Gold Is Worth $20,000 Per Ounce According To The Bretton Woods Calculation

The global monetary system rests on a fragile foundation of trust. Thanks to the actions of central banks, pressure on the system will keep growing.

Paper U.S. dollars sit at the heart of the global monetary system. Dollars are liabilities of the Federal Reserve. Just as houses are collateral for mortgages, Treasuries and mortgage bonds are collateral for U.S. dollars.

A central bank’s balance sheet is essentially a self-reinforcing feedback loop: Government bonds are the collateral for dollar liabilities, and bonds are streams of future dollar payments. So the dollar is backed by the promise of more dollars…

As more dollars are printed, their value inevitably falls. As the dollar falls, the Fed responds with more printing. The Fed uses weak excuses to explain higher prices; it blames anything but itself. Weather, geopolitics, and emerging market growth are classic scapegoats for higher prices. Few bother asking how those events would impact consumer prices without the influence of a swelling money supply.

Now introduce permanent zero interest rates into this system and the system becomes even more fragile…(more)

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