Is it becoming evident that gold is the world’s reserve currency?
*Dow Theory Letters, by Richard Russell, August 8, 2011
”Europe���s plan was to have growth fix the problem. America���s plan was to have growth fix the problem. And that���s not going to work,” said Kenneth Rogoff, an economics professor at Harvard. ”I think it���s really starting to sink in that we���re not anywhere near an endgame.”
“The United States and Europe face parallel debt problems. Here, banks and investors are pitted against homeowners. There, banks and investors are pitted against nations. In both cases, governments have struggled to rebalance their books.
“There is no surplus of economic strength to throw at the problem. The United States and Europe ran up great debts in the years of plenty, living well and promising to pay later, even as they made expansive promises to aging populations.
”The restorative forces of the economy are very weak and the immediate forces that will be in place are worsening the problem,” said Joseph E. Stiglitz, an economist at Columbia University. ”We already know it���s not going to be a V-shaped recovery. I had said in my book that it would be more of an L-shaped, slow recovery. I think the answer now is a Japan-style malaise.”
“The weakness of the American economy is most evident in the lack of jobs. Only 55 percent of working-age adults held full-time jobs in July, the lowest level in modern times. About 25 million American adults want but cannot find full-time work, the government said Friday. The unemployment rate fell slightly, but mostly because 193,000 people stopped searching for jobs.” (from NY Times).
In the face of all the above, one rating agency had the guts to downgrade the credit of the US from AAA to AA+. That single agency was the S&P, which was immediately attacked unmercifully by US spokesmen. The bankrupt cat has finally been let out of the bag. For the first time in US history, its sovereign debt has been called “less than sterling.” Since the US is owner of the world’s reserve currency, a “mighty oak” has been shaken. There is now only one “ultimate world reserve currency, and it’s called gold.” Recently, an ignorant Fed Chairman named Bernanke stated before a government committee that “gold is not money.” One wonders if he still feels that way. ”
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