This page is part of the homeplace advertisement-free web portal. (It is politics-free too, except for 3 sections which are obviously not.)
WHAT IS defending the dollar?
It is avoiding the expectation of excessive or uncontrolled inflation.
WHY defend the dollar:
"A nation-state taxes its own citizens, while an empire taxes other nation-states." Krassimir Petrov
"...the United States is able to rule not through its position as world creditor, but as world debtor." Michael Hudson Easier-to-read interview of Hudson
I. THE DOLLAR IS BECOMING LESS SUITABLE AS A STORE OF VALUE
The dollar is still an excellent medium of exchange . It is suitable as a medium between selling what you have and buying what you want: you are taxed only at the rate of inflation and this is tolerable since the time involved is less than, say, a year.
Its suitability as a store of value depends on its ability to preserve value for more than, say, a year. In 1971, the US terminated the only remaining convertibility of the dollar into monetary metal. The dollar's suitability as a store of value now depends entirely on the expected rate of inflation over multiple future years.
II. THROUGH INFLATION, THE USA CAN LIVE BEYOND ITS MEANS
Through controlled inflation, the USA lives beyond its means. We are now accustomed to, and heavily dependent on, doing this.
III. TO SUCCEED, THE USA MUST
Arrange for some inflation, in order to tax the nation-states whose Central Banks hold the dollar as store of value.
Avoid the expectation of excessive or uncontrolled inflation, to defend against flight from the dollar.
HOW to defend the dollar:
I. FORCE USE OF THE DOLLAR, BOTH AS A STORE OF VALUE AND AS A MEDIUM OF EXCHANGE
In 2000, Congress considered — but did not pass — the International Monetary Stability Act, which would have provided financial assistance to countries that adopted the dollar.
Encourage dollarization, and currency boards where the dollar is the hard currency to which the local currency is pegged.
Coerce countries like Iraq or Iran who threaten to price oil not in dollars to use dollar pricing.
Revisited - The Real Reasons
for the Upcoming War With Iraq:
A Macroeconomic and Geostrategic Analysis of the Unspoken Truth by William Clark March 2003 OriginalHere
This article (pdf here) lays out the notion the United States undertook the Iraq war over its concern with the consequences of Saddam Hussein denominating Iraq's oil sales in euros. It builds a pretty creditable strawman, and it gives references. Then it knocks down its strawman, concluding that the notion is little more than another web-based conspiracy theory. But see this chronology.
II. USE MONETARY POLICY
Defend the dollar by increasing interest rates and/or reducing the money supply.
III. USE FISCAL POLICY
Defend the dollar by moving the Federal Budget away from deficit towards surplus.
IV. SUPPRESS THE OLDEST INFLATION INDICATOR, THE PRICE OF GOLD
The Central Banks of several countries
have colluded to sustain their fiat currencies by sales of Gold.
This had such a powerful depressive effect that they agreed to limit
such sales to a [large but] predictable amount. See The Washington
Agreement (1999) and The Second Central Bank Gold Agreement
Possible motives for the U.S. Treasury and/or Federal Reserve to surreptitiously depress gold prices are:
To prevent rising gold prices from sounding a warning on U.S. Inflation
To prevent rising gold prices from signaling weakness in the international value of the dollar.
To keep interest rates artificially low.
(These are discussed in the Sprott report.)
These objectives are a subset of those of the Plunge Protection Team (PPT). , whose objectives include stabilization of all US financial markets.
To suppress the price of gold, there have been at least the following types of largely-secret operations:
The U.S. Treasury Department owns gold which through the Federal Reserve is leased in the (gold) "carry trade" to certain "bullion" banks such as Goldman Sachs, at artificially low interest rates. This gold has been sold, with the resulting dollars invested at higher rates of return, guaranteeing a profit as long as the gold can be bought back at roughly the same price years later for return to the Treasury. (See the Sprott report.)
The Exchange Stabilization Fund is used for bear raids on the price of gold.
They are effected by an entity often termed the Gold Cartel. Those paying close attention and willing to write about it believe that JP Morgan Chase represents the Fed's interest while Goldman Sachs represents the Treasury's. The Gold Cartel possibly operates through Caribbean Banking Centers which "include Bahamas, Bermuda, Cayman Islands, Netherlands Antilles and Panama" and Hedge Funds incorporated there. The Cayman Islands is the prime location for offshore, non-transparent OTC derivatives trading.
PPT operations are possibly also in part effected by the Exchange
Stabilization Fund (ESF).
Cheuvreux report January 2006 © Crédit Agricole Cheuvreux, 2006
Gold Rush 21 Conference by Gold Anti-Trust Action Committee (GATA)
leMetropoleCafe -- Check out, for example, the James Joyce Library for daily reportage of Gold Cartel and PPT actions (to the extent they can be seen or inferred).
In A Short History of the Gold Cartel, James Turk asserts that the gold cartel exists entirely within Goldman Sachs, JP Morgan Chase, and Deutsche Bank.
V. MAKE (COVERT) WAR ON INFLATION INDICATORS WHICH ARE PRICE INDEXES
The indicators of most interest are the PPI and the CPI.
You've probably heard of core inflation but have you heard
of, say, hedonic regression?
See page 48 of this. Or eyeball this relatively dispassionate discussion or this more impassioned/outraged coverage. This devastating, silly, simple essay shows how deep into truthiness our government has sunk.
Here are some keywords to use in finding out more about how price indices are being [re]defined:
Just select, cut, and paste-into-google this:
"Boskin Commission" substitution "geometric weighting" hedonics "seasonal adjustments" "core rate"
Kate Welling, John Williams, inflation.pdf by Kathryn/Kate Welling of Walter J. "John" Williams, Feb 21, 2006.
In general, defense of the dollar benefits from those around the world accepting it as a store of value to not even know how aggressively it is being defended: they could lose confidence in it.
Stop reporting M3.
Keep the mainstream media silent on things like petrodollar warfare. (Why does the mainstream media cooperate?)
An admission of media bias with respect to market manipulation: AnnotatedHere . “... held my tongue for fear.................to this day, there are folks that will view this ... as ... sacrilege.” Note that this admission is only made by a single “brave” financial writer who feels that something finally “gives this topic license for discussion”. See the reference to find out what allowed him to assume that discussion of covert market manipulation had become licensed for discusion.
Establish 'forbidden research' areas at your Yales, your Harvards. (Why would these prestigious institutions cooperate?)
VII. ATTACK COUNTERFEITERS, INCLUDING THE
NATION-STATES THAT DO IT OR TOLERATE IT
WHAT WILL HAPPEN WHEN THE DOLLAR IS NO LONGER DEFENSIBLE?
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of the voluntary abandonment of further credit expansion [depression], or later as a final and total catastrophe of the currency system involved [hyperinflation]." Ludwig von Mises
History of the Dollar:
This one hits most of the high points!
This page assembled by: Frederick N. Chase