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BC: Gold or Gunfire: Hedging Against the Collapse of the Dollar

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BC stands for NEO’s Banned Classic. This article was originally published by our journal on 27.10.14. For some reason, this article is missing from Google search results. Since this article remains pretty relevant to those geopolitical events that are taking place on the geopolitical stage today, we deem it possible to present it to our readers once again. Should it go missing again, you may be confident that you will see it republished by NEO once more, should it still remain relevant by that time.

A global economic collapse has become unavoidable, said former chief economist of the Bank of International Settlements (BIS) William White in response to the BIS’ quarterly report in September 2013. Experts forecast that a global economic collapse may occur, overnight, some time at the end of 2014 or in 2015. The fact that private interests are holding the US Federal Reserve and the Central Bank of England as well as the Bretton Woods institutions in a state of capture makes it improbable that the governments of the USA, UK and EU could prevent a collapse.

Their policies have remained largely unchanged since early 2013, when the Deputy Governor of China’s National Bank, Yi Gang, stressed that China does not look forward to an economic war, but that it is prepared for it. BRICS member states have since then capitalized the BRICS Development Bank; the US/UK axis and the EU have launched a war of sanctions against Russia and a civil war in Ukraine. In 2014, China began opening its banking sector for foreign investments and banking at an unprecedented scale; Australia is in a quagmire between US pressure and the trend to make use of attractive and safer Chinese opportunities.

Thailand, Malaysia and other economies are increasingly encouraging their traders and investors to study the Chinese market. With the Bretton Woods system at the brink of possible collapse and conflicts looming, gold and the new gold-based economies are catching the, in some cases more, in some cases less hesitant attention of governments worldwide. The trend is, however reluctantly it is accepted, impossible to ignore. China overtook the U.S.’ as the world’s leading economy measured in buying power and is poised to become No.1 measured in GDP within a bout one year too, reports the IMF.

Avoiding Confusion of Principles. Fiat vs. Gold.

Fiat currencies are not necessarily more unstable than commodity-backed currencies. Both have advantages and disadvantages. Commodities, for example gold, have an inherent value due to the physical presence and the value of labor that has to be invested in mining and refining gold. One problem with gold is that it is as finite as other commodities and that it is not equally distributed across the globe. Gold is, in other words, no panacea against resource-driven geopolitics and conflict. Fiat currencies are, in principle, not finite. To infinitely print fiat currency without backing it with values like commodities, goods, labor force, or by means of a production potential implies that powers with greater military might may be tempted to force others to accept an, in principle, valueless fiat currency that could as well be counterfeit. The US, its militarily backed geopolitics and the fact that it repeatedly forced other nations like Iraq to either accept the dollar for international settlements or face war, while the US is basically producing counterfeit to settle its bills; the use of euphemisms like quantitative easing to cover-up a failed counterfeit-like policy is a good example for fiat currencies inherent problems and risks.

While fiat currencies are not necessarily better or worse than gold-backed systems, the greatest problem with using fiat currencies for economic settlements between nations is rather the fact that some national banks are privately-owned; That is, that its owners are part of rogue networks which hold the government in a state of capture. The same holds true with regard to the Bretton Woods institutions like the IMF and the World Bank.


© New Eastern Outlook