by Joseph P. Farrell, Giza Death Star:
This important little tweet was spotted by V.T., one of our long-time and regular article spotters and sharers, and a big thank you for doing so, because the numbers here confirm something that has long been a suspicion of mine. But first, the tweet:
Now normally I would not bother with a tweet on “x”, but as this one comes from Jim Rickards and therefore from a stable source, it’s worth taking a look at, because I think the implication is clear.
TRUTH LIVES on at https://sgtreport.tv/
Here are the real gold powers ranked by their ratio of gold to GDP. The ranking shows how much real money each has to support its economy:
Russia – 8.3%
Switzerland – 7.6%
Italy – 7.4%
France – 5.3%
Germany – 4.9%
U.S. – 1.9%
India – 1.4%
Japan – 1.3%
China – 0.80%
UK – 0.60% pic.twitter.com/3e6qliPUBK— Jim Rickards (@JamesGRickards) February 14, 2024
You’ll note that what I’ve been saying for a very long time (almost as long as this website has been in existence, and as long as I’ve written books about finances and money) is true: there is far too little gold and for that matter, silver and other types of bullion to support any wholesale return to “the gold standard,” because as a percentage of national gross domestic product, gold reserves only approach the benchmark of ten percent.
That ten percent benchmark is probably significant, because that is usually considered the target benchmark of reserves required to make a fractional reserve system work. If, say, a bank has on its books $1,000,000 of assets in deposits, the rule of thumb is that it should have about $100,000 in actual cash in its vaults in case depositors demand to convert their deposit into cash and withdraw it. And of course, runs on banks are when its solvency becomes suspect, people lose trust in the institution, and a considerable percentage demand their deposits be converted into cash. When this demand exceeds the reserve supply, the bank shuts its doors, stops the hemorrhage.
Now imagine the same situation with regard to bullion rather than cash. In the system that actually prevailed during “gold standard days,” convertibility and reserve requirements meant that there was never enough bullion to cover all the certificates in circulation based upon the bars in the vaults. So how did the system actually work? The answer to that may form a clue as to what is taking place now, and to see the answer, a quick look at the American War Between the States is in order. Both the Union and the Confederacy financed their burgeoning war efforts largely by fiat monies (though, strictly speaking, the Confederate version was a bit “strange”). Both sides restricted the use and circulation of specie – gold and silver coin – because this was needed to pay foreign creditors. Thus, both sides would not accept their own fiat currencies in payments of taxes on imports or exports, but only in the conduct of other normal everyday transactions.
In short, the system was a two tiered system, and so long as specie money was restricted as a means of financial clearing to being largely between “major players” like governments, the system worked. Convertibilty was restricted to the banks. As specie flowed into the respective governments in payment of export or import dues, those governments in turn leveraged their specie and bullion for foreign credit and trade. “Yes, we’ll take Confederate dollars, so long as they’re in gold or silver.” (And, I’ll wager, the exact same holds true today.)
Thus the amount and spate of gold buying we’ve seen recently suggests that this may be the goal or intended “stopping” point in any global financial reset.
But there’s a problem, and as far as I can tell, it’s a problem that faced not only the Confederacy, but it’s modern financializing counterparts: with so much speculation and inflation of paper in the financial system, not just of paper notes of monetized debt, but other financial instruments like derivatives and so on, the whole thing has become massively inflated. One can either go out and find more gold and silver to be able to prop up the massive expansion of such instruments, or one can attempt to financialize other commodities. We’ve seen Mr. Globalooney attempting to do the latter in recent years, with the financialization of the very basics of life: water, food, the air, the climate, and so on. This should be a warning and measure of just how insane the whole system has become. And how very near it is to collapse. And it’s an experiment that the Confederacy actually tried: massive inflation “backed” by the commoditization of its only internationally tradable resource: cotton.
Notably, in 1864 as its economy finally began to collapse, and in spite of its legal proscriptions on the circulation of gold and silver, the latter became the most sought after form of money in the very Confederacy that had attempted to restrict its use in order to increase its own supply of it. The opposite happened.
