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Ah.... Money!!!
An old article from ViewZone
Here's the REAL reason the US Dollar is shrinking... and will continue to shrink!
When you finish reading this article, you may change your mind about the war in Iraq.
I've written about extraterrestrials, HAARP and even the end of the world. So when Viewzone asked me to write about a boring topic like "global currency" I was inclined to say, "no way!" Heck, I can't even balance my checkbook. Money has always slipped through my fingers like beach sand. But I like a challenge, so here it is.
The information they gave me came from a brilliant investigative journalist, Rudo de Ruijter. It took time for me to digest what he wrote, and even more time to understand the importance of what he revealed. I must confess, I'm still shocked by what I learned.
This information is not new. International bankers and politicians know these facts all too well. It's the ordinary people -- the little guys like us -- who are told that these things are too complex for us to understand; yet it is because of "global currency" that we invaded Iraq, Afghanistan and, perhaps soon, also Iran. Sure, it's all about oil -- but not the way you think.
What is "money?"
At the dawn of civilization, the earliest way to get something that you needed was called barter. I give you a cow and you build me a hut to live in. But what if I want a tiny hut? Do I give you half a cow? Placing a standard value on goods and services was first achieved through the use of currency, or money. Almost every culture has money. Ancient cultures used everything from sea shells and beads to huge circular stones to buy and sell. Eventually, precious metals were used and more recently the standard currency has been based on gold.
The value of precious metal is determined by its weight. Instead of carrying chunks or nuggets of gold and silver, early empires made standard "coins" of the metals and set a standard value in the marketplace. Coins were great for most transactions, but they were heavy and wore out your pants pockets quickly. Soon a new idea, paper money, was invented.
The original idea behind paper money was convenience. Each piece of paper represented a specific weight of a precious metal, usually silver or gold, that was kept somewhere in a treasury. If an individual wanted to, he could exchange the paper money for the gold or silver that it represented. It was all based on trust and a promise. In fact, the early paper money in America was called a "promisary note."
If you can find old dollar bills, you will read the promise written on each note. You will also notice that the notes are numbered. In this way, each note is unique and represents a corresponding weight of silver or gold in the US Treasury vaults.
On a global scale, when someone in America bought something from a foreign country, they would pay in US dollars. The foreign company would then go to their local bank and exchange the dollars for their local currency. When foreign banks had a surplus of US dollars, they would then exchange them for gold. This meant that the US Treasury was always needing to acquire more gold to replenish its vaults and maintain the "gold backed" dollars in circulation.
The Nixon Legacy -- fiat money
The Vietnam War was a painful time for America. We're still paying for the sins of our past leaders -- quite literally. The war was so expensive (estimated at $500 Billion) that America didn't have sufficient dollars in print to pay the bills for the disaster (The gold reserve only had about 30 Billion). But Nixon had a plan. Why not just print more dollars? Never mind that there isn't enough gold on reserve to back each note. Just print as much as you need to pay the bills.
To do this he needed to change the law. So he did. The new system is called "fiat money" and is defined as follows: "Definition: Fiat money is money that is intrinsically useless; is used only as a medium of exchange." He ended the system of "promisary notes," ended the fixed value of gold and allowed the system of "supply and demand" to set the value of both gold and American currency. But wait! There's more!
Enter Oil: Black Gold
Back in the early 1970's, America produced most of the oil it needed. Texas oil fields were active and a far cry from the rusted rigs you can still see there today. We imported a fixed amount, about 25%, from foreign countries, but our thirst for oil was getting stronger. Nixon knew that America and every developing nation in the world would need more oil in the future. He also knew that OPEC, the handful of countries that produced foreign oil, wanted the limits of American imports lifted so they could sell more. So he cut a deal.
The cap on 25% imported oil was lifted in exchange for the agreement that oil, purchased from any country in the world, would be bought only with American dollars. OPEC agreed and almost immediately there was a strong demand for dollars throughout the globe. This demand was not based on the value of gold but on the value that each dollar had in the marketplace. Since anyone who wanted oil had to have dollars, the dollar remained strong.
Another thing that helped pull this scheme off was the fact that gold, held by the US Treasury, went from its fixed value of $35/ounce to its present value of over $600/ounce. Of course a cup of coffee was once 5¢ and now my Starbucks Latte-Macchiato-double-Skim is close to $5!
Coffee, Automobiles and Computers: The Plot Thickens
Oil is a big import but not the biggest. Americans buy so many things from foreign countries that it is staggering to imagine. In 1973 the US sold more goods to foreign countries than it bought. But in each successive year the tables have turned.
All of these goods are bought with "fiat dollars," meaning that the currency itself is worthless since it can never be exchanged for gold or silver. Of course, a foreign country could exchange it for something else -- something that was produced by America, like... hmm... (anyway). As the chart above shows, American exports, although representing 1.25 million dollars every two seconds, are insignificant.
Fiat dollars remain in circulation mainly because they are needed to buy oil. For this reason lots of countries keep huge supplies of dollars in their reserves. It has become a way of storing their national wealth. The fact that US dollars represent foreign national wealth adds to their value.
Good Is Bad: Bad Is Good
This kind of system turns traditional logic on its head. Like, a trade defecit is supposed to be a bad thing, right? Wrong. It's actually good for the dollar! Imagine what would happen if everyone started using their dollars to buy things from America. The US would be flooded with dollars which would cause inflation and, besides, we don't have enough goods and services to exchange for all those foreign US fiat dollars! In fact, America is technically, as of last year, bankrupt!
Continue Reading....
http://viewzone2.com/moneyx.html
