January 20, 2013 By L. Todd Wood 1 Comment
We Spaniards know a sickness of the heart, that only gold can cure.The mainstream media did their duty this week and duly reported that
~ Hernando Cortez
the German government was beginning the process of repatriating their gold reserves stored in Western central banks since WWII. And, that was it.
was the biggest economic story to hit in a long time, and it was almost
completely ignored. The stated motivation was a desire to have the
gold back home since there was no longer a threat from a Soviet
Well, thanks to alternative news outlets like The Brenner Brief, we can explain the real reason.
This action by the Germans is a turning point in the history of the modern Western world.
It is a fulcrum point in history. And, there is a reason the MSM
ignored the story. It’s because the truth hurts. It doesn’t fit their
Since the Bretton Woods agreement,
the U.S. Dollar has been the world’s reserve currency. This means that
when countries have wealth that they want to store and be assured that
they don’t lose money, they buy Dollars. The USD was also used to
correct the balance of payments among countries. Instead of moving gold
around constantly to facilitate this, governments deposited gold at
central banks and this covered any payments needed to be made.
The Germans repatriating their gold means nothing less than the German government no longer having faith in the United States currency, and no longer believing the USD will be the world’s reserve currency in the future.
This is monumental.
Speaking as an old bond trader, the Dollar
has a reserve currency bid. In layman’s terms, it means there is
demand for the USD on the world market as countries buy it to store
their wealth in something they believe will retain its value. If this
bid goes away, there will be nothing to hold the value of the Dollar at
its current levels. There will be less demand.
The Russians and the Chinese are actively working to replace the
Dollar as the world’s trading currency. What will take its place? The
Chinese Yuan? UN Special Drawing Rights from the IMF?
This action by the Germans is a direct result of uncontrolled and unsustainable spending by the U.S. Federal Government. It is a direct result of quantitative easing by the Federal Reserve. In Bolivia they call it printing money — here, we call it quantitative easing.
If you could pick up gold off the ground just like a fallen leaf,
would there be any value? After expanding its balance sheet by $4
trillion, the Fed is making the Dollar worthless, just like leaves on
L. Todd Wood is a contributor to The Brenner Brief. Twitter: @LToddWood
Why would any foreign country expect that the Dollar will hold its
value in the future? Why would they want gold at the Fed to cover
payments if the USD is no longer the world’s reserve currency?
It makes perfect sense for the Germans to want their gold back. And, it’s not because they no longer fear the Soviets.
Rather, the Germans are looking out for number one.
We are entering dangerous times, my friends.
not reflect the beliefs of The Brenner Brief, its Editor or its other
contributors. The opinions and advice in this column are the sole
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