan was to flood developing nations with cheap credit, upsetting their internal chemistry and drawing them into a snare. What is less understood is just how destructive this has been.

This post was published at The Telegraph

The Ultimate 21st Century Choice: OBOR Or War

The G20 meets in tech hub Hangzhou, China, at an extremely tense geopolitical juncture.
China has invested immense political/economic capital to prepare this summit. The debates will revolve around the main theme of seeking solutions ‘towards an innovative, invigorated, interconnected and inclusive world economy.’
G20 Trade Ministers have already agreed to lay down nine core principles for global investment. At the summit, China will keep pressing for emerging markets to have a bigger say in the Bretton Woods system.
But most of all China will seek greater G20 backing for the New Silk Roads – or One Belt, One Road (OBOR), as they are officially known – as well as the new Asian Infrastructure Investment Bank (AIIB).
So at the heart of the G20 we will have the two projects which are competing head on to geopolitically shape the young 21st century.
China has proposed OBOR; a pan-Eurasian connectivity spectacular designed to configure a hypermarket at least 10 times the size of the US market within the next two decades.

This post was published at Zero Hedge on Sep 4, 2016.

Barack Obama may have finally destroyed America’s #1 advantage

In July 1944, just weeks after the successful Allied invasion of Normandy, hundreds of delegates from around the world gathered in Bretton Woods, New Hampshire to determine the future of the global financial system.
The vision was simple: America would be the center of the universe, and every other nation would revolve around the US.
This arrangement ultimately led to the US dollar being the world’s dominant reserve currency which still remains today.
Whenever a Brazilian merchant pays a Korean supplier, that deal is negotiated and settled in US dollars.
Oil. Coffee. Steel. Aircraft. Countless commodities and products across the planet change hands in US dollars, so nearly every major commercial bank, central bank, multi-national corporation, and sovereign government must hold and be able to transact in US dollars.
This system provides a huge incentive for the rest of the world to hold trillions of dollars worth of US assets – typically deposits in the US banking system, or US government bonds.
It’s what makes US government debt the most popular ‘investment’ in the world, why US government bonds are considered extremely liquid ‘cash equivalents’.

This post was published at Sovereign Man on August 23, 2016.