Washington Celebrates Solving Totally Unnecessary Crisis They Created
Posted by Andy Borowitz
WASHINGTON (The Borowitz Report)—Official Washington was in celebration mode on New Year’s Day after kind of averting a completely unnecessary crisis that was entirely of its own creation.
“This deal proves that if we all procrastinate long and hard enough, we can semi-solve any self-inflicted problem at the very last minute in a way that satisfies no one,” said Senate Minority Leader Mitch McConnell (R-Kentucky).
But even as Sen. McConnell basked in self-congratulation, he warned Congress against the complacency that could come with having sort of fixed its own completely avoidable mess.
“This is a new year, and much work remains to be done,” he said. “It’s up to us to concoct entirely new optional disasters that we will have to undo at some later date in a more or less half-assed way.”
In a related story, an arsonist received an award for putting out his own fire.
Central banks are shifting from greenbacks into gold in a realignment to beat the debt crisis
Posted on 29 December 2012
Why would some global central banks actually want the price of gold to rise? Well they hold a lot of it on their balance sheets and in order to balance their assets against their rising liabilities one way to achieve this is to allow the price of gold to go up.
So inflate away the debts of the world by allowing the price of gold to increase? It is not as mad as it sounds. If you want to reset the global financial system this is one method of achieving it: tie the currencies of the world more closely to gold. It worked before for several hundred years.
The central banks of China, Russia and Europe are leading this fight against American currency debasement. It is not so outlandish at all. The Chinese have a stated policy of doubling their gold reserves over the next three years and have supported the IMF’s plan for Special Drawing Rights including gold as a new global currency.
Perhaps we should approach this from another direction. How likely is it that the US dollar will continue to remain the reserve currency of global trade with the Fed now committed to QE to infinity and a much lower US dollar?
If the present foreign holders of the greenback sign up to this future scenario then they are going to pay off US debts through dollar devaluation. Do they want to do this? Most probably not and that is why so many central banks are again net buyers of gold whereas they were net sellers a few years back.
Gold and US debt
For gold bugs this is something of an ideal scenario. Both the global central banks down to the small investor are planning for a dollar collapse as the mounting debts over power the once almighty US financial system. By doing so they make it more likely and drive up the price of gold in the process.
However, if this thesis is proven correct then the new price of gold will not be a transient one but a permanent feature of the financial system. There is not enough gold, and even less silver to go around and many predict that $5-10,000 an ounce for gold and $200-500 silver will be reached if the precious metals are to take on this role again.
It’s a price the world will have to pay for sound money and an end to the financial instability of recent years, not that we have seen the end of that just yet.