On Wednesday, January 23, an interesting news story appeared on Yahoo News titled: Study: False statements preceded war
The news item reported on a study made by two "nonprofit" journalism organisations which found that "...President Bush and top administration officials issued hundreds of false statements about the national security threat from Iraq in the two years folllowing the 2001 terrorist attacks." Now for those who do NOT get their news coverage from the mainstream US news media, this was hardly a revalation. But many if not most Americans DO get their news from the mainstream news media, so it was news to them. What makes the Yahoo story interesting is that on the day it was published on their website it was the "Most Popular" (ie - most read and emailed to others) news item on their site.
The item reported that the study had counted 935 false statements over the two years between September 2001 and 2003 regarding weapons of mass destruction in Iraq and about Iraqi links to al-Quaida. What we wonder is when some kind of well reported "study" which focusses on false statements made in regard to the US economy/financial system/markets/currency is going to come out.
We also wonder where the point will be where the contradictions between such statements and the plainly observable state of affairs becomes so blatant that the statements begin to be questioned. Almost every word which comes out of the mouth of any "authority" or "official" in the US (or anywhere else) in regard to financial/economic affairs is false, obviously and clearly false, and deliberately false.
This must be so for the simple reason that the basic premise on which the entire global financial and monetary system is based is false. This premise is that "money" can be anything the government says it is. The fact is that it cannot, as the demise of literally hundreds of variations of "government money" over the centuries have shown. The "experiment" of a global currency system exclusively based on government fiat was doomed from the day of its inception - August 15, 1971 - the day when President Nixon decreed that a Dollar was no longer to be redeemable in any amount of Gold.
The reason that the global fiat money system has lasted as long as it has is simply that the system IS global. There are no dissenters. There are no nations whose currency IS redeemable in Gold. Every government and every financial establishment in every nation has a vested interest in perpetuating the system. Their position, their "authority", their POWER depends on it. Deprive them of the ability to create "money" at will and you destroy them.
The politicians and the "authorities" can't afford to worry about mere details like that. The US economy is "on the verge" of recession and this is an ELECTION year. All hands to the pumps - and devil take the hindmost or the consequences.
That is why (almost) no-one in power, and (almost) no-one who owes their position to those in power or maintains their position on the "sufferance" of those in power questions the system. And that is why the incessant flood of "false statements" regarding almost every aspect of the global economy based on fiat money continues unabated - and as yet largely unquestioned.
This week, the US Fed took one look at the stock market carnage around the world while the US was closed for Martin Luther King day and immediately slashed 0.75 percent of their controlling Fed Funds rate. In any rational economic system, such an action goes way beyond the absurd. Ever since last August, the HUGE danger of default of US Dollar denominated "assets" of all descriptions has been increasing and becoming increasingly obvious. In such circumstances, interest rates go UP, not down. And, of course, the rates over which central banks have limited or no control HAVE gone up. It is just the Fed's controlling rates, the rates which the banks pay to borrow "excess reserves" from the Fed, which have been dragged down. This makes the danger of default of debt paper denominated in US Dollars even greater because it prepares the ground for a MASSIVE fall in the US Dollar on the international currency markets.
It is not a matter of "if", it is a matter of when.
Gold was sold off at the beginning of this week, mainly to allow desperate investors to meet the margin calls which were being issued in a flood by brokers all over the world. Then came the US rate cut and the announcement of planned "bail-outs" for everyone from the "debt insurance" providers to the US consumer. World stock markets snapped back. So did Gold. By the end of the week, the spot future Gold price in New York closed at yet another all time high of $US 910.70. In trading earlier in the day in Asia and Europe, Gold had risen as high as $US 925. These are levels never seen before in the history of the global fiat money system.
They are, however, still WAY below the levels they reached in 1980 in purchasing power terms. "Discounted" for the official measures of US "price inflation" since then, the equivalent of $US 850 Gold in January 1980 is in the region of $US 2300 in January 2008. In REAL terms, it is MUCH higher than that.
But REAL terms are precisely the terms which the "powers that be" do NOT want to be applied to global economies and markets today. That is why the amount of false statements about both are steadily accelerating in both quantity and transparency. The idiocy of claiming that shoving a check for $500 into the bank account of every American and more in the case of a family ("rich" people excepted, of course) will "fix" the system is truly laughable. If such an action could really work, why hasn't it been done before? Why isn't it a government "policy"?
The reason is obvious. It is a "policy" only resorted to in extremis. That is precisely what the global economy and financial system - led by the ones in the US - are in at present. The only "solution" forthcoming is the one which is always forthcoming - throw more "money" at it. In the US, the only thing now left to throw is literal $US100 bills. If the situation descends THAT far, the jig is up.
Meanwhile, the solution stares us all in the face. Gold is right there. It is not going away. The problem is that after nearly four decades of fiat money, reconnecting Gold to the monetary system would be an act of HUGE political courage. It will be interesting to see which nation takes the plunge, and how much further the situation must deteriorate before it is taken.