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An in-depth exploration of the history and consequences of fiat currency abuse, highlighting the manipulation, greed, and collapse behind the global financial crisis.
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Smoke and Mirrors: The Story of Fiat Currency Abuse Richard Karn Managing Editor The Emerging Trends Report http://www.emergingtrendsreport.com
An Exercise in Monetary Forensics • US Dollar History: 1774 to 2008 • The Fed Period: 1914 to present • A 45-year Career: 1965 to present www.emergingtrendsreport.com
US dollar is not different, just more sophisticated • better management • more dominant and far better distributed • unparalleled promotion and marketing www.emergingtrendsreport.com
US Monetary History: 1774 - 2008 “A strong dollar is in the interest of the United States.” www.emergingtrendsreport.com
19th vs 20th Century: gold standard & fiat Technological & Financial Innovation www.emergingtrendsreport.com
Productivity Miracle www.emergingtrendsreport.com
Or was it? www.emergingtrendsreport.com
Ending all pretense to gold convertibility www.emergingtrendsreport.com
“Our experience shows a weak link between money supply and inflation and output.” www.emergingtrendsreport.com
The Fed Period: 1914 to present “Give me control of a nation’s money, and I care not who makes her laws.” The 6 stages of a fiat currency regime: • Implementation • Collusion • Greed overwhelms restraint • Disequilibria • Accelerated cycles • Collapse www.emergingtrendsreport.com
Fiat Currency Regime Life Cycle www.emergingtrendsreport.com
Fed Fix-All: lower interest rates & make more credit available www.emergingtrendsreport.com
A Truly Bi-Partisan Effort www.emergingtrendsreport.com
1966: $1 of debt produced $.93 of GDP Growth • 2007: $1 of debt produced $.18 of GDP Growth • From 1980 to 2007, the financial industry share of total US corporate profits rose from 10% to 35% www.emergingtrendsreport.com
Fed Nightmare: Consumption now fuels 71% of GDP; Saving starves it equally www.emergingtrendsreport.com
A 45-Year Career: 1965 to 2009 “I’m mad as Hell, and I’m not going to take it anymore!” www.emergingtrendsreport.com
Generations Collide in Twin Tragedies www.emergingtrendsreport.com
Pending Change in the Status Quo www.emergingtrendsreport.com
Saving Fiat in a Negative Real Interest Rate Environment www.emergingtrendsreport.com
“Gold Doesn’t Earn Any Interest” …nice thing about models is that if you keep your data series short enough you can make your model say anything you want it to. www.emergingtrendsreport.com
Best Scenario: Another Trader’s, Not Investor’s, Market? www.emergingtrendsreport.com
Sixth Stage: Collapse • Without sufficient credit/debt growth, Ponzi-style collapse looms • Faith in monetary system shattered: social, political and economic upheaval • Final indignity is the realization of the extent of the betrayal • Occasionally a new democratic republic results, more often a fascist state www.emergingtrendsreport.com
Conclusion • Greed & Fiat Currency Abuse, not Capitalism, behind Global Financial Crisis www.emergingtrendsreport.com