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September 18, 2011 / 74

Fed “Bails Out” European Banks – With US Dollars

I’d call this move the “Last Gasp of the Fiat Currency Crowd”. Like the collapse of the TBTF banks and the collapse of the other bubbles we’ve been subjected to lately, this move seems to be a desperate attempt to prolong the eventual crash of fiat currency.

To bail out the European Banks with US dollars is like throwing an anchor to a drowning man. The immediate effect will be to spread the risk of individual national defaults. If one nation’s currency fails, then every nation takes a little hit, and the one nation survives… at least I THINK that’s the plan.

If you’d like an intelligent model of inflating fiat currency to failure, just look at the monetary history of Brazil – the nation that is addicted to inflation. Over at least the last 40 years (the extent of my personal experience with Brazil and inflation), Brazil has inflated their currency to destruction and then simply re-structured it with first, rubber stamps (reducing the value of existing bills with rubber stamps), then defaulting on that currency and introducing a NEW currency. Then they inflate it and do it all over again.

Is that the path the world’s Central Bankers intend to take? I know they want a “global currency” – a global currency would make the inflating merry-go-round a lot easier. Would this global currency be backed by anything? It’s extremely doubtful since if the Central Banks use anything but fiat currency, they’d lose most of their power.

So… we know that this effort to spread the pain of a US or European Currency default can only be marginally successful – but how many nation’s economies will it take down along with the failing currency? And lest you think that the US and Europe are the only nations with fiat currency troubles – don’t forget – China puts up a good front – but how successful can a nation be that has resorted to building ghost cities in order to keep the workers busy so they don’t revolt?


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