I like turtles too.
That graph is an excellent representation of the problems of an 'interest' bearing currency. However, there isn't enough gold already processed above ground to equal the amount of 'dollars' in the market. Gold would have to be around $5000/oz to even come close. What is a more feasible idea is a basket of commodities, soy, oil, corn, gold, etc to use as a backing. This is what the 'evil' chinese have been hinting at with the IMF recently. The idea begin that a currency should have a hard, tangible reserve as its basis, and be able to trade 'without interest' for that commoditiy. A speculative based fiat currency is like building your house on sand.
The graph shown above is an excellent example of the inherent problem of 'interest bearing' currency. Since you are forced to buy the very currency used to pay the debt you will forever be 'in debt'...just the way the bankers want. As long as the base economy that supports that fiat curreny is expanding through conquest, wealth appropriation or inflation, the 'ponzi' scheme continues to work. This is the real basis for America's rise after the WW2 when we forced the international community to peg their currencies to the US dollar. In 1971 Nixon made it law that US dollars would no longer be redeemed for gold from our federal reserve in Fort Knox because the French were taking huge amounts of physical gold in the run up to the Vietnam war. While central bankers spout a philosophy that gold is a 'barbarous relic' and no longer functional in this 'modern' economy they are absolutely not willing to let it leave their stronghold....interestin g?
Iran can openly speculate about going to the Euro because the Chinese and the Russians have hard contracts for oil outside of the Saudi/Isreali/American paradigm. This is refered to as the BRIC alliance(brazil, russia, india and china). These countries are doing business outside of US dollar cartel.
The real reason that we are in Afganhistan has nothing to do with 'terrorists' in the media propagated sense. We are there because 6 months before 9/11 the Taliban met with US officials in Texas to negotiate the amount they wanted to allow the gas/oil pipelines through their country. They wanted too much so they had to go. 9/11 gave us the pretext for throwing them out and putting in Karzai as president. Karzai's previous job was head of the American company that was negotiating the original pipeline...imagine that. 9/11 also gave us a pretext to take control of the Iraq oil fields which is why we have 19 'permanent' military bases in Southern Iraq, which is coincidentally where all the oil is. We dont ever have to bring it to market we just sit on a commoditiy that has peaked and whose value will continue to rise. It's money in the bank and more importantly it's veto power over the European union. The EU, minus England, has been going its own way politcally since the seventies and with the collaps of the USSR they weren't feeling the need for a permanent US military presence anymore. They began to make deals, on their own, with countries like Iraq and Russia for raw resources. These deals brought them out from direct US control...which is always unacceptable. So we invaded Iraq to break those deals. Remember our media demonification of the French and Germans in the run up to the war? It had nothing to do with 'freedom fries' and everything to do with breaking those contracts and controlling the resource in US dollars.
The biggest thing happening now is that the great American beast is wounded and in trouble economically. Because we can't keep our thumbs on everyone you are seeing the rise of competing organizations. Countries that are banding together to push back against America's military and economic presence. For example, you're seeing the rise of South America. Chavez would never have been able to do any of what he does if this were the 1980's. Putin wouldn't have been able to invade Georgia in 2007 and China certainly wouldn't be able to make monetary demands to the IMF on the international stage...never.
It will be interesting to see how the American empire ends however empires rarely go quietly or peacefully...
My recommendation to take advantage of this is to have some physical holdings of gold and silver in your portfolio. If the Fed tries to inflate its way out of its international debt it will kill the dollar (and your savings) and drive up the price of PMs as investors and the public look for a place to preserve their wealth but more importantly if they try to constitute a new currency it will have to have a backing in PMs. They always to do at the begining. They will either do that through forced confiscation (Roosevelt 1933) or they will have to give you (the citizen) a fantastic exchange rate for your metals. This exchange could mean you start out sitting pretty on a new currency. This has been the end of every fiat currency in history...the US dollar is no different. Makes you wonder why the Constitution calls for no centralized banking system and for money to be only gold and silver.
Incidentally, if a new fiat currency comes into play and you trade your PMs in on a high note....quickly move that capital into real estate...it will be the next bubble.
There is no friend anywhere - Lao Tse
