Is the dollar destined to lose its value and purchasing power?
*Texas Straight Talk, by Congressman Ron Paul, September 3, 2012:
'We frequently hear the financial press refer to the U.S. dollar as
the 'world's reserve currency,' implying that our dollar will always
retain its value in an ever shifting world economy. But this is a
dangerous and mistaken assumption.
Since August 15, 1971, when President Nixon closed the gold window and
refused to pay out any of our remaining 280 million ounces of gold, the
U.S. dollar has operated as a pure fiat currency. This means the
dollar became an article of faith in the continued stability and might
of the U.S. government.
In essence, we declared our insolvency in 1971. Everyone
recognized some other monetary system had to be devised in order to
bring stability to the markets.
Amazingly, a new system was devised which allowed the U.S. to operate
the printing presses for the world reserve currency with no restraints
placed on it-- not even a pretense of gold convertibility!
Realizing the world was embarking on something new and mind-boggling,
elite money managers, with especially strong support from U.S.
authorities, struck an agreement with OPEC in the 1970s to price oil in
U.S. dollars exclusively for all worldwide transactions. This
gave the dollar a special place among world currencies and in essence
backed the dollar with oil.
In return, the U.S. promised to protect the various oil-rich kingdoms
in the Persian Gulf against threat of invasion or domestic coup.
This arrangement helped ignite radical Islamic movements among those
who resented our influence in the region. The arrangement also
gave the dollar artificial strength, with tremendous financial benefits
for the United States. It allowed us to export our monetary
inflation by buying oil and other goods at a great discount as the
dollar flourished.
In 2003, however, Iran began pricing its oil exports in Euro for Asian
and European buyers. The Iranian government also opened an oil
bourse in 2008 on the island of Kish in the Persian Gulf for the
express purpose of trading oil in Euro and other currencies. In
2009 Iran completely ceased any oil transactions in U.S. dollars.
These actions by the second largest OPEC oil producer pose a direct
threat to the continued status of our dollar as the world's reserve
currency, a threat which partially explains our ongoing hostility
toward Tehran.
While the erosion of our petrodollar agreement with OPEC certainly
threatens the dollar's status in the Middle East, an even larger threat
resides in the Far East. Our greatest benefactors for the last
twenty years-- Asian central banks-- have lost their appetite for
holding U.S. dollars. China, Japan, and Asia in general have been
happy to hold U.S. debt instruments in recent decades, but they will
not prop up our spending habits forever. Foreign central banks
understand that American leaders do not have the discipline to maintain
a stable currency.''
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
Call Now
Let us help you:
Personal Advisors
available now at
1-800-444-8317