Editor’s Note: This is the fifth installment of the six-part “How safe is your money?”
During the Cold War West Germany wisely stored its gold in the U.S., England and France fearing an invasion from the Soviet Union. In 2012 Germany asked for the repatriation of 300 tons out of 1,500 tons of gold held by the Federal Reserve. Two years later only 5 tons had been delivered. This minuscule amount that was eventually delivered did not even consist of the same bars that Germany originally sent to the Federal Reserve. None of the serial numbers matched and the bars had obviously been newly minted. Readers can make their own conclusion from this information.
Recently a string of countries have been asking or talking about having their gold repatriated. They are Germany, Austria, Belgium, Holland, France and Venezuela. Why would these countries want their gold back? All of them, except for one, use the euro as their currency. Gold is and always has been the ultimate means of exchange worldwide. Gold is insurance for a currency collapse, as it has always been accepted for payment and always will be. It’s pretty obvious these countries have no faith in the euro. The euro is just another fiat currency that is being debased by the criminal European Central Bank in a similar fashion as the dollar is being debased by the Federal Reserve.
Two shots to the heart of the U.S. dollar as the world reserve currency were recently fired. The first one is the BRICS Development Fund. BRICS stands for Brazil, Russia, India, China and South Africa. This bank set up in 2014 will compete directly with the World Bank and International Monetary Fund. These five countries comprise more than 40 percent of the world’s population and more than 25 percent of world GDP.
The second shot is the AIIB or Asian Infrastructure Investment Bank, another direct competitor to the World Bank and IMF. As of this writing, most countries in Asia have joined, along with eight western countries, including France, Germany, Switzerland and the United Kingdom, for a total of 38 countries. The U.S. is conspicuously missing from that list. In fact, the U.S. government chastised other countries that joined.
It’s becoming obvious that China is actively seeking to make their currency, the yuan, the next world reserve currency that will replace the U.S. dollar. There are already 14 trading hubs throughout the world for the Chinese yuan. They are Australia, Canada, Germany, Hong Kong, London, Luxembourg, Malaysia, Moscow, Paris, Singapore, South Korea, Switzerland, Taiwan and Tokyo.
According to a Wikipedia article, “The New Development Bank formerly referred to as the BRICS Development Bank is a multilateral development bank operated by the BRICS states as an alternative to the existing U.S.-dominated World Bank and International Monetary Fund.
The bank is set up to foster greater financial and development cooperation among the five emerging markets. Together, the four original BRIC countries comprise in 2014 more than 3 billion people or 41.4 percent of the world’s population cover more than a quarter of the world’s land area over three continents, and account for more than 25 percent of global GDP. The bank will be headquartered in Shanghai, China. Unlike the World Bank, which assigns votes based on capital share, in the New Development Bank each participant country will be assigned one vote, and none of the countries will have veto power.”
By some estimates the shadow banking derivatives bubble is over 1.5 quadrillion U.S. dollars, that is $1,500,000,000,000,000. We can all thank Bill Clinton and his Treasury Secretary Robert Rubin for this abomination. They deregulated the banking industry in 1999. This allowed the big banks to effectively become gambling houses.
The 2008 housing bubble was a direct result of this deregulation, along with the Federal Reserve’s “easy money” policy. These Wall Street banks and others, thanks to this deregulation, were able to purchase millions of mortgages, bundle them up, call them mortgage-backed securities, multiply their value by 10 times, 20 times and in some cases even 100 times and then sell them to other less corrupt banks, pension funds, municipalities, hedge funds, other countries, school districts, individuals, etc. These banks knew before they sold their first mortgage-backed security that if the price of houses went down, even as little as 5 percent, these mortgage derivatives would catastrophically collapse in value.
“Hey, but we all know housing prices never go down, right?”
So, when the housing bubble collapsed and the average home prices fell by 30, 40 or 50 percent in a matter of months, these mortgage derivative all collapsed to zero. Most everyone who had invested in these mortgage securities lost everything.
To be concluded Tuesday