Gold Vs. the US Dollar -- The Big Lie

Investment Research Dynamics

Under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one.  – Alan Greenspan, “Gold and Economic Freedom,” 1966

I don’t know if the Plunge Protection Team will be able to stabilize and bounce the market today.  I suspect they will get it done sometime in the next 24-48 hours – there’s real blood money at stake here.   By this I mean there’s still a lot of middle class wealth that has not been wiped off the table and into the pockets of the elitists.  Hell, Hillary Clinton is still standing – for now.

But at some point our system will collapse.  EVERYONE in this country has been living off the benefits of The Big Lie for too long.  It’s not just the upper .1% who have benefited, even the welfare programs have been levitated by the U.S. Government’s ability to bamboozle the rest of the world into buying our debt and accepting our currency.

When the rest of the world flinched at taking down more debt, the Fed printed trillions to buy U.S. Treasuries directly, and lent $100’s of millions to the Bank of Japan and the ECB to enable them indirectly to continue propping up the Big Lie.

But today gives us  a glimpse of The Truth.  Beneath the headlines of plunging stock markets, and not being reported by the U.S. financial muppets, is a stunning 1.5% plunge overnight in the U.S. dollar:

At the same time, the world’s oldest currency – the Wall Street Journal’s “Pet Rock” – has performed as the ultimate flight to safety today:

While the “Einsteins” out there offered only the obvious explanations for China’s move to devalue the yuan, I have maintained all along that it was first and foremost a means of tossing a “grenade” at the massively unprecedented U.S. dollar bubble. It only took a about 3% move to accomplish this.

Meanwhile, here’s what’s really happening in China:

Shanghai gold withdrawals for the week ending Aug 14th have been reported at 65.013 tonnes (previous week 56.015 tonnes). This brings the year to date total to 1,585 tonnes, 161 tonnes more than in the record 2013 year at the same time.  – John Brimlow’s “Gold Jottings”

The Fed kept insisting that it would raise rates in September. For anyone willing to look honestly at the underlying economic evidence, it was obvious – OBVIOUS – that the Fed would never raise rates. It was nothing but Orwellian smoke. Keep repeating a lie until almost everyone wants to believe it.

I heard a radio promo yesterday for a mortgage broker who insisted that “rates are definitely going higher later this year so you better take out as big of a mortgage as you can now and buy your dream house.”

Rates may go higher this year, but if they they do it’s because the dollar is collapsing – or even vanishing – as the rest of the world other than the Bank of Japan and the ECB rush for the exists with their Treasury holdings.

The Big Lie is that gold is a Pet Rock and the U.S. dollar is the global flight-to-safety currency of the world. If that’s the case, then how come China seems to be cornering the market in Pet Rocks while dumping the dollar through that exit door at the back of the movie theater?