By Gordon Long
Since the US lifted anchor on the Gold Standard in August 1971 making the US Dollar a Fiat Reserve Currency, the US economy has been propelled forward, no-longer tethered to the principles of Sound Money. Unfortunately, the reality is that this sort of political expediency is the equivalent of building a house on a foundation of sand versus solid bedrock, dooming it to be unable to withstand the economic storms and turmoil that inevitably lie ahead.
As a consequence International Balance of Payments were by 1980 forced to be settled through the use of credit. Credit which then exploded in growth with the mounting US trade deficits financed by Foreign and Japanese mercantilism, where the BOP settlement credit was used to buy US Treasuries, thereby triggering a steady fall in interest rates.
This post was published at GoldSeek on Friday, 8 December 2017 / Friday, 8 December 2017.