On February 15, the total outstanding public debt of the United States exceeded $34.2 trillion, or 122.7% of the country's GDP At present, the time required for each trillion dollars of new debt has been shortened from six years to three months today, and worse, this debt snowball is only going to get bigger and bigger, and it is clear that the macro environment of the US economy is now monetized debt, which will exacerbate the soaring US debt deficit and interest costs, and eventually plunge the dollar into a collapse spiral.
In this regard, Egon von Greyerz, a legend who has successfully predicted quantitative easing and historical currency fluctuations in the United States, said in a report published on February 13 that since Nixon broke up the dollar with gold in 1971, the US debt carnival began, and the revaluation of gold's status in the next few years will be imminent.
Liu Bang's grand strategist Chen Ping said that people can refuse other things, but no one can refuse gold, and then 300 years ago, Newton proposed the gold standard during his tenure as director of the British Mint also required the country to issue currency based on gold, and the above two historical facts have actually said the two value meanings of gold.
In fact, for half a century, people around the world have used to call the dollar "US dollar", which reflects the credit value of the US dollar when it is strong, but we know that currency has a shelf life, and the dollar is not gold, the real gold is gold, which has actually said the relationship between gold and currency, and gold and silver are naturally not currency, but currency is naturally gold and silver, and Marx broke the value connotation and essence of gold in one sentence.
But when the United States ran out of enough gold reserves in August 1971 to support its gold standard, it suddenly announced to the world that it had unilaterally closed the window for direct exchange of dollars for gold, indicating that the United States had effectively defaulted.
Since then, the U.S. has faced a growing balance-of-payments crisis, with the dollar increasingly losing its purchasing power under the weight of the Federal Reserve's several rounds of quantitative easing and soaring debt deficits.
According to Alex Mooney, a defender of the U.S. gold standard, in an updated proposal (HR2678) submitted to the U.S. Treasury Department on February 12 to review the transparency of gold reserves, the current $100 has lost 98% of its value relative to gold, so from this point of view, the decoupling of the dollar from gold itself is a sign of the loss of dollar credit.
Former French President Valéry Giscard d'Estaing blamed "the central role of the dollar for perpetuating the United States' balance-of-payments deficit with impunity," as former U.S. Treasury Secretary John Connally famously asserted to his foreign counterparts: "The dollar is our currency, but that's your problem." ”
The reason why Americans are able to buy the world's cost-effective goods and live a drunken life through printed dollars of green paper is based on the status of the dollar as the world's main reserve currency and the fact that U.S. bonds have become the core international reserve assets of global central banks.
But the situation has changed dramatically, and this has accelerated the dollar's fall from the monetary crown against the backdrop of the recent regional banking crisis and debt crisis in the United States, which continue to erode the dollar's credit.
So, just a few recent major events in the U.S. financial system make it clear that while U.S. Treasury Secretary Janet Yellen and Wall Street are touting the power of U.S. finance, the dollar and U.S. Treasuries have been eaten up by ballooning debt, especially now that the abuse of the dominance of the U.S. currency is prompting global central banks to accelerate the process of de-dollarization.
In fact, at present, dozens of countries around the world, whether they are economic allies or non-allies of the United States, whether they are oil-producing countries or agricultural countries, have respectively carried out major de-dollarization strategies in the field of commodity transaction settlement, foreign exchange market and international reserves, etc., in order to weaken the power of the dollar and get rid of the use of the dollar, especially in the field of digital currencies where the dollar is relatively backward.
So, from this point alone, the process of resetting the dollar as the world's main reserve currency has begun, and at this critical juncture, there is something that traders expected in the base camp of the dollar.
According to the U.S. financial website ZeroHedge on February 13, U.S. Senator Bryan Hughes and Rep. Mike Dorazio of Texas Dorazio) submitted an updated proposal (SB2334, see chart below for details) to Congress on February 11, saying that many states in the United States should return to the gold standard in the context of high debt, which also made Texas take the lead in calling for a halt to the dollar and calling for the United States to return to the gold standard The proposal made headlines.
The two lawmakers' remarks come at a time when many countries are abandoning the gold standard in favor of a gold digital currency. Coincidentally, we note that Georgia Congressman Marjorie Taylor Green also proposed a similar return to gold-backed digital currencies last November.
They called on the global central bank to develop a digital currency anchored to gold, Texas should return to the gold standard as soon as possible, establish and issue a digital currency backed by 100% gold reserves, make the currency not pegged to the dollar, and officially stop the dollar, Texas' action has laid the foundation for the abolition of the Fed's monopoly on the dollar.
THIS MEANS THAT TEXAS WILL SUPPORT THE RECENT PROPOSAL BY CONGRESSMAN ALEX MOONEY TO RESTORE THE 1971 GOLD STANDARD, WHICH WOULD EFFECTIVELY REQUIRE THE DOLLAR TO BE PUT UNDER THE CONTROL OF THE STATES WITH THE LARGEST INVENTORIES OF METALS, AND AT A TIME WHEN 37 STATES IN THE UNITED STATES HAVE DECLARED THAT GOLD CAN BECOME LEGAL TENDER IN PARALLEL WITH THE DOLLAR, OFFICIALLY DECLARING MONETARY INDEPENDENCE.
According to an announcement issued by Schiffgold, the world's leading precious metals research institution, citing authorities in Missouri and Kansas on February 13, the two states have passed a bill on defining gold as legal tender (SB735 and SB303), respectively, treating gold and silver as legal tender like the US dollar, and abolishing state capital gains taxes, and prohibiting state seizure and "confiscation" of gold.
This also means that 37 states in the United States have officially declared their independence in terms of financial currency, and have given gold and silver the function of general equivalents in commodity trading, and these bills also specifically mention that gold is allowed to be used to pay off US debt and taxes, and the actions of these 37 states have laid the foundation for the abolition of the Fed's monopoly on the dollar.
These latest news will obviously be seen as a clear warning to the existing dollar-dominated US financial system and the spread of distrust of the US dollar, and it is also a sign that gold is returning from the fringes of US monetary history, which is unexpected by Wall Street, and it is now that more and more Americans are snapping up gold coins and hoarding gold, questioning whether the US dollar can continue to function as a long-term store of wealth.
Immediately after, a survey of 57 global central banks and 85 sovereign investment institutions released by Invesco, a global asset management company headquartered in the United States, showed that in the context of the acceleration of the global de-dollarization process since 2020, more and more global central banks now plan to ship their gold assets in the United States back to their own countries to ensure the safety of these strategic assets.
The report highlights that 70% of global central banks say they are worried about their country's assets being frozen, up from 50% before 2020, and the survey shows that within five years, this proportion is expected to rise to 74%.
For example, an unnamed central bank in Europe told Invesco that it had transferred gold stored at the Bank of England in London back to our own country. At this critical moment, foreign media reported an unexpected news, and things suddenly made new progress.
On February 12, in addition to announcing the addition of 32 tons of gold reserves in the fourth quarter of 2023, the head of the bank also excitedly said on social media that it had carried out another top-secret operation to repatriate gold stored in overseas vaults such as the United States and the United Kingdom, using multiple late-night flights to airlift back 8,000 gold bars from overseas vaults to demonstrate the country's economic strength (please refer to the chart below for details).
A site map of the gold being flown back by air in Poland
In addition, the follow-up report of the American financial website ZeroHedge on "many countries will send back gold from overseas" also confirms the above phenomenon.
The U.S. media analysis said that even if the Federal Reserve has refused to prevent Germany, China, Venezuela, Turkey and other countries from repatriating gold several times, and even the outside world has been suspecting that the gold reserves of some countries will be misappropriated, lent and melted by the Federal Reserve, or used for other purposes, but the Federal Reserve and the U.S. Treasury will eventually have to return the gold in full in order to protect the credibility of the dollar and U.S. bonds, because, as we have emphasized many times, the property rights of these gold reserves are very clear.
It is worth mentioning that according to the statistics of the previous international capital flow reports released by the U.S. Treasury Department since 2023, our team found that at present, the U.S. allies represented by France, Saudi Arabia, Belgium, Germany, Australia and Israel are not only speeding up the process of repatriating gold deposited in the United States, but also holding high the banner of liquidating U.S. bonds, and are promoting the process of global central banks selling U.S. bonds to replace gold.
In fact, as early as February 3, U.S. Treasury Secretary Janet Yellen had similar concerns when she attended an event at the Economic Club of Chicago: "The $34 trillion U.S. debt is a terrible statistic, and the current high interest rates will bankrupt the country, and the consequences for the U.S. financial system will cause us heavy losses, and the cost of debt service will reach more than $1.15 trillion in the next decade," and she also said that "the Republican Party's proposed debt ceiling funding cuts will be destructive" It is clear that Yellen's remarks have been a disguised reminder to US creditors that the US fiscal situation is becoming increasingly precarious.
Then, on February 13, the U.S. financial website Zero Hedge cited data from the latest report on international capital flows released by the U.S. Treasury Department, showing that foreign investors' investment in U.S. Treasuries continued to decline, while China and Japan were the main sellers of U.S. bonds. In the next few years, large buyers of global central bank-level U.S. bonds, including China and Japan, are expected to sell another 600 billion U.S. bonds to reduce the risk of exposure to U.S. dollar assets.
At this critical juncture, U.S. Treasury Secretary Janet Yellen responded to a hearing before the House Financial Services Committee in Congress on February 10 that "the U.S. dollar is considered an asset because of the depth and liquidity of the market, as well as the strength of the U.S. economy," and Yellen stressed that "regular and predictable bond issuance is the core strategy of the Treasury Department."
When Yellen was asked about the size of the next U.S. Treasury auction during her testimony before Congress, Yellen said that "the market has a very strong demand for U.S. Treasury bonds" and "does not realize that the dollar and U.S. Treasuries face any serious threats", and she even bluntly stated that "the U.S. budget does not need to be balanced to embark on a path of fiscal sustainability, and does not promise to prioritize the repayment of U.S. Treasury bonds to global creditors, including China and Japan, when it is unable to repay all debt obligations."
To this end, Yellen has responded on different occasions in the past two weeks that she will visit again in 2024 to discuss cooperation in areas of concern including debt with major buyers of U.S. bonds, but according to the latest report on international capital flows released by the U.S. Treasury Department, China has been selling U.S. bonds for seven months in the eight months to November last year. (ENDS)