The world is awash in dollars. It is also awash in assets and derivatives that are quickly deflating in value. They are deflating because the holders of those assets are frantically trying to convert them to dollars. There are reportedly $1,100 Trillion worth of worldwide assets and derivatives that are bidding on only $60 Trillion worth of dollars (including all currencies). When all is said and done, that would be a deflation of 94.55%!
Can you imagine our stock markets crashing 95%? How about the value of your savings?
That is what we are currently facing!
To fix the problem, the Central Banks of the world are printing money as fast as they can. But they can never print fast enough to keep those assets from having a catastrophic collapse in value. Besides, what would those dollars be worth even if they could? Remember, that value was a phantom value. It was only based on what the last one sold for. There was never $1,100 Trillion (1.1 Quadrillion) dollars in existence.
So the pain we are watching, while real, is still just a result of imaginary values being placed, and spent, on pieces of paper.
After watching Karl Denninger's 2 minute video, I have been able to read between the lines on some of the statements by other Senators and Representatives that have spoken in public. And I believe his thesis is closer to the truth than anything else I have seen.
Here's how I see America's problem put simply:
America has 20 credit cards all maxed out. No available limit left. Each year we apply for a new credit card and max it out just to pay the minimum payment on the previous 20. We are only paying the interest, not the principle. And then the next year we must get a newer and bigger credit card to pay the interest on the previous 21.
Well who is issuing us those new cards each year? It is the foreign central banks that buy our debt, like China and Saudi Arabia. They are giving us a fresh credit line JUST to pay the interest on the previous debt we already owe them.
So now they are threatening to not give us a new card this year (fiscal year starts Oct. 1st). And we have no way to pay the trillion dollar interest payment on our other 21 credit cards. So without this new credit card, we will go into default on those 21 bills sitting on our desk.
What does that do to our credit rating? Are we now bankrupt? And who's to say that even if we buy back $700 billion of bad investments from them that they will honor the deal and give us one more year?
This is a pathetic situation we are in. If I ran my house this way, they would lock me up.
So where do we go from here?
FreeGold! That's where.
Imagine all the gold in the world was melted down and minted into... oh, let's say 2 rands.... no, how about 1 ounce Gold American Eagles... like the beautiful Liberty on the right side of this blog. If all the gold was minted in that way, there would be about 4 Billion of those.
Now I know that FreeGold is not about a number (Ender), but just for the sake of this experiment let's use the number from my previous post of $100,000 per ounce. That would mean that each of those 4 Billion coins was worth $100,000 US dollars in today's dollar value. I know that's a lot, but consider this. That would mean that all the gold in the world was worth $400 Trillion. That's more than all the paper money in existence. And it's a full 36% of the perceived value of all the paper assets in the world. Do you see where I'm heading yet?
Okay, now let's say those $1,100 Trillion in "junk" assets are now going to convert to currency with a pool of $460 Trillion ($400T worth of gold plus $60T worth of paper money). Sure there are still going to be major losses for those who hold the worst of it, but the fall will be much softer.
Also, now imagine the US Treasury's position in this new world. Assuming the bailout goes through, the net worth of the Treasury is something like NEGATIVE $11 Trillion. But with 8,000 ounces of gold valued at $100K, the US Treasury's net worth would jump to a healthy POSITIVE $15 Trillion.
Let me say that again... from NEGATIVE $11,000,000,000,000. To POSITIVE $15,000,000,000,000. And that would happen literally overnight!
That value is already there!!!! It is simply suppressed!
I could go on and on about this, but I'd probably just bore you. Please, I know some people are reading this, so ask your questions! Express your skepticism! How can I say these radical things if I am not crazy?
So there you have it. FreeGold is like a giant sponge that can sop up all the dollars in the world seven (7) times over. And in the process it can bring order, confidence, national pride, and free trade back to where it belongs.... in our lives and not in our history books!