U.S. Economic Foundation is Broken.
Throughout the history of the world, there have always been strong currencies, usually held by the economic powerhouses of the day. Theses currencies were known as the Reserve Currency of the day. The Pound Sterling was the primary reserve currency for much of the world in the 18th and 19th centuries leading up to World War II.
But continual account deficits and fiscal deficits, financed by cheap credit and unsustainable monetary and fiscal policies used to finance wars and colonial ambitions eventually led to the pound sinking (sound familiar?).
After the war, The Bretton Woods Agreement established the U.S. Dollar as the Reserve Currency of the world. All foreign currencies would trade in relationship to the US Dollar and only the US dollar (as the reserve currency) would be tied to a gold standard (meaning the value of dollars circulating must be backed by gold reserves).
The gold standard caused major problems in the 1960’s when France demanded gold for payment of debt, rather than US dollars (they understood that America was printing more money, to finance the Vietnam conflict and fund new social programs, than she had available in gold reserves).
Due to the rapid loss of US gold reserves, President Nixon had no choice but to abolish the Bretton Woods agreement in August of 1971 and he took the US dollar off the gold standard. Then Gold was $35 per ounce; today it is $900.
The removal of the Gold Standard caused a fast devaluation of the dollar. Currencies from around the world were in turmoil. Something had to be done and it was.
In 1974 a meeting took place and an agreement between the United States and Saudi Arabia took place. The main component of this agreement was that Saudi Arabia and the OPEC Nations would sell it oil ONLY in U.S. Dollars.
This agreement increased the demand for the dollar, as oil importing countries now had to earn or borrow dollars to pay for their oil. Oil now replaced gold as basis for a strong dollar.
As you are beginning to see all of this is changing and the oil dollar relationship is becoming strained causing serious pressure on the U.S. Dollar.
Stay tuned for more developments.
For my analysis of the horrible position of the American economy and U.S. dollar, read my new report “Fall Of The Dollar: Are Black People Prepared For The Coming Economic Collapse?” http://www.fallofthedollar.com
