Currencies and why Gold won’t work this time
I suggest that the original debt was caused by the Vietnam Fiasco. This was a direct result of LBJ’s advancing the war to a major conflict.
In real money, the man put us in debt to the tune of approximately 450 billion dollars. That is 35 dollars per ounce of gold dollars.
What he then did was not go for re-election. He made approximately 16 million dollars of his personal fortune by promoting the industry behind the war. This was exposed by the Times in London, England at the time. (Little was said about it in this country for some reason.) I guess they were immune from insider trading even back then.
Now we have a repeat performance. Only this time it is Obama not LBJ. This time it has extended over both political parties. Instead of 35 dollars per ounce we are talking a couple of thousand dollars per ounce. (It is less than that right now.) But for conversation purposes lets give it the higher number.
I suggest just like LBJ, Obama is insider trading to promote his personal fortune. This is conjecture on my part. History tends to repeat itself. To do so, the wars must continue after the election. Probably the grand war to come will be with Iran.
The racket here is that they will pay the debt back with devalued dollars. Just like LBJ’s successor Nixon did. He payed it back with dollars worth $600 plus an ounce instead of $35 an ounce. Meantime, back at LBJ’s ranch they invested in commodities big time. So the fortune in today’s dollars multiplied many times over.
I suggest that if the wars are about over with, then these same people will have all their money invested in warehouses and commodities to hold them. When the proverbial hits the fan, then they will be prepared to multiply their money many times over.
I suggest they will close the market on silver and gold when it hits $3,000 an ounce. It will then plunge in value as it is no longer an acceptable medium of exchange. Ask the Hunts about that. They experienced it with silver. The $3K figure is just a figment of my imagination. It could be a lot sooner than that.
If silver and gold have no value in a regulated government market, then everyone will go to commodities as a value of currency.
In the 1960s, South Korea went broke. The currency itself was broken. The government changed it from the equivalent in dollars like this: A dollar became a dime. Ten Dollars became one. Up and down the line their currency went to 1/10th of its previous value. The older and wiser gentlemen of Korea bought warehouses. They stored commodities. Then they sold them at the current currency value to the Korean people so that they could survive day to day. Savings were a joke. No one could survive a 1/10 currency devaluation. I don’t remember how they spelled it. Juan or Won is how it was pronounced.
Anyway, the Korean Juan had no value at all in the Orient for years. There was no valid exchange between that currency and China or Japan.
Services were also a winner. If you spoke pidgin English or better, then working for the foreign American government on base was the way to go. Even if you made poverty wages the exchange rate made you rich on the local level. Prostitution was major business there. So much so, that the American government payed us locally in counterfeit money rather than actual dollars so it could not be exchanged for gold anywhere. That was 1965-66. Apartments for prostitutes was also major business. I know of one woman prostitute who re-invested all her funds in apartments for other prostitutes. She was very wealthy by local standards by the end of a decade. She was about 40 when I was friends with her. Her sisters in crime loved her as she was a gentle person. Even though we had systematic currency returns on base, the local GI currency was valued way more than the local Korean currency. Normally, we exchanged it for Korean currency on base before going to town.
I learned enough of the language to listen to what they had to say. I found that the people I worked with that were Korean were very wealthy on the local level. That is where all this comes from.
In the 50s, my Father worked massive amounts of Overtime. He reinvested that money in our house at the time. In the 60s, he reinvested it in England’s Housing market. It went from $2.50 a pound to a low of $1.15 a pound at one point. The housing floated with the currency. Eventually he made money on the deal as the Real Estate went through the ceiling in actual pounds. The pounds in return went back up eventually floating around $2.00 per pound. His salary in the 50s probably started around $85 a week without overtime. I know in the early 1960s, it had arisen to about $185. The overtime was gradually going away. By the time I retired in the same profession it was close to $800 a week. Which is darn close to the 1/10 valuation I put on it in 1980. Commodities are the secret currency.
A car in 1960 might cost between 2K and 3K depending on what you put on it. A 1985 truck I bought in 1988 used cost me $8,000. The same truck today would cost about 20,000. I know because I bought one. I still own every vehicle I have purchased in the last 25 years. I swap them out and repair the broken ones. The new car would cost about 20K to 35K depending on make and model. The car hasn’t changed value. The wages and currency have.
The wages have not kept up with the cost of commodities. The government killed the real estate market between 2000 and 2009. It was done with fraud. People who could not afford housing were given a boost by the government even though they were poor risks because of their minority status or even just because they were poor. When the job market went bad, these same unskilled people lost their shirts and their houses. This has devalued the price of real estate all over the country.
On my street, there are two 1.5 story houses. One was completely redone, rebuilt, with a price of 125,000 put on it by the government. There are approximately 50 homes that were done this way. The ranch styles sold. The 1.5 story houses sit there. The price for that 1.5 story in my opinion is $85K. At $125K, the house is not marketable. The government threw money at the problem. They are now eating it, because they threw more money at the problem than the house was originally worth. One reason is utilities. The utilities are double what the ranch style houses run. It is not realistic pricing.
There is a fool out there somewhere that will overpay for that house. But it might be several years down the road before it happens.
The government does not care. It was a politically motivated solution that did not work.
That is the problem with government. It is not run like a business. Any business out there that worked this way would go broke. That is why the government will go broke in this decade.
Thanks for listening.