by Morley Evans
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| Fort Knox |
Gold has been the repository of value throughout history. The reason is people cannot create gold out of thin air. Gold has to be mined. Gold is rare. When money is debauched, people who can seek refuge in gold. As currency becomes worth less (worthless), gold becomes worth more. The largest gold repository in the world is the Federal Reserve Bank of New York in Manhattan. The second largest repository is the more famous Fort Knox in Tennessee. Most people will remember the James Bond movie Goldfinger but something more complicated than simple bank robbery has been going on.
The U.S. dollar currently is the world's reserve currency, replacing Great Britain's Pound Sterling of the nineteenth century. International payments are made in U.S. dollars which are "as good as gold." But people don't always believe that is true.
President Nixon "closed the gold window" in 1971 when West Germany withdrew from the Bretton Woods system and the Swiss and French demanded payments be made in gold because the United States had been debauching the dollar to pay for the War in Vietnam and the Great Society programs at home. The official price of gold then had been pegged at $36 an ounce. It has been allowed to float since then. Today, gold bullion is over $1,500 USD an ounce, reflecting how much less the dollar is worth now than forty years ago due to the Federal Reserve System and profligate American politicians.
With Ben Bernanke picking up from Alan Greenspan at the Fed and creating even more phony money to "resolve the world-wide financial meltdown" that had been caused by Greenspan, the Chinese, and everybody else, may soon start demanding payment in gold, rather than continuing to accept dollars and then use them to buy T-Bills that currently finance the United States. Bernie Madoff has said the United States is a Ponzi scheme. Madoff knows what that is!
Can the United States sell off gold to solve the fiscal crisis it faces? Will the United States have to start paying in gold? How much gold does it have? No one really knows. Could the gold repositories be empty? Who owns the gold that is there? Secret deals have been made between the Fed and other central banks. An independent audit has been demanded to answer these questions. Whatever happens, the era of Washington's empire is over after less than a century — unless Mr. Bernanke has some magic no one has ever seen in the history of mankind. That seems doubtful.
What if someone could make gold out of thin air, as they can create money out of thin air? Examples abound to show what happens. Spain was riding high when it started looting the New World after Columbus's voyage of discovery in 1492. Tons of new gold entered Spain, and Europe, as Spanish galleons brought gold and silver home to Spain. As gold became less scarce, its value fell. Spain acquired the "Spanish disease" — it had lots of money yet Spain became poor.
Great Britain was sunk by its spending in World War I of around a million dollars a minute. Though it won the war, it lost its position and the baton of world domination was passed to the United States which emerged as the world's only real superpower in 1945 after World War II.
Today, the U.S. "printing presses" are running day and night creating money to pay for out-of-control U.S. spending that is required to finance Washington's empire, its many never-ending wars, its military-industrial complex and its ballooning social and infrastructure obligations at home. The jig is up. There is no escape. A new day is dawning like it or not.
http://en.wikipedia.org/wiki/United_States_Bullion_Depository
http://goldprice.org/gold-price.html
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article5989271.ece
THE DEBT
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