The Germans and most of the world no longer trust us. Rather, the Germans no longer trust the Federal Reserve, our political or economic elite and leaders — why should they?
The United States has held the world’s reserve currency status since 1971 when Nixon took on the gold standard after Charles DeGaulle demanded that any transfer payments between the US and France be in gold. After that, the world accepted us as reserve currency, and the dollar became the gold standard. Along with London and the Swiss, the United States became a financial empire as well as a military and political empire.
Since 1971, most trading between countries has been done in dollars; however, that situation is changing as the US began to squander it’s reserve status in foolish schemes and dreams, derivatives and financialization of the US economic system.
In recent years, the world’s countries have looked furtively at one another wondering what the world’s crazy uncle – the US – will do next. Meantime, our once large and thriving Middle Class is shrinking and a nation that was once a producer/saver has gone nuts – spending itself both publicly and privately into massive debt. From producers and savers we have become consumers of junk from the rest of the world; using our McMansions as giant ATM machines and producing very little of importance – derivatives and drones don’t count. The world’s crazy uncle chopped off various body parts and fed them to the wolves.
We gutted our manufacturing, imported millions from the Third World, shut down our productive capacity, closed off resources to any good use, went nuts doing regime change around the world, kept military in over 100 countries, and built a giant police state and prison system. We pretended we could spend and tax ourselves into being king of the world forever. Our entire economic system became one of debt junkies on a private and public level gone off on a wild spending spree. Meanwhile, in the REAL economy, the Middle Class went into free fall and no one seems to care, let alone know what to do about it.
The Middle Class is on the ropes for many reasons and we are not in Kansas anymore. According to Pew Research Center:
“In 2011, this middle-income tier included 51% of all adults; back in 1971, using the same income boundaries, it had included 61%. The hollowing of the middle has been accompanied by a dispersion of the population into the economic tiers both above and below. The upper-income tier rose to 20% of adults in 2011, up from 14% in 1971; the lower-income tier rose to 29%, up from 25%. However, over the same period, only the upper-income tier increased its share in the nation’s household income pie. It now takes in 46%, up from 29% four decades ago. The middle tier now takes in 45%, down from 62% four decades ago. The lower tier takes in 9%, down from 10% four decades ago.”
As I recently told my grown children, this is not your father’s United States anymore – not even close. The world knows that we are over-extended geopolitically. Our own finances and economic system have become a big Ponzi scheme as we spend too much and produce too little. For all intents and purposes, we are bankrupt. Fiscal cliff and debt ceiling make nice theater but signify hype that someone is an adult and in charge.
Nevertheless, US politicians as well as central banks and most corporate entities continue to act as if it were 1948 and we were sitting on top of the world dictating terms. A half dozen major and minor wars later, the United States indulged in “guns and butter” to an insane degree. The giant boondoggle called the “War on Poverty” and various wars on drugs or terrorism have left the United States broke and printing it’s way out of trouble.
The US has turned on itself, eating its own leg off as the moral and economic capital we once had has been squandered recklessly and with an arrogance that is breathtaking. It took generations to accumulate our capital and build our system and only one generation to bring it down.
We are broke or broken in every significant way: monetarily, fiscally, spiritually, economically, politically and culturally. All squandered in a binge of empire building and and trying to become the world’s policeman, its banker and increasingly its bully.
The world knows we are busted like some genteel southern lady living in grand style but who can’t pay the light bill. We can’t seem to stop with the empire building. It was recently announced that the US military will be going into 35 African countries. The president offers bread and Obama-phones when we owe trillions and servicing the debt is going to eat up most of the money we take in through taxes. Our leaders do not seem to care – but the world notices and cares. The bill has come due and we can’t pay it. We continue to write rubber checks to cover it, but that only works until no one accepts them any longer – as in the case of the German Bundesbank. We have bounced one too many checks and the world no longer trusts us.
Recently, the German Bundesbank decided to begin repatriating its gold from the US Federal Reserve in New York, as well as the gold held in trust in Paris. Germany is worried about the socialists and empire builders in both countries. Germans are concerned and rightly so. The country does not want its gold to be used to prop up either country as they implode from debt and stupidity.
In fact, Germany’s gold might not be in the Fed in New York. I would hazard a guess and say it is gone – long gone. Likely, the Fed has loaned out Germany’s gold, which was then sold to different entities in the giant Ponzi that is now the globalized economic system. Scrooge McDuck probably has more gold in his imaginary vault than the Fed does in theirs.
In any event, the official statement from Bundesbank includes:
“By 2020, the Bundesbank intends to store half of Germany’s gold reserves in its own vaults in Germany. The other half will remain in storage at its partner central banks in New York and London. With this new storage plan, the Bundesbank is focusing on the two primary functions of the gold reserves: to build trust and confidence domestically, and the ability to exchange gold for foreign currencies at gold trading centers abroad within a short space of time.
To this end, the Bundesbank is planning a phased relocation of 300 tonnes of gold from New York to Frankfurt as well as an additional 374 tonnes from Paris to Frankfurt by 2020.
The withdrawal of the reserves from the storage location in Paris reflects the change in the framework conditions since the introduction of the euro. Given that France, like Germany, also has the euro as its national currency, the Bundesbank is no longer dependent on Paris as a financial center in which to exchange gold for an international reserve currency should the need arise.”
Gold guru Jim Sinclair writes in his latest newsletter:
Basically the Germans – if they go through with repatriation of their gold – is one of the most significant events in monetary history – at least in the last hundred years.
Charles De Gaulle was the first person in modern history to call the hand of the USA on its then obligation to convert French held dollar reserves into gold. I was a senior trader at the time.
History will look back on this salvo fired across US war financing as being the beginning of the end of the US dollar as the reserve currency of choice.
The reaction on the part of the US was to cut the tie between the dollar and convertibility. This again raises the question of the USA having fungible gold to the degree that is claimed without 3rd party audits or any viewing publicly whatsoever.
He knows, I know, and most people know, the gold that belongs to Germany is likely not in a bank in New York or, as the song says, Beverly Hills either. In order to comply with Germany’s request to get it’s gold returned, the Federal Reserve will have to shut the Germans out or give them an I.O.U that is not worth the paper it won’t be printed on. The Fed may take gold stores from someone else and give it to Germany.
What may happen is that The Bernanke, Helicopter Ben, will tell the Germans – “If you repatriate that much gold from us it will implode the entire world economy, the markets will go down, and we will be left with lots of egg on our face and have to shut our doors because everyone else will want their gold too.”
A few years ago, crazy man dictator of Venezuela, Hugo Chavez simply demanded his gold from the Federal Reserve then sent it to Russia for safe keeping. Given that the Federal Reserve is playing fast and loose with the US and world monetary and financial system – Chavez may not have been crazy after all. Putin is renowned for calling US leaders nuts – he is right; they are nuts and are so arrogant they believe the scam they have been pulling for 30 years or so will continue.
So what is the end game in this momentary madness? Sinclair seems to think it’s a game the banks are playing.
Jim Sinclair clarified his beliefs that the end-game for gold in this global debt/fiat/derivatives crisis will be a virtual reserve currency linked to gold, that is tradable by central banks only.
What does all this mean for the United States, the American people, the Middle Class? It means we are in for a very rough ride. It means that the US government, Federal Reserve and central banks will continue to play fast and loose with our economic future. It means your children and grandchildren will have less of a future, band e slaves to debt mostly incurred by dumb policies from the government and central banks. It means we are on our own to rethink the system. The one we currently have is broken beyond reform. It also means the end game is a world currency or one currency or a basket of currencies consisting of various groups backed by gold.
The answer? Be prepared.
Think preparation. Think in terms of what you can do for your family, community and state. The federal government and central banks have ruined us. It is likely we will have to act outside their notice and start over again. In addition, be ready for a one-world-fits-all economic system – and that is what this entire crazy bubble and process was about from the beginning.
Top 10 Travel Destinations to the Start the New Decade
For many, traveling offers an opportunity to disconnect from the everyday and experience new places and cultures. With the beginning of a new decade, it is the perfect time to start deciding your next travel adventures.
When booking your future destinations, consider these spots and tips recommended by travel expert and Bank of America ambassador, Lee Abbamonte, the youngest American to visit every country plus the North and South Poles.
From its deserts to tropical beaches, Australia is a beautiful country to explore. While many people might be familiar with the Sydney Opera House and the unique wildlife, there are many hidden gems in Australia.
“I’ve been to Australia 10 times and I still can’t get enough,” Abbamonte said. “One of my favorite cities is Melbourne. While it’s one of the largest cities in Australia, the heart of the city is hidden and secretive. It comes to life when you visit the alleys, laneways and arcades. The vibrant city has so much to offer: cafes, a unique street culture and street art.”
2. New Zealand
If you are going to New Zealand for the first time, Abbamonte recommends boogie boarding down the sand dunes, hiking up a volcano and visiting the Moeraki Boulders. However, if you are really interested in getting the blood pumping, take a leap from Nevis Bungy near Queenstown. It is among the highest bungy jumping experiences in the world, measuring 440 feet.
“Mexico City has two of my favorite things – great food and sports,” Abbamonte said. “The street tacos are to die for, and I love going to soccer games at Estadio Azteca.”
In 2020, there will be many festivals to explore. The city is a cultural hub with music, theater, dance and food events throughout the year. While experiencing the festivities, it is also an opportune time to take a step back and enjoy Chapultepec Park.
One of Abbamonte’s favorite waterfalls is Iguazu Falls located on the border of Brazil and Argentina. While Iguazu Falls might be well known, the falls themselves are truly unique. The waterfall system consists of 275 falls that stretch over approximately 1.68 miles. The Devil’s Throat is the tallest fall with a drop of more than 262 feet.
While traveling internationally can be fun and exhilarating, there are also places throughout the United States that offer memorable activities:
5. Scottsdale, Arizona
If you enjoy being outdoors, Scottsdale is an ideal place to visit. There are many trails to explore in Camelback Mountain, Papago Park and Hole in the Rock. After hiking, follow Abbamonte’s example and golf at The Short Course at Mountain Shadows.
“Scottsdale has some of the most beautiful sunsets in the States, and from The Short Course at Mountain Shadows, I get to enjoy the view while practicing my swing,” he said.
6. Boston, Massachusetts
“I love sports, so I visit Boston regularly for the professional games,” Abbamonte said. “I’m also fortunate that Boston is a beautiful city I can enjoy along the way.”
Boston is one of the oldest cities in the country. Founded in 1630, Boston is filled with history, museums and universities. If you are interested in a more unique attraction, check out the Warren Anatomical Museum, which is one of the last of its kind in the United States.
7. Portland, Oregon
What makes Portland unique are the bizarre and wonderful things you can do when you visit. For example, you can try bone marrow ice cream, stop by Mill Ends Park (the world’s smallest park) or attach your wish to The Wishing Tree.
“Portland is absolutely beautiful,” Abbamonte said. “It has a bit of everything – restaurants, bars, parks – and I enjoy the people watching. Portland has some of the nicest people while maintaining an edgy vibe.”
8. Tampa, Florida
Tampa might be known for its spring break party scene, but it has so much more to offer. For example, the city’s zoos and aquariums provide opportunities to interact directly with animals. Then you can take a break at Clearwater Beach, which is known for its soft, white sand and calm waters.
9. Santa Barbara, California
“I go to Santa Barbara when I want to recharge,” Abbamonte said. “I enjoy the food, walking around, talking to the locals and even watching a football game or two.”
There are wine tours, zoos, beaches, museums and restaurants. While taking in the city, also make time to visit the hidden gems such as Knapp’s Castle ruins.
10. England, Germany, Scotland, Azerbaijan and more
While technically more than one place, these locations have one thing in common: Union of European Football Associations (UEFA) Euro 2020. The international soccer event marks the first time the games will be held across the continent in 12 host cities.
“The year is a big one for sports,” Abbamonte said. “From sporting events in Europe to Japan, it is a fun year for travel and to enjoy once-in-a-lifetime experiences.”
US Vows 100% Tariffs on French Champagne, Cheese, Handbags Over Digital tax
The US government on Monday said it may slap punitive duties of up to 100 percent on $2.4 billion in imports from France of Champagne, handbags, cheese and other products, after concluding that France’s new digital services tax would harm US tech companies.
The US Trade Representative’s office said its “Section 301” investigation found that the French tax was “inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected US companies,” including Alphabet Inc’s Google, Facebook, Apple and Amazon.com.
US Trade Representative Robert Lighthizer said the government was exploring whether to open similar investigations into the digital services taxes of Austria, Italy and Turkey.
“The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets US companies,” Lighthizer said. His statement made no mention of proposed digital taxes in Canada or Britain.
The US trade agency said it would collect public comments through Jan. 14 on its proposed tariff list as well as the option of imposing fees or restrictions on French services, with a public hearing scheduled for January 7.
It did not specify an effective date for the proposed 100% duties.
CHAMPAGNE, ROUGE AND GRUYERE
The list targets some products that were spared from 25 percent tariffs imposed by the United States over disputed European Union aircraft subsidies, including sparkling wines, handbags and make-up preparations – products that would hit French luxury goods giant and cosmetics maker L’Oreal hard.
Gruyere cheese, also spared from the USTR aircraft tariffs levied in October, featured prominently in the list of French products targeted for 100 percent duties, along with numerous other cheeses.
The findings won favor from US lawmakers and US tech industry groups, who have long argued that the tax unfairly targets US firms.
“The French digital services tax is unreasonable, protectionist and discriminatory,” Senators Charles Grassley and Ron Wyden, the top Republican and Democrat, respectively, on the Senate Finance Committee, said in a joint statement.
Spokespeople for the French embassy and the European Union delegation in Washington could not immediately be reached for comment.
But prior to the release of the USTR’s report, a French official said that France would dispute the trade agency’s findings, repeating Paris’ contention that the digital tax is not aimed specifically at US technology companies.
“We will not give up on taxation” of digital firms, the official said.
France’s 3 percent levy applies to revenue from digital services earned by firms with more than €25 million ($27.86 million) in French revenue and €750 million (£644 million) worldwide.
The USTR’s report and proposed tariff list follow months of negotiations between French Finance Minister Bruno Le Maire and US Treasury Secretary Steven Mnuchin over a global overhaul of digital tax rules.
The two struck a compromise in August at a G7 summit in France that would refund US firms the difference between the French tax and a new mechanism being drawn up through the Organization for Economic Cooperation and Development.
But Trump never formally endorsed that deal and declined to say whether his French tariff threat was off the table.
Andrew Yang Wants You to Make Money Off Your Data by Making it Your Personal Property
Andrew Yang, 2020 Democratic presidential candidate, plans to regulate the tech industry by prioritizing in giving people the right to own their personal data (“data as a property right”), thus allowing them to make money by sharing it with companies. Currently, companies entirely own users’ data – users do not have much control over it.
Yang said, “our data is now worth more than oil” and gave emphasis to the great amount of data people create and how companies make money over it. “By implementing measures to increase transparency in the data collection and monetization process, individuals can begin to reclaim ownership of what’s theirs,” he said.
He also cited a report saying that the collection and use of Americans’ personal data has become a $198 billion industry. Yang believes that people should have more control over their data, such as being able to see how their data is being used and having the freedom to opt out if they choose.
Yang added that we need politicians “who understand technology and a modern way to regulate it,” as reported by Engadget. “In order to regulate technology effectively, our government needs to understand it. It’s embarrassing to see the ignorance some members of Congress display when talking about technology, and anyone who watched Congress question Mark Zuckerberg is well aware of this,” said Yang.
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