Dollar Crash: Gold will replace the U.S. dollar as world reserve currency
Looking at the euro, the yen and the yuan, it is clear that these paper currencies are too weak to fight much too big have their own problems, as they can get by filling out the ailing U.S. dollar created a vacuum. Currently we see how the world turns at a breathtaking speed of a reserve currency, which has been proven for thousands of years: Gold
Peter Schiff, Europacmetals.com, 01/06/2011
My forecast that the U.S. dollar is currently in the final stage of its decline is well known to my readers. Tragically, the U.S. is bankrupt and unable to pay their donors, unless they do so with additional printed U.S. Dollars. In addition, the United States are now still in the midst of an economic depression.
The whole thing goes on until there is a crisis of confidence in the dollar - just as in all previous bubbles has also been the case. The crucial difference between the current dollar collapse and, say, the bursting of the U.S. housing bubble is that it is the U.S. dollar is the backbone of the global economy.
This Inferno is thus leave a vacuum that will somehow be filled and again.
The commentators in the mass media often talk about the three main challenger to the U.S. dollar in the competition for the role as world reserve currency: the euro, the yen and Chinese renminbi (also called the "Yuan" is known).
These currencies, however, suffer even under significant weaknesses, which makes it at the time of the dollar's collapse is impossible to assume the role as world reserve currency. Regarding the alternatives at the Fiat currencies, the world seems so from the rain to come to worse.
The Euro: dissolution at the edges
When € is a 10-year-old experiment that combines different political, economic and cultural interests under a giant Fiat currency and controlled by a very powerful central bank.
The euro would be handled properly, could serve such a currency means that the participating governments remain honest. But this does have nothing to do with the world in which we live. Instead, the fiscally irresponsible countries already discussed at the first sign of trouble to let the currency fall easily.
This means that they would prefer to inflate their own national currencies in order to cope with the crushing national debt. To hold the euro, the donor countries of the euro zone were thus put under pressure to rescue the debtor - even though such actions violate the contractual arrangements that the common currency area is based.
The question is: How long will the Germans - which are still influenced by memories of the Weimar hyperinflation and the rise of Nazi Germany - are still willing to print Euros to pay the debts of the prodigal Gentiles? How many German politicians with the promise of eternal ongoing recovery efforts in Europe and rising prices still win elections? This is the fundamental flaw of the euro.
And Greece is of course not the only problem. Ireland and Portugal both vying for the second worst debt crisis in Europe. Spain, which represents 12% of GDP in the euro zone had to, to watch as the yield rose for Spanish government bonds of 4.1% at the beginning of 2010 until the end of 2010 to 6.6%. In almost all other euro-zone countries, the yield has also increased - a clear indication that in mind, where the euro zone to an increasingly risky bet pregnant.
Although a withdrawal of €-PIGS would ultimately lead, in fact, a stronger currency area, it would be a traumatic event. The mere prospect of such a development already undermining the euro and at a time when the world just musing about which direction it goes next.
Perhaps it would be an older currency that given the recent financial crisis was getting not so easy to sway a better challenger to the current world reserve currency. In contrast, the euro is a new currency, which also is still in serious trouble. If already represent less than two dozen nations too onerous burden for the euro, why should we assume that the results were different when the euro would extend over 200 countries?
The Yuan: A capitalist country with a communist currency
The investment community is now developing gradually, in my long-standing existing enthusiasm for the growth miracle in China. And that is not unfounded. Rather, I assume that many investors are too scared when it comes to the Chinese market.
And yet those who now jump on the train to say also that the Chinese yuan would be the logical successor to the moribund U.S. dollar. But while China, becoming an enormous economic power, the yuan is even more a relic of the communist past of the country.
First, China has imposed strict capital controls, the yuan. A reserve currency can be exchanged, however, freely and easily to other currencies. Even within China, it is not possible to exchange large amounts of yuan into dollars or any other currency.
China is currently conducting cautious reforms to loosen the restrictions. We should, however, make clear that these restrictions were not introduced arbitrarily. These controls enable China to keep in the position to the value of the yuan down, so the country can maintain inter alia, its exports artificially high. China should allow free convertibility of the yuan, the country would lose the power that it exercises over his money and thus also on his people.
We should in this context, once again realize that all Fiat currencies are manipulated and inflated regularly. The Chinese central bank reported that the M2 money supply growth was within the last 5 years with over 140%, which is almost entirely due to the efforts of the Chinese to keep their exchange rate with the U.S. dollar depreciating stable.
Given the combination of rampant inflation in the country, exchange restrictions and the lack of transparency of the yuan is simply not in a position to become the role as a world reserve currency.
The Yen: A black hole of debt
The Japanese yen is the third cronies on the international fiat money party. While the yen is not concerned with the structural risks in the euro, but he is in an environment of massive national debt. Japan's debt / GDP ratio is 225%, the highest among industrialized countries, which means that there is a constant incentive to abandon them, to settle the debt to always print more yen.
The yen has therefore put up with the debt millstone around his neck, which it can be a poor alternative to the U.S. dollar, which has exactly the same problem.
Although I am of the opinion that Japan was in a much better position than the U.S. is, as the country generally has a net trade surplus and the greater part of the debt is held by the Japanese, the yen still not a stable currency, which for the conduct of world trade would be suitable.
Perhaps more important is the fact that the value of the yen in a striving for yen reserves world would establish solid, which would be in Japan, but politically to enforce, since the Japanese export lobby the yen continually downward pushes to the sales to foreign countries to fuel .
These two factors then fit together in ways that make the yen as a reserve currency is simply impossible. The appreciation of the yen would make Japan's debt problems only get worse and lead to the Japanese export industry would suffer extreme among them, which means that Japan, this role probably would not anyway, even if that is the wish of others.
By the way, if you ever after "yen as a reserve currency" Google, you are asked "Did you mean: Yuan as reserve currency?". I guess that even the smartest search engine in the world doubted that the yen could take over that role.
The simplest answer is usually the best
JP Morgan said in 1913 before a committee of the U.S. Congress: "Gold is the only money!" Morgan was saying that gold store of value and medium of exchange is effective when unchallenged.
Given the fact that the bank was named after him in February this year began to physical gold as protection, begs the question, why should be considered the trend of a generalized return to gold only as a distant possibility. Quite the opposite, in fact it is expected - and very simple reason, because all the other currencies make through and through a miserable and dreary impression.
The markets are huge and powerful and therefore require a reliable medium of exchange. The demand for sound money is not just a philosophical question, but is derived from the requirements of the market itself.
While the history of mankind, dealers frequently covered with gold and silver throne before other candidates. What we are seeing now is, yes, now is not the first experiment of a paper money system and the extensive depreciation of money is nothing new.
The fact is that the well-read the founding fathers of the United States from the lessons of history have been impressed so much that they are following a very clear provision in the U.S. Constitution wrote down this: "No State shall ... anything but gold and silver coins for payment for make payment of the debt. "
While at any time, the possibility existed that another Fiat currency rises, and the place of the U.S. dollar takes - making the irrational experiment worthless currencies is maintained much longer - seem to be the special circumstances which today are ample for supporting this development, I believe now to make less and less likely.
Rather, I see evidence to suggest that the world at blistering speeds to gold returns. It is a return to normal, the number of positive effects on the global economy. Certainly there is a trend we definitely welcome and we can benefit from.
Looking at the euro, the yen and the yuan, it is clear that these paper currencies are too weak to fight much too big have their own problems, as they can get by filling out the ailing U.S. dollar created a vacuum. Currently we see how the world turns at a breathtaking speed of a reserve currency, which has been proven for thousands of years: Gold
Peter Schiff, Europacmetals.com, 01/06/2011
My forecast that the U.S. dollar is currently in the final stage of its decline is well known to my readers. Tragically, the U.S. is bankrupt and unable to pay their donors, unless they do so with additional printed U.S. Dollars. In addition, the United States are now still in the midst of an economic depression.
The whole thing goes on until there is a crisis of confidence in the dollar - just as in all previous bubbles has also been the case. The crucial difference between the current dollar collapse and, say, the bursting of the U.S. housing bubble is that it is the U.S. dollar is the backbone of the global economy.
This Inferno is thus leave a vacuum that will somehow be filled and again.
The commentators in the mass media often talk about the three main challenger to the U.S. dollar in the competition for the role as world reserve currency: the euro, the yen and Chinese renminbi (also called the "Yuan" is known).
These currencies, however, suffer even under significant weaknesses, which makes it at the time of the dollar's collapse is impossible to assume the role as world reserve currency. Regarding the alternatives at the Fiat currencies, the world seems so from the rain to come to worse.
The Euro: dissolution at the edges
When € is a 10-year-old experiment that combines different political, economic and cultural interests under a giant Fiat currency and controlled by a very powerful central bank.
The euro would be handled properly, could serve such a currency means that the participating governments remain honest. But this does have nothing to do with the world in which we live. Instead, the fiscally irresponsible countries already discussed at the first sign of trouble to let the currency fall easily.
This means that they would prefer to inflate their own national currencies in order to cope with the crushing national debt. To hold the euro, the donor countries of the euro zone were thus put under pressure to rescue the debtor - even though such actions violate the contractual arrangements that the common currency area is based.
The question is: How long will the Germans - which are still influenced by memories of the Weimar hyperinflation and the rise of Nazi Germany - are still willing to print Euros to pay the debts of the prodigal Gentiles? How many German politicians with the promise of eternal ongoing recovery efforts in Europe and rising prices still win elections? This is the fundamental flaw of the euro.
And Greece is of course not the only problem. Ireland and Portugal both vying for the second worst debt crisis in Europe. Spain, which represents 12% of GDP in the euro zone had to, to watch as the yield rose for Spanish government bonds of 4.1% at the beginning of 2010 until the end of 2010 to 6.6%. In almost all other euro-zone countries, the yield has also increased - a clear indication that in mind, where the euro zone to an increasingly risky bet pregnant.
Although a withdrawal of €-PIGS would ultimately lead, in fact, a stronger currency area, it would be a traumatic event. The mere prospect of such a development already undermining the euro and at a time when the world just musing about which direction it goes next.
Perhaps it would be an older currency that given the recent financial crisis was getting not so easy to sway a better challenger to the current world reserve currency. In contrast, the euro is a new currency, which also is still in serious trouble. If already represent less than two dozen nations too onerous burden for the euro, why should we assume that the results were different when the euro would extend over 200 countries?
The Yuan: A capitalist country with a communist currency
The investment community is now developing gradually, in my long-standing existing enthusiasm for the growth miracle in China. And that is not unfounded. Rather, I assume that many investors are too scared when it comes to the Chinese market.
And yet those who now jump on the train to say also that the Chinese yuan would be the logical successor to the moribund U.S. dollar. But while China, becoming an enormous economic power, the yuan is even more a relic of the communist past of the country.
First, China has imposed strict capital controls, the yuan. A reserve currency can be exchanged, however, freely and easily to other currencies. Even within China, it is not possible to exchange large amounts of yuan into dollars or any other currency.
China is currently conducting cautious reforms to loosen the restrictions. We should, however, make clear that these restrictions were not introduced arbitrarily. These controls enable China to keep in the position to the value of the yuan down, so the country can maintain inter alia, its exports artificially high. China should allow free convertibility of the yuan, the country would lose the power that it exercises over his money and thus also on his people.
We should in this context, once again realize that all Fiat currencies are manipulated and inflated regularly. The Chinese central bank reported that the M2 money supply growth was within the last 5 years with over 140%, which is almost entirely due to the efforts of the Chinese to keep their exchange rate with the U.S. dollar depreciating stable.
Given the combination of rampant inflation in the country, exchange restrictions and the lack of transparency of the yuan is simply not in a position to become the role as a world reserve currency.
The Yen: A black hole of debt
The Japanese yen is the third cronies on the international fiat money party. While the yen is not concerned with the structural risks in the euro, but he is in an environment of massive national debt. Japan's debt / GDP ratio is 225%, the highest among industrialized countries, which means that there is a constant incentive to abandon them, to settle the debt to always print more yen.
The yen has therefore put up with the debt millstone around his neck, which it can be a poor alternative to the U.S. dollar, which has exactly the same problem.
Although I am of the opinion that Japan was in a much better position than the U.S. is, as the country generally has a net trade surplus and the greater part of the debt is held by the Japanese, the yen still not a stable currency, which for the conduct of world trade would be suitable.
Perhaps more important is the fact that the value of the yen in a striving for yen reserves world would establish solid, which would be in Japan, but politically to enforce, since the Japanese export lobby the yen continually downward pushes to the sales to foreign countries to fuel .
These two factors then fit together in ways that make the yen as a reserve currency is simply impossible. The appreciation of the yen would make Japan's debt problems only get worse and lead to the Japanese export industry would suffer extreme among them, which means that Japan, this role probably would not anyway, even if that is the wish of others.
By the way, if you ever after "yen as a reserve currency" Google, you are asked "Did you mean: Yuan as reserve currency?". I guess that even the smartest search engine in the world doubted that the yen could take over that role.
The simplest answer is usually the best
JP Morgan said in 1913 before a committee of the U.S. Congress: "Gold is the only money!" Morgan was saying that gold store of value and medium of exchange is effective when unchallenged.
Given the fact that the bank was named after him in February this year began to physical gold as protection, begs the question, why should be considered the trend of a generalized return to gold only as a distant possibility. Quite the opposite, in fact it is expected - and very simple reason, because all the other currencies make through and through a miserable and dreary impression.
The markets are huge and powerful and therefore require a reliable medium of exchange. The demand for sound money is not just a philosophical question, but is derived from the requirements of the market itself.
While the history of mankind, dealers frequently covered with gold and silver throne before other candidates. What we are seeing now is, yes, now is not the first experiment of a paper money system and the extensive depreciation of money is nothing new.
The fact is that the well-read the founding fathers of the United States from the lessons of history have been impressed so much that they are following a very clear provision in the U.S. Constitution wrote down this: "No State shall ... anything but gold and silver coins for payment for make payment of the debt. "
While at any time, the possibility existed that another Fiat currency rises, and the place of the U.S. dollar takes - making the irrational experiment worthless currencies is maintained much longer - seem to be the special circumstances which today are ample for supporting this development, I believe now to make less and less likely.
Rather, I see evidence to suggest that the world at blistering speeds to gold returns. It is a return to normal, the number of positive effects on the global economy. Certainly there is a trend we definitely welcome and we can benefit from.
