There’s a lot of talk these days about how the European Union is going to “stick it” to the US by potentially selling trillions of dollars worth of US treasury bills. But there’s a problem. Since every currency on earth is just a derivative of the US dollar, and has been since the Bretton Woods agreement of 1944, Europe wouldn’t be “dumping” US dollars. Whatever financial instrument they get in return, they all share the same root: the US dollar.
One of my favorite financial commentators, Rafi Farber, explains the problem fully in this short video.
This is why gold is heading to $5,000 USD. Gold is not appreciating. Fiat currency is running into rough waters.
“Paper money eventually returns to its intrinsic value – zero” ~ Voltaire
Well, that was a little ray of sunshine on a January morning!
His last line that cultures that no how to work, save, earn and not steal will survive. I don’t see canaduh in that group and good riddance to it.
There is an old adage; “if you owe the bank 100k and can’t pay, you have a problem. If you owe the bank 100 Million and can’t pay, the bank has a problem”
This idea that Europe would suddenly dump all its Treasuries to, ostensibly, crash the Dollar, would, even if it succeeded, be a Pyrrhic victory. I don’t believe it can be done. (of course, I am just an armchair quarterback)
Firstly, who will buy the Treasuries? If they succeeded in crashing the dollar, the US Fed could buy them with devalued dollars
What will the other holders of Treasuries think (i.e. China, Japan, Korea, Middle East etc) when their reserves are suddenly wiped out?
A devalued dollar makes European imports to the US far more expensive. Crashing the market. Achieving Trumps goal.
The most important world commodity, oil, is denominated in US $ Not sure how that would unfold.
Finally, the expectation would be that the ECB would buy gold to provide reserve stability would skyrocket the price of gold.
Who is the largest holder of [known] gold in the world? I’ll give you a hint, it’s in Kentucky.
BTW, the geniuses that run this post national state have 0 gold in reserve