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The Federal Reserve Note: 1971-2012?

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Before I begin, I would like to just say these are only my opinions and I understand not everyone will agree with them. My viewpoint is always developing, as I constantly am looking for new information, and I am always willing to listen to respectful alternatives to the viewpoints I present. Truthfully, I wish I did not have to have these thoughts, but until many questions are answered I am forced to deal with the potential unsettling reality. I am not asking you to agree or change your life, merely I am presenting the knowledge I am observing because I don’t know what else to do. I advocate using reason and free speech towards addressing “sensitive” subjects in our modern day, as something is clearly sick within our political system today. Presenting alternative viewpoints (“conspiracy theorist”) is no doubt a form of modern day discrimination, justified through patriotism to one’s country (the Patriot Act is by no means patriotic). I only write this article because I wish to address the root of our economic problems, for I am only fearful of the possible reality that encompasses a dollar devaluation, blindsiding innocent people who are unaware of the greater problems that currently exists.

"Believe me, the next step is a currency crisis because there will be a rejection of the dollar, the rejection of the dollar is a big, big event, and then your personal liberties are going to be severely threatened.” — Ron Paul
The US Dollar was once the World Reserve Currency as it was “as good as gold.” Other countries stored US Dollars in their central banks as the “ultra-safe” currency, trusted worldwide. Most importantly, the price of oil was traded through dollars, giving the United States super cheap oil. Yes, the dollar used to be worth 1/35th an oz of gold, or equivalently $35 US Dollars for once ounce of gold (Though US citizens could not redeem it for gold after laws in the 1930s). The Federal Reserve has been in charge since 1913, which was also the year the federal income tax was implemented which has effectively been stealing money from the public and funneling it to the Federal Reserve’s private owners for interest payments from issuing their private currency (Federal Reserve Note) to the US government. However, in 1971 the world changed with the Bretton Woods Agreement, as the dollar was effectively taken off the gold standard and entrusted upon the Federal Reserve, a private central bank whose client was the US Government. History shows corruption will always breed where great power is entrusted, and this case is no different I am afraid. The new policy post-1971 was to expand monetary supply to spur growth. Thus, from 1971-2008 America has experienced the “wealth affect,” as the strategy was to have economic growth to outpace the increasing monetary supply. Well, the “wealth affect” seems to now be over, as the price of gold since this new-found policy tells the story. (Please visit this link for the picture sources/original article)

And this one detailing economic conditions during this same timeline (10 Year Bills, CPI Inflation, M3 Growth:

Note the following explanation given alongside these graphs in the article: (Link Here)

To understand gold price performance, you need to grasp the concept of monetary inflation cycles which are generally 10-20 years in duration. Higher monetary inflation (M3 growth) generates higher CPI. With higher CPI comes rising interest rates. Gold performs strongly in this environment as people question the purchasing power of the dollar and become nervous about the market uncertainty surrounding these periods. Higher interest rates generally result in poor performances in the sectors which benefited significantly from extended periods of easy credit. These sectors are namely property and shares.
So where do we stand in M3 growth in the recent 5 years? After all, it seems as if M3 was beginning to rapidly increase. Well, the private Federal Reserve has stopped following the M3 indicator. Yes, the Federal Reserve has decided that M3 is no longer a key indicator that needs to be followed. Wikipedia confirms as it tells its readers: “M3: Since 2006, M3 is no longer tracked by the US central bank.”

It appears Wikipedia forgot to note that the US central bank they mention is a private banking cartel that profits by loaning its private currency to the US Government on interest…. but at least they confirm this questionable decision. You can see how desperate this private bank is to conceal its identity, being so arrogant to put the man who took down the second American National Bank on the face of one of the most widely used bills. I remember learning in my history class that history was written by the winners (or those in power), how fitting to see it in action. (Read a very interesting article here)

So, what has happened to the monetary base? There are not exact measurements now, however, the following two graphs should help understand what is going on (the first one is from

Currently, the US Interest Rates are near zero, encouraging easy lending (and mal-investment). We have maintained these policies because it helps finance our overwhelming debt, which Washington DC has not come close to making any real “budget reform”. For those who trust in “politics,” I see no difference between George Bush or Barack Obama. I ask if there is any significance of our president, when the man in control of our currency stays in place (Ben Bernanke)? The same could be asked about our foreign policy against a theology of terror (no timeline or guidelines to measure “success”).

Even after the 2008 Crisis which Ben Bernanke not only completely missed, but was then rewarded by another term as Federal Reserve Chairman by the congress to resume steering the US into worsening waters (He is really not appointed by congress, but appointed by within the Federal Reserve as Chairman… the congress is only ceremonial through status quo). Watch Ben Bernanke fail to see all of the 2008 problems, and wonder how this man is in charge of the most important currency in the world?

Why do I think 2012 will be the year when things go down? Well, with QE II ending in June 2011 (Bond Purchasing Program), the Fed will be forced to decide whether or not to continue supporting the long term bond market. Any hint of more easing will spur an accelerated flight from the World Reserve Currency, yet if they do nothing we could be facing a most necessary “correction.” Considering the previous, I have no doubt that the Federal Reserve will be forced to buy its own debt continuing forward, as here are some unfortunate facts that we as Americans must come to grips with.

--In 2009, it was Reported that the Federal Reserve bought 80% of the US Treasuries by CNBC. They effectively printed their own money (digitally these days), to buy US Debt, which is a recipe for hyper-inflation.
--China has proposed that it would like to cut its $3.2 Trillion Position in Treasuries to a smaller $1 Trillion as stated by a member of the People’s Bank of China. Guess there goes the argument of “China will buy our debt.” (April 25, 2011: Link Here)
--The Federal Reserve has passed China in US Treasury Holdings in early February 2011 (Reported Here)
--Japan (the world’s second largest holder of our debt), has economic problems of their own as a result of the Tsunami and will be in no position to finance Rome as it is falling (could even have to sell).
--Russia and China dropped the US Dollar in bilateral trade (between themselves) earlier this year. (Link here)

Where is everyone flocking to? The answer is Physical Gold (and physical silver for individuals). Governments have quietly turned from net sellers of gold to net buyers of gold in the past few years as explained here by Mike Maloney. It is not hard to look for headlines bullish for gold these days, as here are just a few:

Bank of Mexico Buys 100 Tonnes of Gold in February, March (2011)
India Embraces Gold’s Recent Selloff
China Demand Leading to Nominal Gold Record Highs
Russia to Increase Gold Reserves by 13% in 2011
University of Texas buys Gold for Endowment
China May Start New Sovereign Funds to Invest in Oil, Gold

(And so many more… concerning silver as well! Make no mistake, physical is king).

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