In cahoots with the central bank, the government prints unbacked currency.  Most dollars are not physical linen – it is merely electrons in bank accounts, which is shown simply here, “Fractional Reserve Banking in Pictures.”  This is really just an indirect way to tax anyone who holds dollars.  Anyone who whines that the banks “needed” the TARP bailouts fails to understand it is not just the banks who are failing – it is the entire monetary system, which remains a giant Ponzi scheme.

Today’s monetary system is not sustainable, and tomorrow’s bubble is the US Treasury sovereign debt market.  As I wrote recently, China has halted purchase of Treasury bonds which may be the modern-day equivalent of France redeeming its paper dollars for gold in 1967-1968, which led to the collapse of the London Gold Pool and the complete severance of the dollar from gold by Nixon in 1971.

Unknown to most Americans, the global gold market is one of the world’s largest, trading over $25 billion a DAY – or $6.5 trillion annualized – on the London gold market alone.  I have previous highlighted how governments and central banks suppress the gold price with “paper gold” contracts last year here.

Within the past several years, during my time spent in China, I witnessed the methodical promotion of gold and silver by the Chinese government to their people – who already have a traditional respect for these metals as a form of wealth.  After my return to the United States in 2009, I was somewhat alarmed to see all the “Cash for Gold” advertising and full-page newspaper ads appear urging Americans to sell their gold and silver where they had been none several years earlier.

This is the exact opposite of what should be happening – gold and silver belong in the hands of the PEOPLE, not the financial elite.  The recent dramatic rise in the gold price over the past decade has nothing to do with gold getting more “expensive” but has everything to do with the depreciation of the dollar currency.

As seen in the below video centered in Indonesia, more and more people around the world are figuring out the governments’ scam.   The world we live in today – an unbacked paper currency with >25% interest rate credit cards and hundreds of trillions of dollars in derivatives – is an unsustainable illusion and will cease to exist in the years to come.

From the end of the Revolution of 1776 until 1964, Americans circulated 90% silver coins.  Credit card companies were only permitted to charge obscene interest rates over 10% after the Monetary Control Act of 1980 eliminated the usury laws.  The recent bubble in derivatives was only made possible courtesy with the reckless Alan Greenspan and Congress revoking parts of the Glass-Steagal Act in 1999.  (See “What the Heck Are Derivatives?” in case you are wondering.)

While the future holds more short-term economic pain, if society recognizes the actions of the government as the root cause, we will have a shot at mending the situation for ourselves and future generations.  A world where people own their money is the vital missing key to improving the living standards and comfort of all mankind.  Today’s problems are not solvable by the harsh dictat of government, but instead by the free will and ingenuity of all individuals.

TOWNE FOR CONGRESS

PS – If you have any paper or electronic dollars you don’t want, feel free to donate them to the campaign during the August 16th Money Bomb, see here for details.   See also the platform article “Sound Money and Jobs” for more info.

Jake Towne

http://towneforcongress.com/

-- Posted Monday, 16 August 2010 | Digg This Article