A headline in Thursday’s New York Times reported, “U.S. Economy Began to Grow Again in 3rd Quarter–The United States has emerged from the longest economic contraction since World War II.”
Ohh, so it’s “emerged, has it? Well, isn’t that just great? I guess “Happy Days” are here again.
In a modern economy, the relationship between the purchasing power of the fiat currency and economic strength generally resembles a teeter-totter: When one goes up, the other goes down.
For example, in times of economic boom, we have more employment, more products, more consumption, more demand and more currency in circulation. Result? Price inflation. As the economy rises in strength, prices rise while the correlative purchasing power of the dollar tends to fall. Teeter-totter.
The U.S. dollar has been the world’s reserve currency since World War II.
In March, China (and then Russia) openly attacked the greenback, calling for the dollar to be replaced as the world’s reserve currency. This call by China is particularly disturbing since China holds more U.S. debt than any other country—about $1.3 trillion—and the further the dollar drops, the less the value of the U.S. debt owed to China. If the dollar were completely replaced as the world’s reserve currency, the dollar would be quickly and dramatically devalued and the purchasing power of China’s $1.3 trillion in T-bills would be diminished by hundreds of billions of “dollars”.
Thus, by calling for replacement of the dollar as world reserve currency, China shows that it is willing to sacrifice much of the value of its hoard of US T-bills for the sake of overthrowing the U.S. dollar. This is not the simple economics of greed. Such enormous self-sacrifice is normally evidence of serious, economic warfare.
Benjamin Fulford writes in both Japanese and English on political and economic issues. He’s an intelligent man. Still, it’s sometimes hard to tell if Mr. Fulford has the gift of prophecy or is simply a “loose cannon”. Mr. Fulford has recently written a couple of commentaries that predict the Federal Reserve could cease to exist within the next six months.
The Fed might die?! Why . . . why that’s economic blasphemy! That’s . . . that’s about as crazy as . . . as predicting in the 1980s that the mighty “evil empire” of the Soviet Union would soon disintegrate. Surely, the almighty Federal Reserve is “too big to fail”. Besides, if the Fed failed, the entire US economy would tank, too, right?
