-- Posted Friday, 20 March 2009 | | Source: GoldSeek.com
By Andy Hoffman
Demonitization – the process of converting paper (fiat) currency into real goods or services
The process of ending the fiat currency system, not just in the U.S. but worldwide, has officially begun with the past two weeks’ announcements by Switzerland, England, and the U.S. that they intend to pursue policies of outright “quantitative easing”, in other words hyperinflationary money printing as a means of retiring debt and pursuing the dangling carrot of prosperity.
The expirement of a worldwide fiat system, in other words one in which not a single currency is backed by gold, silver, or any real commodity, lasted exactly 38 years and has decisively failed. Calls to end the current financial system are reaching a deafening pitch, the direct result of the carnage created by reliance on the cancerous dollar as the world’s “reserve currency”.
The only reason the dollar has survived this long is because Central Banks worldwide (particularly China and Japan) own trillions of dollars already, and do not have the means to dispose of them in an orderly fashion without crashing the market. Think of it like this: if you own 50% of the stock in a company and need to sell it, think of what would happen to the stock if you tried.
In the meantime, the destruction to industry, both Wall Street and Main Street, compounds each day. Kind of like the movie “Fargo” when an innocent kidnapping turned into a grizzly mass murder story. And trust me, what is being implemented now, symbolized by Wednesday’s maniacal announcement by the Fed that it plans to print $300 billion to buy U.S. Treasuries and $1.2 trillion to buy mortgage-backed assets is the equivalent of giving a bottle of vodka to someone with a 0.25 blood/alcohol level.
It is hard to tell how fast this process, as highlighted by the article below, will take to evolve, but the seeds could start to be visible after the global G20 meeting of the world’s 20 largest financial powers on April 2nd. And even if it doesn’t then, it will likely occur shortly thereafter, either by an orderly process (unlikely) or something more draconian.
Will a new currency be created? Or a new gold standard? Or something more revolutionary such as the rumored “merger” of the U.S., Canada, and Mexico? I do not know, but I do know that the current world financial order will change, and the lowest item on the totem pole will be CASH, particularly the massively overvalued (for the reasons noted above) U.S. dollar.
In my view, it is prudent to commence a policy of the aforementioned “demonetization”, in other words converting your paper dollars to things of intrinsic value before the oncoming wave of inflation hits, and god forbid if it becomes hyperinflation. Gold and silver coins, food, necessities, guns and ammo (for those interested in such things), etc., are all things I would consider “real goods”.
And one more note of advice; hold as much of these items in your possession as possible. Do not trust banks, financial institutions (with few exceptions), or anything related to the government, particularly the Federal government. The government (coupled with the bankers) are the cause of this mess, and if history tells us one thing they will not show any mercy on the people in their perverse attempts to maintain the status quo.
And in the “worse-case scenario”, in other words I am wrong, you still hold a cadre of valuable things that will absolutely be used. And trust me, gold is NOT going to be a liability if somehow crisis is averted, which at this point seems a fait accompli.
Andy
MOSCOW, March 19 (Reuters) - China and other emerging nations back Russia's call for a discussion on how to replace the dollar as the world's primary reserve currency, a senior Russian government source said on Thursday. Russia has proposed the creation of a new reserve currency, to be issued by international financial institutions, among other measures in the text of its proposals to the April G20 summit published last Monday....The source said that India did not object to the discussion but was not prepared to take the lead. The source said South Korea and South Africa backed the idea, while developed nations were not "allergic" to it.
http://www.reuters.com/article/usDollarRpt/idUSLJ93633020090319
-- Posted Friday, 20 March 2009 | Digg This Article
| Source: GoldSeek.com
