Economic Collapse

Here is a great intervew with the legendary Marc Faber on interest rates, T-bills and currencies.

Dear readers,

The End of the Dollar is really starting to hit world news. I think this will hit main stream soon and by autumn or early winter or so everyone will question the US dollar. However, this will put strain on ALL currencies, so if you have savings, NOW is the time buy some cheap gold while its still available.

Here are a few interesting headlines:

Chavez seeks Arab support for oil-backed currency
This is really important, since the “demand” for USD is often related to oil only traded in USD. I very much recommend this article by Austrian-school Krassimir Petrov:
The Proposed Iranian Oil Bourse

“The American Empire depends on the U.S. dollar. The proposed Iranian Oil Bourse
will accelerate the fall of the U.S. dollar and hence the fall of the American Empire.”

“When in 1971 foreigners demanded payment for their dollars in gold, The U.S. Government defaulted on its payments on August 15. The popular spin of this default was that “the link between the dollar and gold was severed”. The proper interpretation is that the U.S. Government went bankrupt, just like any commercial bank is declared bankrupt.

However, by doing so, the U.S. declared itself an Empire. It had extracted an enormous amount of economic goods from the rest of the world, with no intention or ability to return those goods. The world was effectively taxed and it could not do anything about it: it could not force the U.S. in bankruptcy proceedings and take possession of its gold and other assets for payment, nor could it take forcefully what it was owed by declaring war and winning it. Essentially, the U.S. imposed on the world an inflation tax and collected an imperial seigniorage!

From that point on, to sustain the American Empire and to continue to tax the rest of the world via inflation, the United States had to force the world to continue to accept ever depreciating dollars in exchange for economic goods and to have the world hold more and more of those dollars, while those dollars depreciated. It had to give the world an economic reason to hold dollars, and that reason was oil.”

Also note the efforts from China to push for a New World Currency:

• Dollar falls on Geithner’s openness to China’s currency proposal
• China expands currency swaps to avoid trading in dollars

And:

• Russia backs partial return to gold standard

Interesting times…

I wrote only 9 days ago that gold priced in Swedish currency hit all time high of 265.000 SEK/Kg. Today on the 20th of Feburary 2009 gold broke through 300.000 SEK/Kg. That’s quite a jump in only 9 days as the SEK falls hand over fist in EUR and USD terms. This is a very good example of why you need to be invested in gold: it is the perfect insurance against debasement of a fiat paper currency.

Global Gold 5, by Adam Hamilton
http://www.zealllc.com/2009/glogold5.htm

Some highlights from the article:
*) Canada-gold breaks March 2008-record as stock market crashes.
*) Euro-gold breaks March 2008-record as stock market crashes.
*) UK-gold hits all time high since records began in 1717.
*) Indian gold investors find safe haven as the Rupee (in USD) collapses.
*) Australia-gold reaches new hights.
*) South-African-gold reaches new hights.

And I can add that Swedish SEK-gold is steady at about 230.000 SEK/kg as news of gold as a safe haven investment becomes more and more mainstream in Swedish financial media.

The Zeal article concludes:

“So unlike lamenting American gold investors, the great majority of the world’s investors witnessed strong gold performance in recent months. Since demand for any investment grows with higher prices, gold investment should accelerate substantially in 2009 as global investors see how gold could have protected and grown their capital even while everything else was melting down around them. You couldn’t hope for a better advertisement for the merits of gold investing.

The sharp US dollar rally that drove the poor gold performance in the US and China (and maybe Japan) was an unsustainable anomaly. Acute panic conditions generating extreme fear spawned it, but this fear is abating and those panic conditions no longer exist. And the US dollar is already reflecting this as its panic-driven rally started failing the day the US stock markets bottomed. As more flight capital emerges from its temporary hideout in US Treasuries, this dollar weakness will probably persist on balance.”