LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page >> News >> Story  Disclaimer 
Latest Headlines to Launch New Website

Is Gold Price Action Warning Of Imminent Monetary Collapse Part 2?
By: Hubert Moolman

Gold and Silver Are Just Getting Started
By: Frank Holmes, US Funds

Silver Makes High Wave Candle at Target – Here’s What to Expect…
By: Clive Maund

Gold Blows Through Upside Resistance - The Chase Is On
By: Avi Gilburt

U.S. Mint To Reduce Gold & Silver Eagle Production Over The Next 12-18 Months
By: Steve St. Angelo, SRSrocco Report

Gold's sharp rise throws Financial Times into an erroneous sulk
By: Chris Powell, GATA

Precious Metals Update Video: Gold's unusual strength
By: Ira Epstein

Asian Metals Market Update: July-29-2020
By: Chintan Karnani, Insignia Consultants

Gold's rise is a 'mystery' because journalism always fails to pursue it
By: Chris Powell, GATA


GoldSeek Web

Socialism Coming Back To Haunt U.S.

By: John Browne
Senior Market Strategist, Euro Pacific Capital, Inc.

-- Posted Tuesday, 12 May 2009 | Digg This ArticleDigg It! | | Source:

America is more than a country; it is the ideal of liberty. In economic terms, liberty translates into the entrepreneurial spirit of hard work, risk taking and self-reliance. And this spirit has made America rich beyond compare.

Unfortunately, over the past four decades, much has been undone. Under the guise of a new, “social” justice, political leaders have turned our native ethics upside down. Profit-taking is now seen as gouging; success is greed; businessmen are predators. This creeping socialist transformation of our culture has finally broken the back of the American economy.

The definitive fork in the road occurred in August 1971, when President Nixon ended the U.S. dollar's link to gold. The move allowed the U.S. government to issue money without the restraint imposed by gold-backed currency. For most countries, this would have unleashed a wave of monetary inflation and, consequently, skyrocketing prices. But, since the dollar remained the world's reserve currency, foreign central banks were compelled to subsidize U.S. expenditure, and our inflation was exported overseas.

With global funding secured, Congress offered increasingly generous entitlements to an increasingly dependent population. This has resulted in the decay of America's productive sectors and a massive depletion of accumulated wealth. Now, socialist America subsists on the whims of the capitalist powers of the East. American consumption is dependent on loans from nations who just 40 years ago were economic afterthoughts.

Rather than dissipating their wealth through spending and borrowing, these economies have undertaken the difficult work of wealth creation. Though nominally Communist, China has become an intensely pragmatic state. While Americans have grown complacent about their liberty, China has quietly, but with determination, expanded economic liberty: courts are becoming more efficient, land reform has introduced private ownership, and obstacles to entrepreneurship are decreasing.

Many countries, such as China and Japan, which export massively to the United States, resist converting their U.S. dollar surpluses into domestic currencies. They fear that, in doing so, they will force up their own currency relative to the U.S. dollar, making their exports less competitive. Therefore, they invest the bulk of their surpluses in “secure” U.S. Treasury bonds, satisfying America's appetite for imports and entitlements.

But this logic is economically flawed. Through their actions, Asian governments are transferring their citizens' wealth to the United States. When a Chinese business exports to the U.S., the dollars earned are exchanged in a Chinese bank for local currency. Those dollars are then recycled by the Chinese Central Bank to buy U.S. Treasuries. America then creates more dollars (inflation) so that it can redeem those outstanding Treasuries. This mechanism props up the dollar and holds down the RMB. As a result, the Chinese are poorer and America richer. Unfortunately, many Asian governments are still too collectivist to cease robbing their citizens. If they would do so tomorrow, America would feel the full effects of years of federal profligacy at once.

What happens when half a century of socialism catches up with the “shining city on a hill”? Start with America losing its Triple-A credit rating, then the dollar free-falling, then interest rates rising into double-digits as a last-ditch effort to restore faith, which may lead to civil unrest — and certainly widespread misery.

Already the credibility of the U.S. dollar is being questioned by producer states. Any loss of its privileged “reserve” status would result in rapid diversification out of the U.S. dollar and U.S. Treasuries. In short order, the inflation gingerly spread around the world by the U.S. government would come back home to roost.

The outlook for the U.S. economy appears increasingly bleak. The final window for self-imposed reform has been forsaken, as both Democrats and Republicans have chosen to magnify the mistakes of the past. Huge investment losses experienced by investors worldwide may have forever tarnished the luster of U.S. stocks. Meanwhile, the threat of inflation and bank failure has discouraged domestic savings. Americans looking to preserve their wealth are turning to precious metals, commodities, and foreign shares denominated in the currencies of surplus countries.

Even in its most successful incarnations, socialism is a drag on a successful market economy. The U.S. has been able to have socialist entitlements within a relatively free-market only because the costs were borne by foreigners. But as the global economy strains under increasing weight, look for those funders to begin tending their own gardens.

This U.S. economy is now a runaway train, and anyone who has the courage to look out the window will likely want off. Short of the imposition of U.S. exchange controls (as during the last depression), American investment funds will flow toward countries that fuel their economies with America's depleted resource: liberty.

For a look back at how Peter predicted our current problems read his 2007 bestseller "Crash Proof: How to Profit from the Coming Economic Collapse." Click here to order a copy today.

More importantly, don't wait for reality to set in. Protect your wealth and preserve your purchasing power before it's too late. Discover the best way to buy gold at Download Euro Pacific's free Special Report, "Peter Schiff's Five Favorite Investment Choices for the Next Five Years", at Subscribe to our free, on-line investment newsletter, "The Global Investor" at And now watch the latest episode of Peter's new video blog, "The Schiff Report", at

-- Posted Tuesday, 12 May 2009 | Digg This Article | Source:

- John Browne Senior Market Strategist, Euro Pacific Capital, Inc.

John Browne is the Senior Market Strategist for Euro Pacific Capital, Inc. Working from the firm’s Boca Raton Office, Mr. Brown is a distinguished former member of Britain's Parliament who served on the Treasury Select Committee, as Chairman of the Conservative Small Business Committee, and as a close associate of then-Prime Minister Margaret Thatcher. Among his many notable assignments, John served as a principal advisor to Mrs. Thatcher's government on issues related to the Soviet Union, and was the first to convince Thatcher of the growing stature of then Agriculture Minister Mikhail Gorbachev. As a partial result of Brown's advocacy, Thatcher famously pronounced that Gorbachev was a man the West "could do business with." A graduate of the Royal Military Academy Sandhurst, Britain's version of West Point and retired British army major, John served as a pilot, parachutist, and communications specialist in the elite Grenadiers of the Royal Guard.

In addition to careers in British politics and the military, John has a significant background, spanning some 37 years, in finance and business. After graduating from the Harvard Business School, John joined the New York firm of Morgan Stanley & Co as an investment banker. He has also worked with such firms as Barclays Bank and Citigroup. During his career he has served on the boards of numerous banks and international corporations, with a special interest in venture capital. He is a frequent guest on CNBC's Kudlow & Co. and the former editor of NewsMax Media's Financial Intelligence Report and


Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to >> Story

E-mail Page  | Print  | Disclaimer 

© 1995 - 2019 Supports

©, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


The views contained here may not represent the views of, Gold Seek LLC, its affiliates or advertisers., Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of, Gold Seek LLC, is strictly prohibited. In no event shall, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.