Diplomacia e Relações Internacionais
Um diretor de uma firma de investimentos, oportunista como todos eles, apresenta sua versão de um dos episódios mais momentosos do século XX: a denúncia unilateral pelos EUA do padrão ouro-dólar estabelecido em Bretton-Woods, e as consequências que se seguiram.
Como diria um filósofo mineiro (desculpe Minas Gerais), as consequências sempre vêm depois.
Pois bem, o dólar não cessa de cair, mas não necessariamente devido a 1971, e sim a todas as demais políticas adotadas desde então.
Se me perguntassem quais os mais importantes eventos, fatos ou processos do século XX, eu não hesitaria em alinhar:
1) Primeira Guerra Mundial (e suas consequências econômicas)
2) O desastroso Tratado de Versalhes (que abriu caminho à Segunda)
3) A depressão dos anos 1930 (vejam bem, não é a crise de 1929)
4) A Segunda Guerra Mundial (que na verdade é mera consequência de Versalhes)
5) Bretton Woods, em 1944 (como pilar da nossa ordem econômica, ainda hoje)
6) A tomada do poder pelos comunistas na China, em 1949 (e os desastres que se seguiram)
7) O "fim de Bretton Woods", em 1971-73 (e a bagunça financeira mundial)
8) O fim do comunismo em 1991 (vejam bem, não é a implosão da URSS, que é mera consequência)
Enfim, depois eu desenvolvo a minha "concepção" da história.
Por enquanto fiquem com um investidor metido a historiador.
Paulo Roberto de Almeida
Celebrating 40 Years of Dollar Destruction
Sean Hyman
The Sovereign Investor, August 16, 2011
This week, we’re celebrating the anniversary of the greatest heist in recorded history.
Exactly 40 years ago yesterday, President Nixon severed the dollar’s ties to gold forever.
It was a government game so the politicians could easily pay off their debts with “cheaper dollars” for the foreseeable future.
In reality, this one decision effectively stole all our dollars’ value for decades to come. And you and I are the ones still paying for this mistake.
Strangely this decision also created the $4 trillion Forex market…and eventually sent gold racing above $1,800 an ounce.
But these profitable side effects were not Nixon’s intention…
You see, up until 1971, each dollar was physically backed by gold.
Gold was $35 an ounce and every dollar in circulation could be redeemed for gold. So every dollar was backed by the power and security of gold.
But when Nixon removed us from the gold standard, that responsibility flew out the window – along with the dollar’s long-term value.
It’s the reason the dollar has lost massive purchasing power against other currencies in the last four decades (and gold has risen 51-fold against the buck).
And get this: the worst is still yet to come for the dollar.
I’ll explain how to protect your savings in just a moment. First, let’s take a closer look at how our dollar has lost that much in value.
The Greenback Is Backed By the “Hot Air” of Washington, D.C.
Given that the dollar has lost so much value, backing dollars with gold simply wouldn’t fly today.
As of July 2011 our “reported” gold reserves was 8,133.5 tonnes. Multiple that by the current price of gold ($1,746 as of this writing), and you can see we have a little over $454 billion bucks in gold.
In just the last year, we have had over $1 trillion dollars in circulation. So obviously we don’t have enough gold to cover all that.
But of course, that was the point of taking us off the gold standard. Otherwise, how else would we be able to write blank checks for everything we need?
Back in the Good Old Days, All These Dollars Would Have Had Value
In fact, it’s estimated that if you took all of the gold that has ever been mined in the world, it would only come up to about $5 trillion.Well we print trillions of dollars and run up over $14.6 trillion in debt all by ourselves in the U.S. (and that’s just one country of the world).
All these dollars are only worth something if the U.S. government says so. It’s backed by the U.S. government promise, “we’re good for it.” In other words, our dollars are basically backed by hot air straight from Washington.
But the harsh truth is they couldn’t back all of the dollars in circulation right now even if they wanted to.
Even worse, the more investors realize how shaky our currency is, the more they start looking elsewhere for more fundamentally sound currencies.
That’s one reason why the U.S. just raised our debt ceiling for the 75th time in 50 years. It’s also why the Standard & Poor’s just downgraded our debt.
Toss in the Fed’s nasty habit of creating money out of thin air anytime we need extra resources, bailouts and stimulus packages – and the dollar is in serious trouble.
The Government has Two Choices and Both are Bad… But Here’s What They Will Choose
Our economy is in shambles, and our currency is losing clout every single day. And we are no longer competitive with the rest of the world in terms of exports. We really only have two choices left to stay competitive with the rest of the world.
Either the government can allow “wage devaluation” or “currency devaluation.” In other words, they can let wages fall or let the currency drop in value.
Do you really think Americans will elect politicians that force them to take pay cuts? Heck no! So if the guys in Washington want to keep their jobs, they really only have one choice – devalue our dollars further.
As you can imagine, voters pay closer attention to how many dollars are in their paycheck than how much those dollars buy. (In fact, most Americans don’t even understand the concept of the dollar losing purchasing power anyway.)
That’s why it’s almost too easy for Washington to dilute our currency and accomplish their “cheap dollar” agenda.
A Glimpse Into the Future…
So here’s how all of this is going to play out. The U.S. will continue to stack on more debt and dilute the dollar by creating more money. Call it QEIII or just ridiculously low interest rates until 2013, but either way, this can only end one way.
The dollar is sinking in value, and central bankers around the world know it.
Therefore, they are “ever so quietly” shifting their central bank reserves slowly away from dollars and into currencies that aren’t being diluted, that have superior fundamentals.
Some, like China and India, are even buying up commodities for their reserves (like gold, silver, iron ore, etc.).
This practically guarantees there will be a constant shift away from dollars through the years – especially as our politicians believe the quick solution is “dollar dilution.” But no country in history ever brought themselves to prosperity by continually diluting their currency.
Therefore, you won’t really be able to “protect your dollars” because of the government’s overall agenda.
So what can you do? Well, you can protect your money – your wealth – by taking your money (dollars) and investing them in other currencies that aren’t playing the debt-stacking, currency dilution game.
You can also buy the traditional forms of “hard money” including gold.
Dollars…On Sale…50% Off!
Now remember when I said that our currency will have to be diluted even further?
One well-respected hedge fund manager ran the numbers and said that the dollar would have to be devalued by another 50% to make us competitive with the world again.
That means, if you’re paying $5 for your Starbucks coffee…you’ll be paying $10 in just a few short years. If you’re paying $400 for your car payment now, better get used to $800 payments.
Do you think “wage growth” is going to keep up with that? Hardly!
In fact, Ben Bernanke flat-out admitted last year that it will likely take five years or more to get our unemployment rate back down to 5-6%.
So if there is a glut of unemployed people, there’s no need for employers to raise wages when there’s an everlasting supply of employees willing to work for peanuts.
So the bottom line is: you’ve got to get positioned into currencies that aren’t “singing the same tune” as America.
That includes places like Switzerland, Norway and Singapore. All three have stronger currencies that can shield you from the dollar’s long-term destruction, and even provide some measure of safety as stocks drop.
So before the greenback devalues another 50% over the upcoming years…shift into something that will retain its value and grow through the years. And do it while the buck is still worth something!
Have a Nice Day,
Sean Hyman
Editor, Currency Cross Trader
P.S. As I mentioned, the one bright spot of Nixon taking us off the gold standard was the $4 trillion Forex market itself. The Forex market as we know it today didn’t exist before 1971. But once currencies all over the world started floating freely, traders could buy and sell them for profits. Today, the Forex market includes retail traders from all over the world who trade currencies online just like the pros. Now’s your chance to join them.
- 1998 Crisis And Now: Differences And Similarities - Ye Xie (bloomberg News)
Why 1998 Was Different, and Same, to Emerging-Market Crisis NowBy Ye Xie Bloomberg News, December 15, 2014Oil prices were tanking. Emerging-market currencies were in a freefall. Venezuela was mired in a financial crisis and Russia had sunk into a...
- A Irresistivel Ascensao Do Yuan? - The Economist
The rise of the yuanTurning from green to redThe yuan is displacing the dollar as a key currency The Economist, Oct 20th 2012 | HONG KONG IN TOKYO last week the bigwigs of international finance paid close attention to a speech by Ben Bernanke,...
- Um Grande Calote, Hoje Quase Esquecido: O Golpe De Nixon Contra Bretton Woods Em 1971
Toda a bagunça do sistema financeiro contemporâneo começou com essa medida populista adotada por Nixon em 1971. Na verdade, ele pensava que era keynesiano; pode ser, mas ele era mesmo um populista demagógico. " The Nixon Shock Heard 'Round the...
- Calote Americano?: Não Seria A Primeira Vez - John S. Chamberlain (mises Daily)
A Short History of US Credit Defaults by John S. Chamberlain Mises Daily, July 15, 2011 On July 13th, the president of the United States angrily walked out of ongoing negotiations over the raising of the debt ceiling from its legislated maximum of $14.294...
- The Fall Of The (still) Mighty Dollar - Barry Eichengreen
Um tema do momento, um grande autor, quase o "romance" do dólar, ou sua biografia não autorizada... Paulo Roberto de Almeida The rise and fall of the dollar The Economist, Jan 20th 2011 Exorbitant Privilege: The Rise and Fall of the Dollar and the Future...
Diplomacia e Relações Internacionais
"Celebrando" o declinio do dolar: consequencias economicas de 1971
Um diretor de uma firma de investimentos, oportunista como todos eles, apresenta sua versão de um dos episódios mais momentosos do século XX: a denúncia unilateral pelos EUA do padrão ouro-dólar estabelecido em Bretton-Woods, e as consequências que se seguiram.
Como diria um filósofo mineiro (desculpe Minas Gerais), as consequências sempre vêm depois.
Pois bem, o dólar não cessa de cair, mas não necessariamente devido a 1971, e sim a todas as demais políticas adotadas desde então.
Se me perguntassem quais os mais importantes eventos, fatos ou processos do século XX, eu não hesitaria em alinhar:
1) Primeira Guerra Mundial (e suas consequências econômicas)
2) O desastroso Tratado de Versalhes (que abriu caminho à Segunda)
3) A depressão dos anos 1930 (vejam bem, não é a crise de 1929)
4) A Segunda Guerra Mundial (que na verdade é mera consequência de Versalhes)
5) Bretton Woods, em 1944 (como pilar da nossa ordem econômica, ainda hoje)
6) A tomada do poder pelos comunistas na China, em 1949 (e os desastres que se seguiram)
7) O "fim de Bretton Woods", em 1971-73 (e a bagunça financeira mundial)
8) O fim do comunismo em 1991 (vejam bem, não é a implosão da URSS, que é mera consequência)
Enfim, depois eu desenvolvo a minha "concepção" da história.
Por enquanto fiquem com um investidor metido a historiador.
Paulo Roberto de Almeida
Celebrating 40 Years of Dollar Destruction
Sean Hyman
The Sovereign Investor, August 16, 2011
This week, we’re celebrating the anniversary of the greatest heist in recorded history.
Exactly 40 years ago yesterday, President Nixon severed the dollar’s ties to gold forever.
It was a government game so the politicians could easily pay off their debts with “cheaper dollars” for the foreseeable future.
In reality, this one decision effectively stole all our dollars’ value for decades to come. And you and I are the ones still paying for this mistake.
Strangely this decision also created the $4 trillion Forex market…and eventually sent gold racing above $1,800 an ounce.
But these profitable side effects were not Nixon’s intention…
You see, up until 1971, each dollar was physically backed by gold.
Gold was $35 an ounce and every dollar in circulation could be redeemed for gold. So every dollar was backed by the power and security of gold.
But when Nixon removed us from the gold standard, that responsibility flew out the window – along with the dollar’s long-term value.
It’s the reason the dollar has lost massive purchasing power against other currencies in the last four decades (and gold has risen 51-fold against the buck).
And get this: the worst is still yet to come for the dollar.
I’ll explain how to protect your savings in just a moment. First, let’s take a closer look at how our dollar has lost that much in value.
The Greenback Is Backed By the “Hot Air” of Washington, D.C.
Given that the dollar has lost so much value, backing dollars with gold simply wouldn’t fly today.
As of July 2011 our “reported” gold reserves was 8,133.5 tonnes. Multiple that by the current price of gold ($1,746 as of this writing), and you can see we have a little over $454 billion bucks in gold.
In just the last year, we have had over $1 trillion dollars in circulation. So obviously we don’t have enough gold to cover all that.
But of course, that was the point of taking us off the gold standard. Otherwise, how else would we be able to write blank checks for everything we need?
Back in the Good Old Days, All These Dollars Would Have Had Value
All these dollars are only worth something if the U.S. government says so. It’s backed by the U.S. government promise, “we’re good for it.” In other words, our dollars are basically backed by hot air straight from Washington.
But the harsh truth is they couldn’t back all of the dollars in circulation right now even if they wanted to.
Even worse, the more investors realize how shaky our currency is, the more they start looking elsewhere for more fundamentally sound currencies.
That’s one reason why the U.S. just raised our debt ceiling for the 75th time in 50 years. It’s also why the Standard & Poor’s just downgraded our debt.
Toss in the Fed’s nasty habit of creating money out of thin air anytime we need extra resources, bailouts and stimulus packages – and the dollar is in serious trouble.
The Government has Two Choices and Both are Bad… But Here’s What They Will Choose
Our economy is in shambles, and our currency is losing clout every single day. And we are no longer competitive with the rest of the world in terms of exports. We really only have two choices left to stay competitive with the rest of the world.
Either the government can allow “wage devaluation” or “currency devaluation.” In other words, they can let wages fall or let the currency drop in value.
Do you really think Americans will elect politicians that force them to take pay cuts? Heck no! So if the guys in Washington want to keep their jobs, they really only have one choice – devalue our dollars further.
As you can imagine, voters pay closer attention to how many dollars are in their paycheck than how much those dollars buy. (In fact, most Americans don’t even understand the concept of the dollar losing purchasing power anyway.)
That’s why it’s almost too easy for Washington to dilute our currency and accomplish their “cheap dollar” agenda.
A Glimpse Into the Future…
So here’s how all of this is going to play out. The U.S. will continue to stack on more debt and dilute the dollar by creating more money. Call it QEIII or just ridiculously low interest rates until 2013, but either way, this can only end one way.
The dollar is sinking in value, and central bankers around the world know it.
Therefore, they are “ever so quietly” shifting their central bank reserves slowly away from dollars and into currencies that aren’t being diluted, that have superior fundamentals.
Some, like China and India, are even buying up commodities for their reserves (like gold, silver, iron ore, etc.).
This practically guarantees there will be a constant shift away from dollars through the years – especially as our politicians believe the quick solution is “dollar dilution.” But no country in history ever brought themselves to prosperity by continually diluting their currency.
Therefore, you won’t really be able to “protect your dollars” because of the government’s overall agenda.
So what can you do? Well, you can protect your money – your wealth – by taking your money (dollars) and investing them in other currencies that aren’t playing the debt-stacking, currency dilution game.
You can also buy the traditional forms of “hard money” including gold.
Dollars…On Sale…50% Off!
Now remember when I said that our currency will have to be diluted even further?
One well-respected hedge fund manager ran the numbers and said that the dollar would have to be devalued by another 50% to make us competitive with the world again.
That means, if you’re paying $5 for your Starbucks coffee…you’ll be paying $10 in just a few short years. If you’re paying $400 for your car payment now, better get used to $800 payments.
Do you think “wage growth” is going to keep up with that? Hardly!
In fact, Ben Bernanke flat-out admitted last year that it will likely take five years or more to get our unemployment rate back down to 5-6%.
So if there is a glut of unemployed people, there’s no need for employers to raise wages when there’s an everlasting supply of employees willing to work for peanuts.
So the bottom line is: you’ve got to get positioned into currencies that aren’t “singing the same tune” as America.
That includes places like Switzerland, Norway and Singapore. All three have stronger currencies that can shield you from the dollar’s long-term destruction, and even provide some measure of safety as stocks drop.
So before the greenback devalues another 50% over the upcoming years…shift into something that will retain its value and grow through the years. And do it while the buck is still worth something!
Have a Nice Day,
Sean Hyman
Editor, Currency Cross Trader
P.S. As I mentioned, the one bright spot of Nixon taking us off the gold standard was the $4 trillion Forex market itself. The Forex market as we know it today didn’t exist before 1971. But once currencies all over the world started floating freely, traders could buy and sell them for profits. Today, the Forex market includes retail traders from all over the world who trade currencies online just like the pros. Now’s your chance to join them.
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- 1998 Crisis And Now: Differences And Similarities - Ye Xie (bloomberg News)
Why 1998 Was Different, and Same, to Emerging-Market Crisis NowBy Ye Xie Bloomberg News, December 15, 2014Oil prices were tanking. Emerging-market currencies were in a freefall. Venezuela was mired in a financial crisis and Russia had sunk into a...
- A Irresistivel Ascensao Do Yuan? - The Economist
The rise of the yuanTurning from green to redThe yuan is displacing the dollar as a key currency The Economist, Oct 20th 2012 | HONG KONG IN TOKYO last week the bigwigs of international finance paid close attention to a speech by Ben Bernanke,...
- Um Grande Calote, Hoje Quase Esquecido: O Golpe De Nixon Contra Bretton Woods Em 1971
Toda a bagunça do sistema financeiro contemporâneo começou com essa medida populista adotada por Nixon em 1971. Na verdade, ele pensava que era keynesiano; pode ser, mas ele era mesmo um populista demagógico. " The Nixon Shock Heard 'Round the...
- Calote Americano?: Não Seria A Primeira Vez - John S. Chamberlain (mises Daily)
A Short History of US Credit Defaults by John S. Chamberlain Mises Daily, July 15, 2011 On July 13th, the president of the United States angrily walked out of ongoing negotiations over the raising of the debt ceiling from its legislated maximum of $14.294...
- The Fall Of The (still) Mighty Dollar - Barry Eichengreen
Um tema do momento, um grande autor, quase o "romance" do dólar, ou sua biografia não autorizada... Paulo Roberto de Almeida The rise and fall of the dollar The Economist, Jan 20th 2011 Exorbitant Privilege: The Rise and Fall of the Dollar and the Future...