As Good As Gold Australia
Jun 3, 2023
Ray Dalio – Billionaire and Bridgewater’s Founder confirmed that the raising of the US $31.4 Trillion debt limit, without fixing the issue at large, is a ‘kick the can down the road’ type solution that will eventually lead to a ‘disasterous financial collapse’.
‘Increasing the debt limit’ the way congress and Presidents have repeatedly done, will mean there will be no meaningful limit on the debt. This will eventually lead to a ‘disasterours financial collapse’.
James Turk from GoldMoney confirmed that the debt ceiling suspension was similar to Nixon taking the US off the gold standard. The monetary system is broken. The evidence supporting this conclusion continues to mount, ranging from the recent episode of negative interest rates to relentless, neverending inflation.
These are not normal conditions. They result solely from government policies and central banks that serves the aims of politicians, rather than the people. Discipline is the key ingredient that is missing. There is no discipline in the creation of new dollars, which was the most important reason for tying currencies to gold, as prevailed throughout history up til 1971.
The US debit limit was intended to provide some discipline, but it has become – like the link to gold that has been abandoned – an uncomfortable constraint on the spending aspirations of politicians and their desire for ever bigger government.
It is important to recognise that the debt limit hasn’t just been raised – this time it has been suspended. It reminds us of President Nixon’s declaration on August 15, 1971 ‘to suspend temporarily’ the dollar’s link to gold.
Could we be looking at a repeat of 1971-1980?
The US may have overplayed its hand when it imposed sanctions on Russia. The Central Banks’ holdings of gold have increased at a rate never seen before in history, and Brazil, India, China and Turkey are leading the way. Instead of holding their foreign exchange reserves in US dollars, these countries are increasingly holding it in gold, which has led to a sharp increase in the price of the yellow metal over the past few months. The global movement to end its reliance on the US dollar is already underway. Is this trend likely to continue and will the meeting of the BRICS nations in August be the continuation and confirmation of this trend, and what does it mean for the price of gold?
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