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"Strong Dollar"..."Weak Dollar"...What About A Gold-Backed Dollar?

"Strong Dollar"..."Weak Dollar"...What About A Gold-Backed Dollar?

Contradictory Palaver

The recent hullabaloo among President Trump’s top monetary officials about the Administration’s “dollar policy” is just the start of what will likely be the first of many contradictory pronouncements and reversals which will take place in the coming months and years as the world’s reserve currency continues to be compromised.  So far, the Greenback has had its worst start since 1987, the year of a major stock market reset.

A modern-day reenactment of the famous “our currency, your problem” play that went over so extremely well in the 1970s… [PT]
The brief firestorm was set off by Treasury Secretary Steven Mnuchin who said in response to the dollar’s recent slide:
“Obviously, a weaker dollar is good for us, it’s good because it has to do with trade and opportunities.”*
Mnuchin backtracked a bit as international financial leaders criticized the apparent shift in policy while Administration officials sought to clarify the Secretary’s remarks.  President Trump weighted in on the matter saying:
“Ultimately, I want to see a strong dollar” and added that Mnuchin’s comments were “taken out of context.”
While President Trump sought to allay jittery currency markets that monetary policy had not changed, candidate Trump supported the Federal Reserve’s suppression of interest rates and did not want to see a rising dollar:
“I must be honest, I’m a low interest rate person. If we raise rates and if the dollar starts getting too strong, we’re going to have some very major problems”.**
Of course, the entire uproar about a strong dollar versus weak dollar is a sham. When the dollar (and for that matter all other national currencies) cannot be redeemed for either gold or silver, it is inherently “weak” and ultimately worthless.

That this obvious fact is not recognized by the Trump Administration, international monetary authorities, and the financial press demonstrates just how unstable the dollar and world currencies actually are.

How to Create a MAGA Dollar


If President Trump truly wants to see a strong dollar that will become a linchpin in “making America great again,” he should enact policies that will return the dollar to its original function – a warehouse receipt that can be redeemed for precious metals.  Just as important, an authentic strong dollar policy would mean that no dollar can be created that did not have “an equal amount” of gold/silver in bank vaults – in essence a 100% gold dollar.

These two acts would guarantee a strong dollar and ensure that the dollar would remain the world’s reserve currency. Moreover, a fully redeemable dollar would likely lead to other nations adopting similar measures.

A gold-backed dollar would also head off China’s not too subtle attempt at replacement of the Greenback with the Yuan as the world’s reserve currency.  Its “Belt & Road Initiative,” its massive accumulation of gold, and other actions are all aimed at making the Yuan the dominant world currency which, if successful, will have catastrophic financial repercussions for the US and Western Europe.

What paper dollars looked like back when they were warehouse receipts for actual money – note the various sizes these banknotes came in. Evidently, no-one was concerned about the potential for criminal shenanigans that the use of large denomination banknotes allegedly invites. One wonders how the US ever survived this! Shouldn’t it have drowned in an uncontrollable miasma of crime? [PT]
Gold-backed money will not only have positive international effects, but domestic benefits as well.  Crippling price inflation that has been intentionally under reported by government statistics will be a thing of the past. Prices in a gold-backed currency will actually fall, raising living standards for everyone.

Without the ability of the Federal Reserve to create money out of thin air, the massive federal budget deficits would have to be dealt with.  And without the Fed’s purchasing of US debt, the government would be forced to actually cut spending.  Spending cuts would have to be deep and across the board.

Continued: https://www.zerohedge.com/news/2018-02-08/strong-dollarweak-dollarwhat-about-gold-backed-dollar