END OF THE ROAD: How Money Became Worthless

Economical Documentary on the international financial system, Gold, Dollar, Money.

Video Transcript

the strength of a nation’s currency is based on the strength of that nation’s economy and the american economy is by far the strongest in the world accordingly i have directed the secretary of the treasury to take the action necessary to defend the dollar against the speculators i have directed secretary connelly to suspend temporarily the convertibility of the dollar into gold or other reserve assets except in amounts and conditions determined to be in the interest of monetary stability and in the best interest of the united states [Music] august 15 1971 will stand as an important event in economic history for many many uh generations in fact you know hundreds of years from now people will look back to that day [Music] [Music] the sun rises today as it has a million times before commuters wake up and travel to their offices to begin the day’s work farmers tend to their crops construction workers build new infrastructure today is a day like any other or is it in 2008 the world experienced one of the greatest financial turmoils in history markets around the world started crashing and major financial institutions once thought to be invincible started showing signs of collapse governments responded quickly issuing massive bailouts and stimulus packages in an effort to keep the world economy afloat and it worked the global economy recovered much quicker than most predicted and soon it was back to business as usual and yet something still isn’t quite right a growing sense of unease fills the population in the world of finance indeed in all facets of modern life cracks have started to appear there’s angst out there and i think if you talk to people on the street today they would tell you i don’t know what’s causing all this but this just doesn’t feel normal to me you know the government’s running a trillion dollars worth of deficit why isn’t the economy improving the government’s going to spend almost 3.7 trillion dollars why don’t i have a job why why is the unemployment rate at 9 and i even think that number is understated a lot of people are feeling unsure about the world today concerned that something terrible is waiting in the wings we’re told that the global financial crisis of a few years ago has been fixed but what if the crisis isn’t the cause of the angst so many of us feel but rather the symptom of a much deeper problem [Music] at bretton woods new hampshire delegates from 44 allied and associate countries arrive for the opening of the united nations monetary and financial conference our story begins in 1944 with world war ii coming to an end the allied nations met at bretton woods new hampshire to create a new financial system which would stabilize the world once the war ended with america poised to enter a golden age of prosperity the us dollar was chosen as the world’s reserve currency the bretton wood system was created after the second world war at the bretton woods conference in new hampshire and rather than using gold as the means of exchange between countries as was the case under the old gold standard the dollar was going to be used and the dollar was chosen because back then it was as good as gold under this new system countries agreed to fix their currencies to the u.s dollar and the u.s dollar would be tied to gold at a price of 35 dollars per ounce this meant that countries around the world could trade their currencies for us dollars which they could then exchange for gold this created a system where all currencies were essentially backed by gold to avoid the logistics of shipping physical gold across the world when countries did exchange their currencies for gold it was usually stored safely in the u.s [Music] under the bretton woods system you could exchange your currency or your dollars for gold now only applied to foreign countries and central banks and we began to run budget deficits we were running the great society program under lyndon johnson we were fighting a war in vietnam and all of a sudden we were running these deficits and countries were changing their dollars and they said they wanted gold and it began with the french and then it started to spread with all the new spending programs in the united states other countries became concerned that the u.s was spending more money than it had gold reserves they started exchanging their dollars for gold and demanded physical delivery as they felt that there were more dollars being printed than the gold that backed it to prevent this outflow of gold from american vaults president nixon called for an emergency suspension of the gold convertibility system i have directed the secretary of the treasury to take the action necessary to defend the dollar against the speculators i have directed secretary connelly to suspend temporarily the convertibility of the dollar into gold or other reserve assets all of the problems that we see today in the monetary system are a direct result of the decision made in august 15 1971 you know to abandon a fixed link back to gold what gold did is it provided discipline on governments provided discipline on government spending under the old system if you ran a budget deficit then what would happen is gold would flow out of your country until there was a balance again well without any gold backing then countries ran perpetual deficits so if you look at for example this country from 1971 on the us has never run a surplus ever since we went off the gold standard it’s just been perpetual stimulus good times bad times always run a deficit what led nixon to abandon the gold standard in 1971 and although he claimed it was temporary we’ve been waiting 40 years we’re still off of it we ran up huge deficits during the 1960s we had the guns and butter economy where the government was both simultaneously fighting a war in vietnam abroad in addition we were funding manned missions uh to the moon in the whole space program we were creating more money than we had gold reserves to back it up and a lot of our foreign creditors saw this and began to demand gold rather than their federal reserve notes because they sensed that washington simply didn’t have enough gold to make its commitment to back the dollar by removing the link between gold and the us dollar president nixon created a system where all currencies were backed by nothing this is what is known as a fiat currency fiat currency is currency that’s backed by nothing except government promises the word fiat is a latin word and it basically means currency that’s circulating by force if people have confidence in that currency and if there’s enough government force that will enable the currency to circulate for a period of time until people lose confidence in the currency there is no nation on this planet that currently uses money we all use currency there will come a day when everybody knows the difference money is a medium of exchange and the way it has evolved is that it’s always something of intrinsic value until the modern age when the politicians say well we don’t need anything of intrinsic value anymore all we need is political decree we can say this is money this piece of paper is money now money has a new characteristic but underneath it all there’s the same concept in place that nobody ever seems to challenge and that is that governments have a right to declare something of of no value to be money and you must accept it that’s really the problem and it’s still the problem today it’s destroying the economies of the world with currencies no longer backed by anything real or tangible their value was measured only in relation to each other and because countries with relatively weak currencies can make products cheaply countries devalue their own currencies to make them desirable trading partners every paper currency measures itself against the dollar so if the dollar goes down the other central banks respond to that and they try and intervene in the foreign exchange markets to ensure that the impact doesn’t hit their domestic economies what is a ponzi scheme a ponzi scheme is a fraudulent investment scheme that promises high returns for investors with little or no risk sounds too good to be true right that’s because it is in a legitimate investment scheme the money invested is used to build wealth typically through low risk ventures like stock or real estate portfolios over time this generates enough income to pay the investor back their initial investment plus some profit a ponzi scheme on the other hand promises massive returns quickly how does it accomplish this instead of using the money invested to build wealth a ponzi scheme simply brings in more investors to pay off the previous investors and because these new investors have also been promised large returns the scheme must then find an even bigger group of investors to pay them off all the while the creators of the scheme are skimming cash from each group of investors because a ponzi scheme doesn’t generate any wealth itself it must constantly bring in larger and larger groups of investors to keep functioning eventually no more new investors can be found or large numbers of previous investors all cash out at the same time and the scheme collapses in on itself by this time the perpetrators of the scheme have siphoned off tremendous amounts of money for themselves while the investors are left out of pocket and out of luck [Music] without a fixed link to gold the us treasury has been able to borrow and spend as much money as it wanted when the u.s government needs money it takes out a loan with the federal reserve the federal reserve prints the currency required for the loan and in return receives an iou from the u.s treasury these ious are called government bonds with the money provided from these loans or bonds the u.s government pays its bills and obligations meanwhile the u.s treasury and the federal reserve work closely together to sell these bonds at auction where foreign central banks pension funds and even individuals buy these u.s government loans and why wouldn’t they loaning money to the us government is virtually a risk-free investment but if the loans are spent on bills and paying off previous loans where does the government get the money to pay back the current loan and the interest that is charged on it is investing in a u.s government bond simply one small part in a giant ponzi scheme the federal reserve system is definitely a ponzi scheme there’s no question about it they go through the appearance of lending money to the governments and the governments agree to pay back the money plus interest and so this money comes into being they created just for that purpose they give it to the governments didn’t exist before that you understand central banks just make it out of nothing and click a few keys on a keyboard of a computer and the treasury of the united states government now has another trillion dollars that it can spend that’s where that money came from and so uh that creates a liability on the part of the federal government to pay it back plus interest now think about that plus interest well when it comes time to pay it back plus the interest they can’t pay it back and they certainly can’t pay it back plus interest too so what they do is they borrow more to cover the original loan plus the interest and then by that time congress wants more money anyway so the debt just keeps going up and up and up and up under the current monetary system we borrow all of our currency into existence and we promise to pay it back plus interest if you borrow the very first dollar into existence and that’s the only dollar that exists on the planet but you promise to pay it back plus another dollars worth of interest where do you get the second dollar the answer is you have to borrow that it’s a ponzi scheme because you can never pay it off it always requires that we go deeper into debt since 1971 the united states has been running trade deficits with the rest of the world meaning we’ve been buying a lot more products from the rest of the world than they have been buying from us the japanese and koreans sell us cars and electronics the middle east sells us oil and the chinese sell us seemingly everything on our walmart shelves the u.s pays for these products with u.s dollars and everyone is happy but if countries were to convert these us dollar profits back into their own currencies their currencies would rise in value making their economies less desirable to trade with instead countries invest their dollar profits by buying u.s government bonds so countries around the world sell their goods to the us in exchange for u.s dollars which have been borrowed through the federal reserve creating ious and countries then loan their u.s dollar profits back to the u.s by buying more ious the money from these loans is spent on paying government expenses as well as paying back previous ious but in order to do this larger and larger loans must be made in order to pay back the principal and the interest by paying back old loans with new and larger loans it would appear as if the entire world has been investing their hard-earned money into a ponzi scheme of epic proportions in this business of creating money for federal governments and national governments around the world if they didn’t keep creating new money in larger and larger amounts the whole thing would crash because there’s that’s where the money comes from to pay off the previous loans it’s the new loans so that’s why it’s a ponzi scheme it’s a classic ponzi scheme in order for the us economy to function we have to borrow more and more money from the rest of the world and the more money they loan us today the more money they have to loan us in the future and if they ever stop loaning the whole thing collapses and we can’t pay them back every friday night julia’s job is to compare the grocery prices of our neighborhood stores for saturday morning shopping there are five big neighborhood markets within a couple of blocks of our house and julia spreads her shopping around going where the prices are lowest and the quality best remember when a chocolate bar cost a quarter when you could fill your car up for five dollars and feed a family of six for 35 dollars a week whatever happened to those days without anything tangible backing currencies governments could borrow and print as much currency as it wanted this has gradually led to the value of our currency being eroded with the creation of all this money that dilutes the value of all of the dollars that were out there before so that the purchasing power of the dollar gets crowded down down down and we used to be able to buy a gallon of gas for you know 31 cents now it’s hitting around five dollars the average guy in the street is affected by inflation because of the loss of purchasing power and as a consequence his standard of living is declining if he can’t keep up with the inflation rate in many measures of a standard of living americans today are actually worse off you can take my grandparents my grandmother never worked despite the fact that my grandfather was a carpenter and they had eight children i could a carpenter somebody without even a high school diploma just working in a blue collar job support a wife and eight kids today not a chance [Music] with inflation rising faster than incomes people were forced into more and more drastic measures to maintain their standard of living [Music] with each new day the work of a family begins again when we went off gold backing of the dollar what used to happen prior to that is the husband went to work the wife stayed at home raised the family because of inflation in the 70s the wife went to work so now you had two incomes that were necessary to produce and buy the same goods and services in the 90s we stopped saving the savings rate basically got down to zero because people were spending they couldn’t save in order to buy the same goods and services then we got to the last decade the wife was already working the savings were down to zero they borrowed money and so we’ve gone from two earners getting rid of our savings rate to borrowing money to keep pace with inflation the average person is now forced to borrow well beyond their means getting themselves deeply into debt at first this was to maintain a nice standard of living but slowly it has become necessary just to survive by printing so much currency and devaluing it so heavily it would seem that governments are essentially levying a hidden tax on their people central banks try to say that two percent or three percent inflation is a good thing and they make that a target well it’s still a tax why is two percent inflation or three percent inflation better for the country then no than no inflation you will be told of course that’s beth and deflation and you’ll be told that uh people like to feel that their money or their jobs or their wages are going up by two percent at least it’s something where the fact that two percent is robbery and and what they get is going down by that amount we are experiencing inflation these days i mean yeah they say the cpi’s up whatever is two or three percent i mean anybody who’s alive knows that inflation is well beyond that probably running double digits the purchasing power of the average person has been deteriorating drastically but in order to disguise this governments have been skewing the figures in their reports to make it seem as if inflation is much lower than it really is there is this curious distinction made which most people don’t understand between core inflation and headline inflation the core inflation is this is a basic two percent target which doesn’t matter and the headline inflation is once you include all sorts of things like energy prices and certain tax rises and the rest well the inflation rate is skewed they use all kinds of contrivances to make the inflation rate look lower than what it really is if the us government were using the same cpi model that they did when president carter was in the white house in the late 1970s the inflation rate today in the united states would be nine or ten percent that’s how badly the currency is being debased now the reason why they do that is there are a lot of inflation-adjusted responsibilities that the u.s government has to pay out money to you know for example people on the social security system on an inflation-adjusted basis if they keep the inflation rate low according to their own statistic that means they’re paying out less that means the government budget deficit is less a thriving metropolis toledo is one of the world’s greatest glass processing centers in akron the state’s fifth largest city that story deals primarily with rubber akron is the rubber manufacturing capital of the nation and the world her very name is synonymous with rubber in a global economy where currencies are measured only against each other countries are able to artificially lower the value of their own currency making their industries more competitive a country with a weak currency can make products cheaper causing entire industrial centers to move overseas this effect has been seen countless times in cities around the world some of which still haven’t recovered from the loss of their industrial base i think the guy on the street is he’s kind of frustrated they go gosh i went to college i don’t have a job i can’t get a job i spent all this money i’ve got student loans it’s costing me more to live the fed is telling me there’s no inflation yet i go to the store and i see the price of milk going up eggs meat i pull into a gas station it’s costing me more for gas they don’t really understand how all this affects them on a personal level and that’s why i think they’re frustrated because there isn’t an educational system that explains that look when you print money when you have nothing backing in and when you debase it you have all the side effects that you see higher inflation costs corruption cronyism all the things that have been in headlines that we’ve seen over the last four or five years the protest movements are an interesting phenomenon a lot of people are terribly upset with wall street they’re upset what’s happening to their purchasing power they’re upset with the news that they hear of the fact that the executives of these giant banks are getting million dollar bonuses at the same time they’re dipping into the pockets of the taxpayers to get all this bailout money and so they’re angry unfortunately people are demonstrating against the crisis the economic crisis and yet at the same time they’re demanding more welfare demanding more medical benefits they’re demanding more state control and regulation of their lives they’re demanding more money being created and pumped into the society they don’t realize that those are the very things that have brought them onto the street in the first place in their anger while the person on the street is struggling to get by we’re told that what we’re experiencing is a typical recession why then does this current crisis feel different to previous economic recessions this is far from typical i think this is the end game i think what we’re experiencing now are the pains of the 40-year experiment in fiat currency coming to an end and it is an absolute failure not only for america but for the entire world up until 2008 we’ve been borrowing more and more money to maintain our standard of living are we now at the point where we’re maxed out and cannot take on any more new debt [Music] what we’re seeing today is deleveraging at all levels of society i mean consumers are maxed out each succession that we had in the economy when we went through this boom and bus period we’d go through a bust they would reinflate again the economy would start up again but we kept piling on piling on piling on levels of debt and finally we reached the point where you just can’t pile any more debt banks are no longer willing to give out credit so freely and many people are more concerned with paying off existing debt as opposed to taking on new debt while this is prudent sensible behavior it’s also a serious threat to the global economy having set itself up as a giant ponzi scheme the global economy is reliant on more and larger debt being issued to keep itself functioning if you try to just live within your means and uh and get by with just the amount of dollars that we have today paying the interest on them collapses the currency supply and so we continually have to borrow more units of currency into existence every month than we extinguish by paying off debt the system as it’s been presently structured is that they have to continue expanding the money supply otherwise the system is going to die politicians and pundits talk about living within our means and paying down the debt you can’t do that without collapsing the entire economy we would just vanish into this black hole all the politicians are in a situation where if they don’t come to the rescue we could just have an overnight shutdown which they can’t ever imagine happening while they’re in power so there’s always this wish to to move it on and k as you know the expression kick the can down the road which is really what we’re doing but the problem is we’ve run out of road you know there is no place to kick the can anymore we’ve got to deal with the can and it’s not simply a can because every time we kicked it down the road unfortunately it got bigger so now it’s an enormous can and you know it’s going to crush us while the financial crisis of 2008 may have been the first death throes of the ponzi scheme governments around the world weren’t about to sit back and let it fail so they delayed the inevitable collapse pushing it down the road by bailing out struggling financial institutions buying toxic mortgages and taking on debt on behalf of its citizens [Music] in 2009 and 2010 what happened was the crisis was papered over through bailouts guarantees money printing expansion of the money supply etc governments can do that i mean don’t underestimate the ability of governments to dictate results in the short run but in the long run none of the problems were solved the bad debts are still there the banks are still insolvent the banks are not landing the economy’s not growing so we haven’t really solved anything by buying their way out of these crises by creating money out of nothing and flooding it into the economy and diluting the purchasing power they’re not really solving the problem what they’re doing is pushing it off a little bit into the future and making it worse now do we keep going down this road do we print more money i mean the fed balance sheet went from 800 billion to 3 trillion should it now go to 6 trillion we had a 800 billion dollar stimulus should we now have a a two trillion dollar stimulus i mean in theory you could but this is where people could lose faith entirely in the currency and the currency could collapse the federal reserve’s money printing exercises may help prop up the economy in the short term but what are the consequences of money printing on such a large scale i think you’re going to see a very rapid decline in the value of the dollar in a matter of days whether it’s 20 30 percent 40 percent a lot of people have been buying the dollar as a safe haven you know when they find out that there’s no safety there in fact they need a safe haven from the dollar i mean right now the dollar is benefiting from the fear trade well what if the fear trade is afraid of the dollar aside from causing an enormous amount of inflation the federal reserve’s reckless money printing exercises also run the very real risk of creating a worldwide loss of confidence in the u.s dollar [Music] i think a currency crisis is highly likely but it’ll be very difficult to know exactly what will cause it and when i think it’ll be something unforeseen could be a natural disaster it could be a political shock could be just a general loss of confidence it could be something as simple as a treasury auction that goes bad there’s no buyers and all of a sudden the interest rate starts to go up then the financial players the big hedge funds start to react to a dump in dollars then all of a sudden you have foreign central banks that begin dumping dollars get me out and when that happens just like that at some point just like all ponzi schemes the participants wake up to the con they don’t want to participate anymore and the whole thing implodes now you know when private uh factors when people who are voluntarily uh participating foreigners foreign central banks uh when they stop buying the one difference is the federal reserve can come and supply the demand for the people who are waking up to the ponzi nature of what we’re doing but of course when the fed becomes the only buyer that’s the end game or be the beginning of the hyperinflation hyperinflation is a rapid increase in the inflation rate so much so that you know people lose faith in the currency and you see what is in fact a flight from the currency defeated germany as a runaway inflation in germany the mark becomes so worthless it is used to paper walls or the light stoves what happens is the government spends so much money forcing it to borrow it gets to the stage where it’s borrowing more money than the market is willing to lend to it the central bank then steps in and turns that government debt into currency the great question is and i don’t know the answer is that what level of inflation 5 10 15 20 do start to panic all i know is when that level comes everybody panics together consequence of a hyperinflation is the price of goods and services rises very very rapidly and that feeds upon itself causing people to get rid of the currency even more quickly so you then have a situation where people go out and they buy things just to get the hell out of paper money and paradoxically that then starts driving and accelerating demand for paper money because they want more paper money to go and buy things so you have the situation where the value of paper money starts collapsing in advance of this issue in everyday life you’ll be scrambling from day to day to get tangible things if you’re thinking of buying one can of tuna you’re going to buy two because you know that tomorrow or even later on that day or the next hour that can of tunas can be costing you more that you’re going to be scrambling to get anything that’s tangible this period is going to involve a lot of economic pain a lot of people who are currently retired in america are going to have to get jobs their retirement is gone it’s been bankrupted because they put their faith in a bernie madoff type uh national ponzi scheme and of course a lot of the property is going to decay if people are spending money on these necessities they don’t have money to make the repairs necessary to maintain their properties if the landlords can’t collect rents from their tenants how are they going to maintain the properties how are they going to pay the taxes so i think the whole economy is going to crumble uh beneath the weight of this runaway inflation and of course uh the initial reaction by the fed will be to create even more inflation to try to stimulate the economy by printing even more money which of course is the source of the problem on the surface it would appear that this is a problem facing the united states alone but with so many countries holding their savings in u.s government bonds a loss of confidence in the u.s dollar could trigger a global crisis which would affect every nation on earth if the us dollar hyperinflates the implications are really profound because you can go to a country like zimbabwe and see the impact of a hyperinflation but what happens when the world’s reserve currency hyperinflates we’ve never been in this situation before it’s impossible to predict you know what the outcome is going to be but logic suggests that if the u.s dollar hyperinflates most if not all of the currencies of the world will also have severe economic problems because at the end of the day the reserves of all of these currencies are basically dollars [Music] there have been dozens and dozens of currency collapses since the end of the second world war and they all result from the same thing you know bad policies bad management and the us right now is pursuing bad policies central bank is doing a bad job managing the currency as a consequence it’s inevitable that the dollar is going to collapse it’s on this road that i call the fiat currency graveyard the markets the private sector however you like to decide it people they suddenly sort of move in a herd instinct they suddenly sort of understand things and this can happen overnight i mean it really can so the timing of this is i think very difficult if anything impossible for us to say but i would point out that there is the danger that i use a metaphor one morning we will wake up and find that we are in a very different world it may not be one morning it may be a week a month i don’t know but when it happens i think it will happen quite quickly and we won’t really be able to predict when hyperinflation may be one of several scenarios facing the world today but history has shown us that whenever a nation tried to run its economy using an artificial fiat system the end result is always the same disaster there is a proven 100 percent failure rate there is no exception to this fiat currencies always fail and then 40 years ago we tried this grand experiment where all the world’s currencies became fiat at the same time when we ended the bretton woods system the world is going to have to extricate itself from this monetary system based on the dollar because if you want to back your currency you have to back it with something you can’t back it with nothing you always think of that old superman movie where the first one where lois lane you know she falls off the top of the the building and superman catches her and he says i got you don’t worry i got you and she said well you got me who’s got you well that’s the dollar who’s got the dollar it’s not superman the dollar can’t fly on its own the dollar used to be backed by gold it was gold that had the dollar it’s like everybody has tethered their ships to the titanic of currencies and so we’re all going to go down if there is a loss of confidence in the us dollar and i think there will be in this decade it’s happened before it’ll just be history repeating then we’ll probably have to go back to something that will instill confidence and what instills confidence is gold the only real solution is to go back to a real sound currency real money with something behind it doesn’t have to be gold or silver but historically that has always been what societies have chosen through trial and error they’ve tried this they’ve tried that they always wind up with gold or silver i think that probably is a clue that not a bad way to go with all the uncertainty facing the world today a return to a gold-backed economy would seem logical so how come there isn’t so much as a discussion about such a return the answer is as simple as it is alarming the people at the top the ones who have been benefiting from the current ponzi system don’t want the ride to end many now believe the price of gold and silver have been artificially suppressed to make it seem less desirable as a unit of global exchange what governments try to do is to maintain a low gold price because by doing that it makes the dollar look worthy of being the world’s reserve currency when in fact we know the dollar is not worthy of that esteemed position because it’s being so badly mismanaged by the united states groups like the gold anti-trust action committee or gata have been tracking what they believe is the deliberate suppression of gold and silver prices through a variety of dubious means in 12 years we’ve amassed nothing but evidence that supports the manipulation of gold price would be like talking about a murder trial when the jury would say guilty beyond a reasonable doubt but you know you’ve got to present each point of evidence and how it all fits together there are numerous methods that they use to suppress the price of gold some are harder to prove than others but some of them are fully reported and that’s central bank sales between 1999 and 2002 the bank of england foolishly sold a massive amount of britain’s gold reserves at an average price of 275 dollars an ounce the proceeds were spent buying euros and u.s dollars the governments of canada france and switzerland among others were also sellers of their gold around this time we know that the central banks used to sell 400 tons every year well why were they selling 400 tons obviously it was the dumbest decision anyone could have made in the decade by far the dumbest but they did it every year sell 400 it’s all 400 i mean now you know gold goes from 300 to 1600 almost 17 or why were you selling the gold because they were trying to keep the price down so it was a coordinated thing to keep everyone focused on believing in currencies alan greenspan in testimony to congress admitted that they were manipulating the price of gold when he said the world’s central banks stand ready to lease gold in increasing quantities meaning they were already doing it should the price of gold rise meaning the target was to suppress the price of gold so they were already doing it and their target was to suppress the price of gold he admitted it in testimony to congress although central banks are able to sell off their country’s gold holdings legally they may have also been suppressing the price of gold using some other rather questionable means some investigators believe that western central banks have been loaning their country’s gold to bullion banks a bullion bank is an institution that sells gold with the intention of buying it back sometime in the future at a cheaper price with the proceeds of this sale these banks have been known to buy u.s government bonds while this isn’t a problem in itself central banks report the gold they have and the gold they’ve loaned to these bullion banks as one item so while a central bank may claim it has a certain amount of gold in reserves much of that gold may be on loan to a bullion bank which may have sold the gold in exchange for government bonds one means of intervention in the goat market is the lending of gold to so-called bullion banks and they sell it in the market this is suppresses the price as if the central banks would sell it directly but this landing does not appear in the book of the central banks the u.s treasury a few years ago changed the way they account for gold and they’re accounting for some of their receivables and their inventory as one line item so they’re accounting for what they actually have and what people owe them as the same thing and that is basically illegal accounting it’s fraudulent but why work so hard to keep the price of gold and silver low why do healthy gold and silver prices threaten to collapse the ponzi scheme there’s this competitive relationship between gold and national currencies because gold is the only competitor to a national currency you know gold is money and these national currencies are money substitutes that circulate in place of gold fiat money gives the power to government real money keeps the power with the people because when you have real money government is limited it can only spend what it taxes and the public will resist taxation but if the government can simply print and borrow there’s a lot less resistance and so it’s a lot easier for the government to grow when it can promise something for nothing and so that’s what they do and so gold is what protects the people from the reckless policies of government gold is government chaperone the government wants to be able to do whatever it wants gold stands in its way so yes gold is an enemy a big government but it’s a friend of freedom it’s a protector of individuals from government gold’s a competitor to the dollar when it’s going way up it’s a threat for inflation it’s a barometer of the well-being of the isaac look at gold screaming now and the world’s falling apart so it calls attention to how bad things are so the us government has an interest wall street the politicians to keep the price suppressed wall street doesn’t want you going down to a coin dealer buying gold and silver coins they want to sell you paper the government wants to sell your paper so i would say it’s the government and wall street gold in the hands of people is the way you control government governments cannot create money out of thin air if it’s gold they can only create paper out of thin air and if they can create paper out of thin air they can use that paper to wage wars or they can use that paper as a political contrivance to enrich their friends and as a consequence governments have been fighting gold all century long despite this desire to keep gold and silver down the recent instability in the markets has seen the demand for gold and silver skyrocket this in turn has exposed a deeper problem within the central banks the problem the central banks in the west now face is that they have sold an awful lot of gold to try and suppress the price of gold they are now embarrassed by the fact that central banks not in that original cartel are now really very keen buyers of gold and we’re talking about the chinese we’re talking about the russians talking about the indians we’re talking about even mexico all these non-mainstream central banks not part of if you like the top club members of the bank of international settlements you know the little guys in that context they’re picking up hundreds of tons of the stuff to suppress the price of gold western central banks have had to sell or loan out their country’s gold holdings but because the gold they sell rarely leaves their vaults no one can be certain they aren’t selling or loaning out more gold than they physically own if this is true then this could be one of the biggest scams ever perpetrated in history a massive con perpetrated not by individuals but by entire governments this central bank gold most of it sits at the new york federal reserve and the bank of england so it’s in the basement of these two places and it doesn’t actually move when a country is doing international settlement they basically take a bar off of this pile and put it on that pile or they’ll just change the labels or it’s just a book entry it’s accounting except there’s been some pretty creative accounting on all this gold and i doubt very much that i i don’t think all of it is there the question remains if everybody especially the big players who wanted all their goal delivered at the same time it is physically impossible to do it most gold that exists on the planet there’s more than one claim on each ounce of gold there’s several people that think that they have titled that same ounce of gold i am have said many many many times over and over again if you can’t hold it you don’t own it the game can’t go on forever because sooner or later people are going to demand their physical gold or silver and that already is happening the lack of accountability in gold sales by western central banks hasn’t been a concern so far but as more and more buyers of gold have started to demand physical delivery central banks that have oversold or loaned out their country’s gold will find themselves caught in a major scandal the result of such fraudulent activity means buyers of gold be they individuals pension or hedge funds or even entire nations could be ripped off for billions of dollars it’s a little similar than the murdoch scandal here at fox news in london of the made-off scandal i mean the it’s a very incessant relationship between press big money and the politicians and unfortunately these things don’t get correct until they blow up madoff blew up murdoch blew up the gold market is going to blow up and i think will be a bigger scandal than either of them because it’s a worldwide financial situation [Music] the only trick that the politicians in power today know and the central banker the only trick they know is to create more money out of nothing to inflate the currency they have no other trick so as long as we keep looking to them to be our leaders and solve the problem that how can we expect anything else that’s the only trick they know because the only trick the other trick there is is to stop inflating and to go back to a sound currency and that would say they say oh no we can’t do that and the reason they can’t do that is because it would put them all out of business they wouldn’t be able to continue the ponzi scheme even with cracks forming in the current financial system the only solutions offered by governments are in fact just more steps down the road to disaster but while a single person may not be able to save the world there is still something you can do to protect your family and yourself you cannot turn to a ponzi schemer and ask him to do to run a real business because he doesn’t know how so you can’t turn to all of these ponzi schemers in government who are inflating the currency and say well let’s solve the crisis in some other way because they don’t know how so the solution is to quit depending on the same people with the same mentality to solve our problems if governments won’t go back on a gold standard individuals can go back on the gold standard all by themselves politicians can create fiat money at will that’s why it’s fiat so why would you want to put your faith in that put your trust in politicians and bureaucrats and central bankers when you can just have something real that has intrinsic value that is scarce and that is going to remain scarce would you rather have gold or a fiat currency and we see what’s happening in the world and obviously people are starting to figure out that gold is is was likely to sustain its value way more than the piece of paper is it’s not that the price of gold is going up is that the value of the dollar is going down the price remains constant in terms of human effort and purchasing power an ounce of gold today will buy the same thing it bought 2 000 years ago an ounce of gold today is approximately takes so much human effort to get out and refine the same human effort that it took to do certain things 2000 years ago it’s the human effort equation that maintains stability how much effort does it take gold is financial insurance and the thing about it is you own it because you want to be protected and you know you just have to have it if you want to have or sleep at night because there’s nothing else you know if some catastrophic event happens and we’ve seen them how are you going to be protected the current financial system may be dying but where there is chaos there is also opportunity as the old model falls apart the door may be opened for great prosperity it’s clearly not the end of the world it’s probably not even the end of america for many countries this is going to be the beginning of an economic boom a giant burden being lifting off their shoulders where the world no longer has to loan trillions of dollars to americans so that we can continue to consume what we don’t produce when this comes to an end the world will benefit so it is not something that we should fear we should embrace it as a world this is the greatest wealth transfer in history if we have a global currency crisis then you’re going to see a greater wealth transfer than has ever happened in all of history it’s all going to happen at once therefore it’s the greatest opportunity we have millions of people now taking an interest in what is money the question of what is money what should it be and they’re learning especially a lot of young people the sun will rise tomorrow as it has a million times before commuters will wake up and travel to their offices to begin the day’s work farmers will tend to their crops and construction workers will build new infrastructure but will the world they live in still be the same in 2008 the world was given a wake-up call the biggest financial crash in human history was delayed by the same poor decisions that brought it about in the first place what that massive bailout bought us was not a solution but merely time time for the people responsible to ring the last few dollars out of a dying system but also for those able to see the cliff edge approaching time to protect themselves and their families from the imminent plunge and in the end that time may prove to be the most valuable commodity of all there are these brief moments in history where the safe haven asset for the last 5 000 years simultaneously becomes the asset class that has the greatest single potential gains in purchasing power we’re in one of these cycles right now where money is the best investment [Music] get out of currency buy money and you’re probably going to be able to buy a whole lot more stuff later but the best thing that people can do of all is really to take on their own responsibility for getting financially educated this is the most important thing don’t let the banks and the brokerage houses and other people guide all of your decisions find out what’s going on for yourself empower yourself

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