Posted by
Chad MacINNES on Wednesday, October 07, 2009 3:27:57 PM
The writing has been on the wall for some time now, and over the last several months there have been many none-too-subtle hints from China, France and a host of other nations about what they think of the dollar. The recent G-20 meeting in Pittsburgh was very much a consensus on abandoning the U.S. dollar as the world’s reserve currency and creating a new global reserve currency. Many scoffed at the viability of such an undertaking, declaring it to be unattainable, but anyone who has been paying attention to what our own Federal Reserve has been doing, who has grasped an even cursory understanding of the history and theory of money, and who has been observing what the other members of the G-20 have been quietly up to were not surprised by today’s announcement that the Arab gulf states, China, Russia, France, Japan and others are planning to divest themselves of their U.S. dollars and end all dollar transactions for oil.
This is a monumental and historic change in global monetary policy, and could soon prove devastating to the dollar. Indeed, it begs the question: will the dollar collapse? Unfortunately, the possibility is becoming increasingly likely despite the pictures of rainbows, sunshine and lollipops emanating from top policymakers, central bankers and analysts in and around Washington and New York. This is most unfortunate because very many people in this country stand to be completely blindsided by these unfolding events and just about the only source for information is foreign press. Too many Americans are right now under the illusion that the “recession” is all but over, that we are in the process of a “jobless recovery” and that our continuing to spend trillions of dollars that we don’t have is of no consequence because the Federal Reserve knows exactly when to begin reducing the money supply to stave off any harmful inflation. There are several serious problems with this entire situation that warrant attention. (continued...)