Tuesday, November 9, 2010

The "return of the gold standard"


It seems like if not for rumors like, "we're going to return to the gold standard", the gold bugs would have no game at all, and since the public school system apparently no longer teaches history I suppose they will be successful in sucking in a few more gold bugs, before sticking the proverbial pin in that bubble.

To set things strait: the Nixon administration took us off the gold standard, back in the 1970's, because there wasn't enough gold to back the currency they wanted to create, so there sure as hell ain't enough gold to back our currency today. This was the beginning of the end for the US dollar, by the way.

You hear a lot of talk about money printing, but the fact is the vast majority of money creation, has been created out of thin air, by simply pressing a few keys on a computer keyboard.

Perhaps we aught to return to the cotton standard, since that is the substrate used in money creation. Paper currency is actually printed on cotton parchment, not paper, and Cotton has some value, unlike computer manufactured currency.

You may or may not be familiar with the service KGB? It's a company people can text (542542) any question to, and recieve an answer for only 99 cents. I actually worked as a KGB agent for a while, back when I was unemployed... but I was able to stumptheir agents, by asking them this question. "How long would it take to grow the cotton needed to create the parchment required to print 5 Trillion dollars?" (the amount of money the Democrats have wasted since taking control of the government (a little over 2 years ago). They answered: "Sorry, but there are a few questions a day that we can't answer. No Charge"

There is an answer to this question, but I'm sure it would take quite a bit of research to come up with an accurate one.

Perhaps the Chinese firm who recently downgraded our debt knows the answer.

China's Dagong downgrades US sovereign credit rating

NEW YORK | Tue Nov 9, 2010 12:21pm EST

NEW YORK Nov 9 (Reuters) - The United States of America's local and foreign currency long-term sovereign credit rating was downgraded by the Dagong Global Credit Rating Co, Ltd on Tuesday to "A+" from "AA" to reflect what it called the country's deteriorating debt repayment capability and drastic decline of the government's intention of debt repayment.

The potential world crisis resulting from U.S. dollar depreciation will increase the uncertainty of the U.S. economic recovery, according to the agency.

"Under the circumstances that none of the economic factors influencing the U.S. economy has turned better explicitly it is possible that the U.S. will continue to expand the use of its loose monetary policy, damaging the interests of its creditors," Dagong said on its website.

The U.S. debt burden can be relieved only to a certain extent through large-scale printing and issuance of the U.S. dollar, it said, adding that, however, "the consequent decline of the U.S. dollar status and national credit will block the debt revenue channel vital to the existence of the United States to a greater extent."

The ratings agency suggested the United States may face unpredictable risks in solvency in the coming one to two years and assigned a negative outlook on both local and foreign currency sovereign credit ratings of the United States.

According to their website, the Dagong Global Credit Rating Co Ltd is a specialized credit rating and risk analysis research institution founded in 1994 upon the joint approval of People's Bank of China and the former State Economic & Trade Commission, People's Republic of China.

Dagong is also a key credit information and credit solution service provider in China. (U.S. Treasury team; Editing by James Dalgleish)