Money Flow Trading Method along with Risk Management

If markets can go from Risk OFF to ON in seconds, then how can we make our strategy, and why not BUY on Risk ON??Each question & answer can cause Swings, then why we go only one direction?? NEED YOUR EXPERT ADVICE on this.Thanks,

Hello everyone

I have recently made a change to my method of Forex trading.

In answer to the questions from loveandpeace, here is the answer and why if you follow my strategy and subscribe for my 90 day course if qualified, then you will become very wealthy.

Here is why.

The only change that I have made is to NEVER have on more than 10 open positions at any one tiMe thus there is little or no chance of any margin call.

Of course having a winning percentage of 75% minimum guarantees winning results.

There is much more to explain however you need to sign up to get access to this knowledge and information.

We only trade with the trend as you know and we only go against the trend when there is a new fundamental fact in front of us today and tomorrow being the questions for FED Chair Powell.


BWM

What about your $1000.00 SL strategy, I can see some of your trades have more than that SL limit.

your 90 days program, with US$250 first, for those who DO NOT take interest, or do not show seriousness because
if is FREE., BUT in my case, you know me, I am very serious in trading with your methodology. I know you have no
desire/intention to make money with people, just to make them serious in trading.

Good Evening Everyone.

I have changed one part of my trading method because over the next six months the markets will collapse. What does that mean ? The US30 (Dow 30) and SP500 will lose at least 25% of it's value so I will be shorting those CFD's at the right moment. Since it is going to be shorter periods of time that they go up in price, as long as I do not put more then 10 open positions on at any one time then I do not need to concern myself with the $1000 US Dollars Stop Loss. Of course if you do not know when to go short and when to add positions when the short term trend goes against you and also if you do not know when to take profits you will most likely lose.

I also notice that for the moment the weakness comes between 2:00 AM and 6:00 AM and so I might close a few positions overnight as I did last night. Tomorrow the questions to FED Chairman Powell will be much more in depth from the Senate and it could lead to the market selling off. There is more negatives out there than positives. Trade with the trend. The Trend Is Your Friend.

PLEASE WATCH THIS VIDEO OF LESS THAN 30 MINUTES.

It is a MUST !!!

Thank You.

Then please post your comments and or questions.

Thank you.


Benjamin
BWM

Good Day Folks

I opened this account on June 18, 2019. I have recently developed a Forex strategy that if learned and followed will make you very wealthy over the next few years if you qualify. It is you that need to qualify not me deciding that.

In this account starting with $50,000 US Dollars, I did 21 Forex trades between June 18, 2019 and June 28, 2019, a period of 11 trading days. All 21 Forex trades were profitable and there were no losses. All the trades were done in REAL TIME and SCREENSHOTS were always taken.

So for just under 1/3 of a month, I was able to net over $8500.00 US dollars or 17% Return On Investment (ROI) The exact amount is $8611.50 US dollars.

From a previous post;
Quoting CKXnlp3R

{quote} Hi, You are definitely right about leaving the positions open. I have encountered such thing numerous times and eventually closed the positions with the loss. I realized that sometimes it is best to analyze the situation like what you have described many many times, before letting the emotion rush make the decisions.

Thanks again for your post, I enjoy reading it a lot! It starts to become part of my reading hobby now, lol

Thank you for the kind words. That is my goal here along with KeepCalmfx. When you learn something then we are happy. I appreciate the feedback and the more that you post with any and all comments then the better.

The last few days were very much fun for me and whether I trade a $50,000 US Funds Demo Account or a REAL FUNDS $50,000 US Funds account you must treat both the same. When I have a DRAW DOWN compared to closing all my positions. I have the same HIGH doing it because for me they are both the same. Of course in my case having traded millions of US Dollars with real funds then I know that I trade the same way. I once thought that my contact at PFG BEST in Chicago , Casey C had a client for me who had $5,000,000 US Dollars for me to manage so he at my request opened a $5.000,000 US Funds Demo Account.

I traded it for exactly 56 days and got my balance over $7,500,000 US Dollars and did 1804 Forex Trades. Looking at the volume of $100,000 US Dollars per open position times 1804 Forex Trades is a lot of Millions traded. I have sent the PDF File of my 1804 Forex Trades to KeepCalmfx to verify my numbers and it can be confirmed. The amount of losses that I had in those 1804 Forex Trades (DEMO) of course was 4 LOSSES.

I doubt anyone can duplicate that MYSELF included. That was 10 years ago and I did not use my Money Flow Trading Method then.

COMMENTS FROM BENJAMINIS: Let us review what we teach and why it works if YOU WORK.

Without your WORK then you are just wasting your time and probably your money.

There is no such thing as Political Correctness here because we are here to teach and share our knowledge ALL FOR FREE until May 15, 2017 and then if you have subscribed to this thread before May 15, 2017, then you will get a FREE LIFETIME PASS to our company website.

SO.... going back to our winning FORMULA for FOREX SUCCESS.

20% of the SUCCESS is yourself the Forex Trader.

20% of the SUCCESS is your EDGE which we teach you and that is Money Flow Trading.

20% of the SUCCESS is control of your RISK (Your hard earned money) Our UNIQUE RISK MANAGEMENT allows you to trade without worry, fear and greed. Of course we want to make sure that you have the right qualities to be a winning Forex Trader so our course is for a period of three months, so we can teach you the right trading methods and we can see your results and make adjustments without your FEAR OF LOSS of Real Money.

20% of the SUCCESS is using and understanding the USE of Technical Indicators which include not only the common ones. It includes the understanding of Supply and Demand. Support and Resistance and the use of Pivot Points which you can see each day on our daily charts that cover ALL our Trade Plans which we also help you develop and explain WHY. These are our Winning Trade Plans that we review every three months or earlier if circumstances in the markets require that.

20% of the SUCCESS is the FUNDAMENTALS, which are much more than Data Releases each day around the world. It includes reports and articles extremely well researched as you can clearly see from this article that explains why the TREND in the Equity Markets especially in North America is DOWN. By understanding the difference between PERCEPTIONS (MARKETS) and REALITY, you then have a good handle on REALITY before the MASSES do and you are not surprised when events eventually unfold.

In order to be able to help you better it is VERY IMPORTANT that you share your thoughts and your QUESTIONS here on our thread.


Benjaminis


BWM
514 247 0775

1. Post 19
2. Cleanup
3. Quote
4. Dec 5, 2016 6:43am | Edited at 7:13am

1. https://cdn-assets.faireconomy.media...ar392875_2.gif BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 5,760 Posts | Online Now

Good Morning Everyone

My subject this morning is PERCEPTION and REALITY. The results of the Italian referendum last night are a perfect example of that. In normal times which means free markets where we have proper price discovery, it is easier to make speculative decisions on market trades. Today we all live in a financial world where the truth is always distorted by those in control. The control for the moment rests with the Central Banks of the world led by The Federal Reserve and followed by the ECB and the BOJ and the BOE.

After the financial meltdown of 2008 involving Lehman Brothers and TARP, which originally was voted down in the USA and then approved, the financial world entered into uncharted waters never ever seen before. It started with QE in the USA and it continued with Draghi in Europe saying he would do whatever had to be done. We also see the failed monetary policies of the last ten years in Japan by the BOJ.

So now we live in a world of NIRP and the attempt all over the world especially recently in India removing the 500 Rupee and 1000 Rupee as legal tender. Because of the Money Printing and Helicopter Drops clearly stated by Bernake in his role as Fed Chairman, there has been so much electronic cash created that now the Central Banks of the World must remove actual cash from the World before the Public figures out that the real cash does not exist and if everyone realized the truth that all monies would be removed from the banks of the world and our financial systems would immediately collapse.

So with the first two paragraphs as background is it any wonder that at times the ability to understand day to day movements in the various currencies is impossible. The fact that EUR/USD has gone up and the markets are ignoring the REALITY and looking as the market psychology of the PERCEPTION then it follows that the MARKET is always right until it is not. Another excellent example with real life consequences is the behavior of the US Stock Markets and the World Bond Markets since November 8, 2016 and the election of Donald J Trump.

Based only on hope and surely, NOT REALITY the wrong assumptions of stimulus in the USA with the NEW Trump Presidency has lead to over Two Trillion Dollars of loss in the World Bond Markets and new highs in the Dow and SP500. There is no possibility that everything will NOT reverse, when REALITY TRUMPS PERCEPTION and that is the whole point. It is in knowledge of reality and the timing of the reality taking effect.

It would be most appreciated to have some feedback so intelligent discussions can be entertained. This week might be the week for REALITY when we hear from the ECB on Thursday and of course next week the FED meets on December 13, 2016 and comes out with their Rate Decision on December 14, 2016. This could be the principle of buy the rumor and sell the news which is what seems to have happened with Italy and the referendum results. When the FED raises rates for the first time in one year even though last December when they raised there was strong indication by them of 4 more raises during 2016. We live in interesting times.

1. Post 37
2. Cleanup
3. Quote
4. Dec 6, 2016 12:29pm | Edited at 1:18pm

1. https://cdn-assets.faireconomy.media...ar392875_2.gif BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 5,761 Posts | Online Now

FREE OFFER AT NO COST OTHER THAN YOUR TIME !!!

I will teach the first 6 traders that sign up here how to earn 5% NET a month or ROI of 5%

CONDITIONS:

(1) You must have been trading for at least one year.
(2) Your methods have not been profitable.
(3) You will invest one hour a day of your time.
(4) You will open up a $50,000 US Funds Demo Account with FXCM UK
(5) You will email me your user name and password so that I can check your results daily.
(6) I will give you 30 days of my time and knowledge and at the end of the 30 days I will give you a grade out of 100 HOWEVER your real Grade will be if you show NET PROFIT or ROI of 5% or $2500.00.


The first 6 qualified persons that sign up and agree to the above conditions will be given my Private Email address so we can communicate. All QUESTIONS AND ANSWERS WILL BE PUBLISHED ON THIS THREAD IN ORDER TO HAVE FULL DISCLOSURE.

Thank You and have a Great Trading Day !!!

Contact Benjamin at [email protected] Thank You and I look forward to hearing from you.

OFFER GOOD UNTIL AUGUST 7, 2019

Psychological Challenges of Speculative Trading

An Extract from the book of “Beat the Odds in Forex Trading” by Igor Toshchakov, published by Wiley

A successful trader’s career mainly depends on his or her psychological stability in stressful situations, which are common in the process of trading. Theoretical knowledge can be acquired by reading professional literature; practical skills and experience are acquired in the process of actual trading. The most difficult process is adjusting psychological stress, because in real life it is impossible to completely eliminate the stress factor influencing human activity. Underestimating the stress factor could play a mean trick on trader and even completely block their abilities to make reasonable decisions in real trading situations. The psychological stress of those trading in the FOREX (and any other) market is extremely high. Traders must work under permanent psychological pressure, making decisions in highly unpredictable and uncertain market situations.

Each trader goes through mistakes, failures, and losses in his or her own way, in accord with his or her personality and temper. Some might blame their failure on market’s “wrong behaviour”, which didn’t comply with the trader’s brilliant forecast and caused the failure of the magnificently planned speculative combination. Others blame themselves and their own inabilities to make right decisions in situations, which afterwards seem to be simple. It is an interesting fact that, in hindsight, traders usually find the decision that should have been made at the lost critical moment and can reasonably prove their point of view. Why can they find the right decision so easily and quickly in hindsight? Was the trader unable to do so at the right moment? I don’t think it can be simply explained by looking at yesterday’s situation from today’s point of view. I do not think it can be explained by the fact that classical technical analysis at allows for multiple explanations of almost any market situation. It is always possible to find an appropriate basic explanation for any market shift after the event takes place. In the heat of the moment, however, the trader was influence by stress, and that stress caused the error. This is proven by the fact that most novice traders show exceptionally good (and even phenomenal) results trading dummy accounts but can’t even come near those result when trading with real money.

Being permanently under stress, a trader can often make insufficiently considered, impulsive, and therefore, wrong decisions that result in losses or premature liquidation of profitable position, that is, in lost profit. Sometimes, after a few successive failures with various trades, traders become fearful of the market. They are in as state of psychological stupor, and even a simple market situation may cause panic. They cannot overcome their emotions or soberly evaluate the current situation, and they are unable to make any decision – reasonable or otherwise. In many cases when the market situation shifts against the trader’s position, they can only passively watch the growth of their losses, because they are unable to make any decision at all. Often, after the market stabilizes and traders have the opportunity to calmly analyse daily diagrams of currency fluctuations, they come to the conclusion that the main cause of failure was not the lack of knowledge or training but their own emotions. However, the situation cannot be reversed. Time has passed, money has been lost, even everything should be begun again.

Another problem that causes severe and even catastrophic consequences is the trader’s wilful thinking. In this case, treaders are sure that their forecast of market trends is solely correct. They feel the market cannot and should not give any surprises. They do not consider other options that could be helpful or they think of other options in a vague and uncertain form. Sometimes, traders consider a market shift against their positions. They acquire new contracts at a lower price in the hope that the market situation will come back, and all the positions will become highly profitable. Afterwards, as the situation worsens, they will be able to come out of the market without serious losses. Being sire they are right, traders lose the ability to critically evaluate the condition of the market and accordingly their own position in the market. In this case, they consider only those basic and technical features that justify their wishful thinking, and they discard the contradicting features. This wishful thinking costs them dearly and can lead to psychological frustration. The market’s “wrong behaviour” not only deprives traders of a certain amount of money and often ruins their trading account, but also undermines their self-esteem and their hopes of being a winner in the trading battle.

After such a loss, traders blame themselves, repeatedly going through the details of the unsuccessful trade. They blame the market for the “wrong behaviour” or themselves for errors in what then seems an absolutely clear situation. Sometimes, the trader-market relationship takes the form of a vendetta. Traders consider the market as their personal enemy, treat it in an unfriendly way (even with hate) and dream of immediate revenge. Doing so, they miss the fact ht at they are essentially blaming nature for changing sunny weather to rain. It is very important to be prepared beforehand for this change. Traders should always have close at hand one or few options in case of sudden change of the situation/weather, so that their foresight assures their good time or good profit.

The third main psychological problem is trader uncertainty, especially when traders are inexperienced in abilities and skills – specifically about each market position they hold. Immediately after each position is opened and a money contract is bought, treaders start questioning their choices. This is revealed most vividly in the case of a moderately active market at the moment of fluctuations close to the opening price of the position. Any moment (even insignificant) against their position causes traders to have an irresistible desire to sell the recently acquired contract to limit losses, until it is too late and the market does not shift too far away from their position opening price. On the other hand, an insignificant market shift in the desirable direction causes the same desire to eliminate the position, until it provides for any (even tiny) profit and before this profit does not turn into losses.

Sacred and trouble traders rush and race about. They open and liquidate their positions too often, and experience many small losses and gains. Within a short period of time, they turn intermittently into bulls or bears. As a result, they suffer losses on a dealer’s spread and/or commissions when there were no significant market changes, and all the market fluctuations were no more than just regular market “noise”. Such losses are typical for beginners and individual traders with small investment capital or little experience and insufficiently psychological preparation.

Not uncommon are cases of traders’ impulsive decisions on trading, without any plans or serious preliminary market analysis. The position is opened under an impulsive, invalid emotional reaction. Often, it can be explained by traders’ fear of losing a brilliant opportunity to earn money they think is being offered by the market at that moment. I have witnessed these attempts to jump onto the last carriage of a departing train, and such attempts have ruined a lot of traders. Many traders cannot calmly watch any kind of market movements. Some of my students have confirmed this reality. If they have no positions at the moment of more or less significant market movement, they consider it as a lost opportunity to gain profit. This can inflict a serious shock to them.

When they have no position, they seem unable to realize that each market movement can be considered both ways, and the opposite situation can quite possibly develop. Statistics show that, at each market movement, the chances to lose are much higher than to profit. How does it happen that reasonable people (who in everyday life, without any emotion, can watch a bank casher counting other people’s money) consider the fact of market movement as a threat to their own pockets? Why is other people’s money in the hands of a bank cashier not considered as a lost profit, whereas capital shift on the market and the corresponding quote fluctuations are causes of negative emotions? I think the answer is in the illusory simplicity of business itself, which is considered by many people as a good and simple opportunity to earn a lot of easy money. Similar notions are widely spread among novice currency traders. The soon traders abandon such ideas, the sooner they become professionally efficient traders.

The most difficult problem for every trader (regardless of their experiences) is to learn as quickly as possible how to recover quickly from losses, which are inevitable in this business. At the same time, they must learn to handle shocks and psychological damage inflicted by the losses, because there situations could negatively influence their future work.

The losses themselves and the fear of losing, both of which permanently torture traders, negatively influence their ability to make reasonable decisions in a complicated situation. These factors also undermine traders’ ability to follow their own rules about trade strategies and systems.

I have become personally acquainted with hundreds of traders and have watched their activities. I have taught many students, and have had my own experience as a trader at various steps of my career in the currency market. Therefore, I have come to the conclusion that the main causes of trader failures in speculative operations in the FOREX marker are without a doubt those associated with psychological trauma – the inability to control their own emotions and to find an adequate way to fight stress.

1. Dec 6, 2016 1:31pm

1. https://cdn-assets.faireconomy.media...ar392875_2.gif BenjaminIs
2. | Commercial Member | Joined Dec 2014 | 5,763 Posts | Online Now

Forex Market Hours

www.forexmarkethours.com

also

http://fxtrade.oanda.com/resources/fxmarkethours/

There are at least two reasons why you should track the major forex market trading hours:

 

1. The first hour after a major market opens is considered very important and often indicates how the session might develop.
2. In periods when market 'trading hours' overlap, liquidity tends to increase because more traders are participating in the FX market.

Comments from Benjamin; You can see by the information on this post that there has been extensive research done by myself so what you will learn will be from my 16 years of Forex trading and research. I started during the year 2003 and I did not do my first live Forex trade with real funds until March 9, 2016.

So I learned and developed my skills using demo accounts over a period of three plus years.

When I started trading at Trade Freedom in Montreal, I used the SAXO platform and I had 6 clients who I traded for under "LPOA" All the time that I traded there from March 9, 2006 until June 6, 2006 when I moved all my business over to Man Financial of Canada using the same Forex trading platform that I use today.

I was managing over $100,000 US dollars and as incredible as it might sound and it was, I never had one loss in any of my six Forex trading accounts.

When I moved to Man Financial during early June 2006, I had my first Forex trading loss of $100 US Dollars and it was the most important trading loss of my Forex trading career. It was when my Common Sense won out over my "EGO"

https://goldswitzerland.com/gold-is-...m-and-benefit/

GOLD IS FOR FREEDOM AND BENEFIT
July 11, 2019
by Egon von Greyerz

http://goldswitzerland.com/wp-conten...07/lemming.jpg

Lemmings have a herd mentality. But following the crowd, can have grave consequences like falling off a cliff and drowning in the ocean. Many investors have the same instinct. They follow the crowd and buy or sell when other people do. This probably won’t end in the same disaster as the lemmings, but following the crowd virtually never leads to a successful long term investment performance.

The biggest investment profits are normally made by investing long term. The key is to buy when an investment is undervalued and unloved. That reduces the risk substantially and thus increases the potential return.

JESSY LIVERMORE – MY SITTING
Extremely important when investing is to be patient and wait for the right opportunity. As Jesse Livermore said: “It was never my thinking that made the big money for me, it was my sitting.”

I have probably been following the gold market for longer than most people still being active today, having received my first gold coins in the 1950s. But not until Nixon’s disastrous action on August 15, 1971 did it start to be exciting to follow the value of my coins.

LESSONS FROM MINING BUBBLE IN AUSTRALIA
The ride from $35 in 1971 to $850 in 1980 was clearly spectacular. I also owned some Australian mining stocks since the bank where I worked in Geneva was advised at the time by Adolf Lundin. Adolf was a legendary Swedish resource investor who lived in Geneva. He sadly died too early in 2006, but his sons have continued to expand the Lundin Group to one of the most successful businesses in the resource sector in the world.

So back in 1969 I made my first investment in mining stocks based on Adolf Lundin’s recommendations. I remember Adolf phoning in the middle of the night in Europe from Australia with the latest hot tip. At the time there was a boom in mining stocks. The most infamous company was a nickel miner called Poseidon which rose dramatically and later collapsed. So I learnt early on about the volatility of the mining sector, fuelled sometimes by some dishonest reporting of discoveries.

DERIVATIVES & DEBT MAKE GOLD A NECESSITY
After the 1980 peak, as gold and the gold mining stocks started falling, I was involved in corporate life and stopped following the resource sector. But then in the 1990s, I started analysing global financial and economic risks and came to the conclusion that the world economy at some point would have very serious problems. At the time I considered that the two most likely areas that would cause this were derivatives and debt.

I was looking at how best to protect against these risks and gold was the obvious solution. But gold at the time was totally out of fashion and central banks around the world had been reducing their holdings. From the January 1980 high of $850, gold crashed to just over $300 in 1982. Thereafter gold traded between $300 and $500 until central bank selling pushed it down to a bottom in 1999 at $250. Finally, at the end of 2001 gold seemed to have stabilised around the $300 pivot point.

GOLD BECAME OUR PRIMARY INVESTMENT AS WELL AS INSURANCE
At that point we decided that risk seemed right with gold totally unloved and undervalued. So we decided to make physical gold our primary investment in early 2002 when the price was around $300 or in pounds, £200 per ounce. At the time we were based in the UK.

So when we entered our physical gold investment in 2002, I had certainly been “sitting” for a very long time. Gold started the current bull market in 1971 at $35, made a temporary top in 1980 at $850 and then spent 20 years correcting. But the gold bull certainly hadn’t finished, central banks saw to that. They continued their irresponsible monetary policy, leading to a chronic credit expansion, debasement of currencies and thereby permanently underwriting the gold price.

Looking at gold on an inflation adjusted basis, 2000 was the lowest point since 1971 when the price was $35 per ounce (based on Shadow Government Statistics inflation calculation).

The gold chart below, adjusted for real inflation, shows this amazing insurance can today be bought at an all time historical low. Gold currently at $1,400 is cheaper than in 2000 at $280, cheaper than in 1970 when gold was $35 or in 1780 when gold was traded in London at £4 per ounce.

http://goldswitzerland.com/wp-conten...7/gold_adj.jpg

What the above chart also shows is that the top in 1980 at $850 today would be $18,160 adjusted for inflation. There is no reason why gold wouldn’t reach that level in the next few years, especially as the gold paper market implodes.

Since we bought gold in 2002 we have been “sitting”. We didn’t buy gold for speculation and we didn’t buy gold for participating in a price move. No, we bought gold for long term capital appreciation in real terms and most importantly for wealth preservation purposes against an extremely precarious world economy and financial system.

As Ralph Waldo Emerson said:

“THE DESIRE OF GOLD IS NOT FOR GOLD.

IT IS FOR THE MEANS OF FREEDOM AND BENEFIT”

THE OPPORTUNITY OF A LIFETIME
Once we owned the best insurance you can buy, our intention was to keep this cover indefinitely.
It is the best kept secret in the world that you can buy an investment with the following attributes:

1. The best insurance against financial and economic risk
2. The ultimate wealth preservation asset
3. Holds its value in real terms through the ages
4. Has a stable intrinsic value
5. Is totally liquid
6. Is a medium of exchange and the only money that has survived in history
7. Has no liability or debt attached to it
8. Has a high potential of substantial capital appreciation

It is the opportunity of a lifetime to acquire insurance that is also a superb investment or an investment which is also the ultimate insurance and all this at the lowest level ever in real terms.


WEALTH PRESERVATION INVESTORS DON’T SELL THEIR GOLD
We have been sitting with our gold position since 2002, and virtually all the investors we advise have also kept their gold since they acquired it.
So when would we dispose of all or part of our gold and advise our investors to do the same? Firstly, I doubt we would ever dispose of all our gold. Because gold is generational wealth and an asset that should always form the foundation of your wealth pyramid.

Today, most of the clients we advise, hold at least 25% of their financial assets in gold. Some hold a much bigger percentage. It must of course be pointed out that our clients believe strongly that wealth preservation is extremely important at a time when risk is greater than ever in the global financial system.

But even if we will always hold some gold, there will be a time when gold becomes overloved and overvalued. I don’t expect this to happen for quite a few years, whether it is in 5 or 10 years or even longer. At that time we will analyse the state of the world economy and financial system and decide if we should reduce our gold holdings and what we should do with the proceeds.

If the financial system still has major unresolved problems like massive debts and derivatives, then it will still not be the place to put your money. Only when debt and derivatives have imploded and the system restructured will it be safe to put your money or assets in the financial system.

GOLD WILL BUY YOU INCREDIBLE BARGAINS
Until then, if you can swap your gold for real assets like land, income producing property or sound businesses at bargain prices, this would be a serious opportunity. History is full of examples of people who used their gold to pick up absolute bargains in periods of economic distress and hyperinflation.

When the time is right, investors with bigger gold holdings will be able to buy valuable assets with their gold for a fraction of what they cost before the crisis. Price reductions of 90-95% are not uncommon in these periods, especially if measured in gold grams or kilos.

For people with smaller gold holdings, this will guarantee them continuing to lead a decent life as opposed to for example the Venezuelans who are now living in total misery.


KEEP LOW PROFILE AND HELP YOUR CLOSEST
But we must also remember that if you hold gold, it is extremely important to keep a low profile from a social and personal safety point of view. It will be essential not to flaunt your wealth like many people are doing today. Also very important will be to help family and close friends. There will be many people who will need your assistance.

Remember that with bankrupt governments, there will be virtually no social security or pensions.


GOLD TODAY AS CHEAP AS IN 1970 AND 2000
The inflation adjusted gold chart above is one method of illustrating the real value of gold. Another way is to adjust the gold price for the increase in US money supply. As the chart below shows, on that basis gold is as cheap today as it was in 2000 at $280 or in 1970 at $35. So whatever method we apply, it comes back to the fact that gold today is an absolute bargain.

GOLD ADJUSTED FOR US MONEY SUPPLY

http://goldswitzerland.com/wp-conten...ney_supplz.jpg

IT WON’T MATTER WHAT PRICE YOU PAID FOR YOUR GOLD
As I explained at the beginning of the article, we bought gold in 2002 for ourselves and the people we advised at the time. For that purpose, we devised the best and safest way to acquire and hold physical gold. A few years later in 2005, we opened it up for outside investors.

Some of these investors bought early and some bought at higher prices as gold was rising quickly to the $1,920 top in 2011. The good thing is that it doesn’t matter at what level you bought your gold in the last 17 years since gold will go to multiples of the current price. As I have already stated, it will be the ultimate form of wealth preservation and a superb investment over the next 5-10 years.


So some of us took our positions in gold 17 years ago and many others later. But since we are all holding gold for wealth protection reasons, we will be “sitting” for many years to come without any concern about the value of our gold holding.


WE KNOW WITH ABSOLUTE CERTAINTY THAT GOVERNMENTS WILL CONTINUE TO OBLIGE BY DESTROYING THE ECONOMY, SPENDING MONEY THEY HAVEN’T GOT, INCREASING DEFICITS AND DEBTS AND TOTALLY DEBASING CURRENCIES UNTIL THEY ARE WORTHLESS.
FOR THOSE REASONS WE ARE HOLDING GOLD AND SLEEPING WELL AT NIGHT.


Egon von Greyerz
Founder and Managing Partner
Matterhorn Asset Management
Zurich, Switzerland
Phone: +41 44 213 62 45

Matterhorn Asset Management’s global client base strategically stores an important part of their wealth in Switzerland in physical gold and silver outside the banking system. Matterhorn Asset Management is pleased to deliver a unique and exceptional service to our highly esteemed wealth preservation clientele in over 60 countries.

GoldSwitzerland.com

Contact Us

Articles may be republished if full credits are given with a link to GoldSwitzerland.com.

https://www.zerohedge.com/news/2019-...ops+to+zero%29


PLEASE READ ALL AND YOU THEN WILL UNDERSTAND THE TRUTH !!!

DO NOT READ AND UNDERSTAND AND ASK QUESTIONS YOU WILL SUFFER THE CONSEQUENCES.


I’m Bonnie Faulkner. Today on Guns and Butter, Dr. Michael Hudson. Today’s show: De-Dollarizing the American Financial Empire. Dr. Hudson is a financial economist and historian. He is President of the Institute for the Study of Long-Term Economic Trend, a Wall Street Financial Analyst and Distinguished Research Professor of Economics at the University of Missouri, Kansas City. His most recent books include, And Forgive Them Their Debts … Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year; Killing the Host: How Financial Parasites and Debt Destroy the Global Economy; and J Is for Junk Economics: A Guide to Reality in an Age of Deception.

We return again today to a discussion of Dr. Hudson’s seminal 1972 book, Super Imperialism: The Economic Strategy of American Empire, a critique of how the United States exploited foreign economies through the IMF and World Bank. We discuss how the United States has dominated the world economically both as the world’s largest creditor, and then later as the world’s largest debtor, and take a look at the coming demise of dollar domination.


Bonnie Faulkner: Michael Hudson, welcome back.

Michael Hudson: It’s good to be back, Bonnie.

Bonnie Faulkner: Why is President Trump insisting that the Federal Reserve lower interest rates? I thought they were already extremely low. And if they did go lower, what effect would this have?

Michael Hudson: Interest rates are historically low, and they have been kept low in order to try to keep providing cheap money for speculators to buy stocks and bonds to make arbitrage gains. Speculators can borrow at a low rate of interest to buy a stock yielding dividends (and also making capital gains) at a higher rate of return, or by buying a bond such as corporate junk bonds that pay higher interest rates, and keep the difference. In short, low interest rates are a form of financial engineering.

Trump wants interest rates to be low in order to inflate the housing market and the stock market even more, as if that is an index of the real economy, not just the financial sector that is wrapped around the economy of production and consumption. Beyond this domestic concern, Trump imagines that if you keep interest rates lower than those of Europe, the dollar’s exchange rate will decline. He thinks that this will make U.S. exports more competitive with foreign products.

Trump is criticizing the Federal Reserve for not keeping interest rates even lower than those of Europe. He thinks that if interest rates are low, there will be an outflow of capital from this country to buy foreign stocks and bonds that pay a higher interest rate. This financial outflow will lower the dollar’s exchange rate.

He believes that this will increase the chance of rebuilding America’s manufacturing exports.

This is the great neoliberal miscalculation. It also is the basis for IMF models.


How low interest rates lower the dollar’s exchange rate, raising import prices

Trump’s guiding idea is that lowering the dollar’s value will lower the cost of labor to employers. That’s what happens when a currency is devalued.

Depreciation doesn’t lower costs that have a common worldwide price. There’s a common price for oil in the world, a common price of raw materials, and pretty much a common price for capital and credit. So the main thing that’s devalued when you push a currency down is the price of labor and its working conditions.

Workers are squeezed when a currency’s exchange rate falls, because they have to pay more for goods they import. If the dollar goes down against the Chinese yen or European currency, Chinese imports are going to cost more in dollars. So will European imports. That is the logic behind “beggar my neighbor” devaluations.

How much more foreign imports will cost depends on how far the dollar goes down. But even if it plunges by 50 percent, even if the dollar were to become a junk currency like the Argentinian or other Latin American currencies, that cannot really increase American manufacturing exports, because not much American labor works in factories anymore. Workers drive cabs and work in the service industry or for medical insurance companies. Even if you give American workers in manufacturing companies all their clothing and food for nothing, they still can’t compete with foreign countries, because their housing costs are so high, their medical insurance is so high and their taxes are so high that they’re priced out of world markets. So it won’t help much if the dollar goes down by 1 percent, 10 percent or even 20 percent. If you don’t have factories going and if you don’t have a transportation system, a power supply, and if our public utilities and infrastructure are being run down, there’s nothing that currency manipulation can do to enable America to quickly rebuild its manufacturing export industries.

American parent companies have already moved their factories abroad. They have given up on America. As long as Trump or his successors refrain from changing that system – as long as he gives tax advantages for companies to move abroad – there’s nothing he can do that will restore industry here. But he’s picked up International Monetary Fund’s junk economics, the neoliberal patter talk that it’s given to Latin America pretending that if a country just lowers its exchange rate more, it will be able to lower its wages and living standards, paying labor less in hard-currency terms until at some point, when its poverty and austerity get deep enough, it will become more competitive.

That hasn’t worked for fifty years in Latin America. It hasn’t worked for other countries either, and it never worked in the United States. The 19th-century American School of Political Economy developed the Economy of High Wages doctrine. (I review this in my book on America’s Protectionist Takeoff: 1815-1914.) They recognized that if you pay labor more, it’s more productive, it can afford a better education and it works better. That’s why high-wage labor can undersell low-wage “pauper” labor. Trump is therefore a century behind the times in picking up the IMF austerity idea that you can just devalue the currency and reduce labor’s wages and living standards in international terms to make the economy more profitable and somehow “work your way out of debt.”

What currency depreciation does do when the dollar is devalued is to enable Wall Street firms to borrow 1% and to buy European currencies and bonds yielding 3 percent or 4 percent or 5 percent, or stocks yielding even more. The guiding idea is to do what Japan did in 1990: have very low interest rates to increase what’s called the carry trade. The carry trade is borrowing at a low interest rate and buying bonds yielding a higher rate, making an arbitrage gain on the interest-rate differential. So Trump is creating an arbitrage opportunity for Wall Street investors. He pretends that this is pro-labor and can rebuild manufacturing. But it only helps hollow out the U.S. economy, sending money to other countries to build them up instead of investing in ourselves. So the effect of what Trump’s doing is the opposite of what he says he’s doing.

Bonnie Faulkner: Exactly. What is the point of driving investment into foreign countries, away from the United States?

Michael Hudson: If you’re an investor, you can make more money by dismantling the U.S. economy. You can borrow at 1 percent and buy a bond or a stock that yields 3 or 4 percent. That’s called arbitrage. It’s a financial free lunch. The effect of this free lunch, as you say, is to build up foreign economies or at least their financial markets while undercutting your own. Finance is cosmopolitan, not patriotic. It doesn’t really care where it makes money. Finance goes wherever the rate of return is highest. That’s the dynamic that has been de-industrializing the United States over the past forty years.


Bonnie Faulkner: From what you’re saying, it sounds like Donald Trump’s policies are leading to doing to the United States what the IMF and World Bank have traditionally done to foreign economies.

Michael Hudson: That’s what happens when you devalue. The financial sector will see that interest rates are going down, so the dollar’s exchange rate also will decline. Investors will move their money (or will borrow) into euros, gold or Japanese yen or Swiss francs whose exchange rate is expected to rise. So you’re offering a financial arbitrage and capital gain for investors who speculate in foreign currencies. You’re also hollowing out the economy here, and squeezing real wage levels and living standards.

Why devaluation will not help re-industrialize the U.S. economy

Bonnie Faulkner: Do you think that Donald Trump understands what he’s doing?

Michael Hudson: I don’t think he understands. I think he has an oversimplified view of how the world works. He thinks that if we devalue the dollar, we can undersell China and Europe. But you can only undersell them if you have car-making factories available. If you don’t have a factory, you’re not going to be able to undersell foreign carmakers no matter how low the dollar goes. And if you don’t have a set of computer manufacturing factories and local suppliers already in the United States, you’re not going to have production capacity able to undersell China. Most of all, you need public infrastructure and affordable housing, education and health care. So Trump’s view is a fantasy. It’s like saying, “If we had some ham, we could have some ham and eggs, if we had some eggs.” It leaves the causes of America’s de-industrialization out of account.

If we had unemployed car makers, computer makers and other manufacturers here – factories that were idle in an economy that was pretty competitive – then devaluation might make some sense. But Americans are not just a bit uncompetitive. The housing costs in America are so high, the medical and health-insurance costs, the taxes and wage withholding on labor and prices for basic infrastructure that there’s no way that we can compete with foreign countries simply by currency manipulation.

Since 1980 the U.S. economy has been made very high-cost. Yet there also has been a huge squeeze on labor, by raising the prices it has to pay for basic needs. Even if wages go up, people can’t afford to live as well as they did thirty years ago. A radical restructuring is needed in order to restore a full-employment industrial economy. You need de-privatization, you have to break up monopolies, you need the kind of economy and economic reform that America had under Franklin Roosevelt in the 1930s. I don’t see that happening.


Bonnie Faulkner: Do you think that Donald Trump was installed as U.S. president to oversee the bankruptcy of the United States and dismantling the U.S. Empire?

Michael Hudson: Nobody installed him; he installed himself. I don’t think most people expected him to win. If you look at the odds that professional bookies and oddsmakers gave from the time he announced his candidacy, most people thought that sleepy Jeb Bush would get the nomination, and that Bush then would lose to Hillary. So there were indeed attempts an attempt to install Hillary or Bush. But nobody tried to install Trump. He made an end run around them, by straight talk, humor and celebrityhood.

He didn’t have advisors that he would listen to, because he’s always been a one-man show. And he doesn’t really know what he’s doing economically. He knows how to cheat people, victimize suppliers, and how to make money in real estate simply by not paying suppliers, and by borrowing from banks and not paying them. But he has no idea that you can’t run an economy this way. Being a real estate mafioso isn’t the same thing as running a whole economy. Trump has no idea and I don’t think anyone knows how to control him, except maybe Fox News.

Wall Street vs. the “real” economy: Which turns out to be more real?

Bonnie Faulkner: What is going on with the ruling class in the United States? Does anybody in its ranks know how to run an economy?

Michael Hudson: The problem is that running an economy to help the people and raise living standards, and even to lower the cost of living and doing business, means not running it to help Wall Street. If someone knows how to run an economy, the financial sector wants to keep them out of any public office.

High finance is short-term, not long-term. It plays the hit-and-run game, not the much harder task of creating a framework for tangible economic growth.

You can do one of two things: You can help labor or you can help Wall Street. If running the economy means helping labor and improving living standards by giving better medical care, this is going to be at the expense of the financial sector and short-term corporate profits. So the last thing you want to do is have somebody run the economy for its own prosperity instead of for Wall Street’s purpose.


At issue is who’s going to do the planning. Will it be elected public officials in the government, or Wall Street? Wall Street’s public relations office is the University of Chicago. It claims that a free market is one where rich Wall Street investors and the financial class run an economy. But if you let people vote and democratically elect governments to regulate, that’s called “interference” in a free market. This is the fight that Trump has against China. He wants to tell it to let the banks run China and have a free market. He says that China has grown rich over the last fifty years by unfair means, with government help and public enterprise. In effect, he wants Chinese to be as threatened and insecure as American workers. They should get rid of their public transportation. They should get rid of their subsidies. They should let a lot of their companies go bankrupt so that Americans can buy them. They should have the same kind of free market that has wrecked the US economy.


China doesn’t want that kind of a free market, of course. It does have a market economy. It is actually much like the United States was in its 19th-century industrial takeoff, with strong government subsidy.

U.S. changing monetary strategy, from payments-surplus to deficit status

Bonnie Faulkner: In your seminal work from 1972, Super Imperialism: The Economic Strategy of American Empire, you write: “Whereas US domination of the world economy stemmed from 1920 through 1960 from its creditor position, its control since the 1960s has stemmed from is debtor position. Not only have the tables been turned, but US diplomats have found that their leverage as the world’s major debtor economy is fully as strong as that which formerly had reflected its net creditor position.” This sounds counter-intuitive. Could you break it down? Let’s start with 1920 through 1960. How was the United States able to dominate the world economy from its creditor position?


Michael Hudson: The U.S. creditor position really began after World War I, based on the money it lent to the Allies before it joined the war. When the war ended, U.S. diplomats told England and France to pay us for the arms they had bought early on. But in the past, for centuries, the victors usually forgave all the debts among each other once a war was over. For the first time, America insisted that the Allies pay for the military support it had sold them before joining them.


The European Allies were pretty devastated by the war, and they turned to Germany and insisted on reparations that quickly bankrupted Germany. German bankrupted its economy trying to pay England and France, which simply sent it on to pay the United States. Their balance of payments was in deficit, and their currencies were going down. American investors saw an opportunity to buy up their industry. Gold was the measure of power, the backing for domestic money and credit and hence capital investment.


America was much more productive, not having suffered war damage here. Between the end of World War II and 1950 when the Korean War broke out, America accumulated over 75 percent of the world’s monetary gold. The United States had heavy agricultural exports, growing industrial exports, and enough money to buy up the leading industries of Europe and Latin America and other countries.

But beginning in 1950 with the Korean War, the U.S. balance of payments moved into deficit for the first time. It got even worse when President Eisenhower decided that America had to support French colonialism in Southeast Asia, in French Indochina – Vietnam and Laos. By the time the Vietnam War escalated in the 1960s, the dollar was running large balance-of-payments deficits. Every week on Wall Street we would watch the gold supply go down, losing gold to countries that weren’t at war, like France and Germany. They were cashing in the excess dollars that were being spent by the U.S. military. By the 1960s it became clear that America was on a trajectory to run out of gold within a decade because of this overseas war spending.

It finally did, by August 1971when President Nixon stopped selling Gold on the London exchange and the price was allowed to soar far above $35 an ounce.

The U.S. balance-of-payments was still running a deep deficit because of the fighting in Southeast Asia and elsewhere, creating a permanent balance-of-payments deficit. The private sector was just in balance during the 1950s and 1960s. The entire deficit was military.

When America went off gold, people began to wonder what was going to happen. Many predicted an economic doomsday. It was losing its ability to rule the world through gold. But what I realized (and was the first to publish) was that if countries no longer could buy and hold gold in their international reserves, what were they going to hold? There was only one asset that they could hold: U.S. Government securities, that is, Treasury bonds.


A Treasury bond is a loan to the US Treasury. When a foreign central bank buys a bond, it finances the domestic U.S. budget deficit. So the balance of payments deficit ends up financing the domestic budget deficit.

The result is a circular flow of military spending recycled by foreign central banks. After 1971 the United States continued to spend abroad militarily, and in 1974 the OPEC countries quadrupled the price of oil. At that time the United States told Saudi Arabia that it could charge whatever it wanted for its oil, but it had to recycle all its net dollar earnings. The Saudis were not to buy gold. The Saudis were told that it would be an act of war if they didn’t recycle into the American economy the dollars they received for their oil exports. They were encouraged to buy U.S. Treasury bonds but, could also buy other U.S. bonds and stocks to help push up the stock and bond markets here while supporting the dollar.


The United States kept its own gold stock, while wanting the rest of the world to hold its savings in the form of loans to the United States. So the dollar didn’t go down. Other countries that were receiving dollars simply recycled them to buy U.S. financial securities.

What would have happened if they wouldn’t have done this? Let’s say you’re Germany, France or Japan. If you don’t recycle your dollar receipts back to the U.S. economy, your currency is going to go up. Dollar inflows from export sales are being converted into your currency, increasing its exchange rate. But by buying U.S. bonds or stocks, bid the price of dollars back up against your own currency.

So, when the United States runs a balance-of-payments deficit under conditions where other countries keep their foreign reserves in dollars, the effect is for other countries to keep their currencies’ exchange rates stable – mainly by lending to the U.S. government. That gives the United States a free ride. It can encircle the world with military bases, and the dollars that this costs are returned to the United States.


Imagine writing IOUs when you go out to spend at a store or restaurant – but your IOUs are never going to be collected! The store might say, “We have an IOU from Bonnie Faulkner. Let’s keep it as our savings. Instead of putting it in the bank or asking for payment in real money, we’re just going to keep collecting these IOUs from Bonnie Faulkner.” Corporations call such IOUs and trade credit “receivables.” Now, suppose you went on a spending spree and gave the store a billion dollars’ worth of your IOUs. There’s no way that you could pay off this billion dollars. In that case the stores receiving these IOUs would say, “Well, we really don’t want to foreclose on Bonnie, because we know that she can’t pay. We’d lose the value of receivables on the asset side of our balance sheet – all these IOUs that we’ve been collecting.


That’s essentially what foreign countries are saying about their buildup of dollars. The U.S. position is, in effect, that we are not going to repay any foreign country the dollar debt we owe them. As Treasury Secretary John Connolly said, “It’s our dollars, but your problem.” Other countries have to pay us or else we’ll bomb them. The military dimension to this arrangement is the U.S. position that it would be an act of war if other countries don’t keep spending their export earnings on loans or U.S. stocks and bonds.


That’s what makes the United States the “exceptional country.” The value of our currency is based on other countries’ savings. The money they save has to be held in the form of dollars or securities that we’re never going to repay, even if we could.

This is a huge free ride. You’d think that Donald Trump would want to keep it going. But he claims that China is manipulating its currency by recycling its dollars into loans to the U.S. Treasury. What does he mean by that? China is earning a lot of dollars by exports its goods to the United States. What does it do with these dollars? It tried to do what America did with Europe and South America: It tried to buy American companies. But the United States blocked it from doing this, on specious national security grounds. The government claims that our national security would be threatened if China would buy a chain of filling stations, as it wanted to do in California. The United States thus has a double standard, claiming that it is threatened if China buys any company, but insisting on its right to buy out the commanding heights of foreign economies with its electronic dollar credit.


That leaves China with only one option: It can buy U.S. Treasury bonds, lending its export earnings to the U.S. Treasury.

Trump is now driving other countries out of the dollar orbit

China now realizes that the U.S. Treasury isn’t going to repay. Even if it wanted to recycle its export earnings into Treasury bonds or U.S. stocks and bonds or real estate, Donald Trump now is saying that he doesn’t want China to support the dollar’s exchange rate (and keep its own exchange rate down) by buying U.S. assets. We’re telling China not to do what we’ve told other countries to do for the past forty years: to buy U.S. securities. Trump accuses countries of artificial currency manipulation if they keep their foreign reserves in dollars. So he’s telling them, and specifically China, to get rid of their dollar holdings, not to buy dollars with their export earnings anymore.

So China is buying gold. Russia also is buying gold and much of the world is now in the process of reverting to the gold-exchange standard (meaning that gold is used to settle international payments imbalances, but is not connected to domestic money creation). Countries realize that there’s a great advantage of the gold-exchange standard: There’s only a limited amount of gold in the world’s central banks. This means that any country that wages war is going to run such a large balance-of-payments deficit that it’s going to lose its gold reserves. So reviving the role of gold may prevent any country, including the United States, from going to war and suffering a military deficit.

The irony is that Trump is breaking up America’s financial free ride – its policy of monetary imperialism – by telling counties to stop recycling their dollar inflows. They’ve got to de-dollarize their economies.

The effect is to make these economies independent of the United States. Trump already has announced that we won’t hire Chinese in our IT sectors or let Chinese study subjects at university that might enable them to rival us. So our economies are going to separate.

In effect, Trump has said that if we can’t win in a trade deal, if we can’t make other countries lose and become more dependent on U.S. suppliers and monopoly pricing, then we’re not going to sign an agreement. This stance is driving not only China but Russia and even Europe and other countries all out of the U.S. orbit. The end result is going to be that the United States is going to be isolated, without being able to manufacture like it used to do. It’s dismantled its manufacturing. So how will it get by?


Some population figures were released a week ago showing the middle of America is emptying out. The population is moving from the Midwestern and mountain states to the East and the West coasts and the Gulf Coast. So Trump’s policies are accelerating the de-industrialization of the United States without doing anything to put new productive powers in place, and not even wanting other countries to invest here. The German car companies see Trump putting tariffs on the imported steel they need to build cars in the United States. It built them here to get around America’s tariff barriers against German and other automobiles. But now Trump is not even letting them import the parts that they need to assemble these cars in the non-unionized plants they’ve built in the South.


What can they do? Perhaps they’ll propose a trade with General Motors and Chrysler. The Europeans will get the factories that American companies own in Europe, and give them their American factories in exchange.

This kind of split is occurring without any attempt to make American labor more competitive by lowering its cost of housing, or the price of its health insurance and medical care, or its transportation costs or the infrastructure costs. So America is being left high and dry as a high-priced economy in a nationalistic world, while running a huge balance-of-payments deficit to support its military spending all over the globe.


Bonnie Faulkner: So it sounds like when the United States went off the gold standard, the dollar basically replaced gold as the main asset in which foreign governments could hold their assets. Now you’re saying that when there was no more gold standard, if foreign economies didn’t buy U.S. Treasuries, the price of their currency would rise and make them uncompetitive.

Michael Hudson: Yes. Imagine if Americans would have to pay more and more dollars to buy German cars. There’s going to be a larger demand for German currency, the euro, whose exchange rate would rise. That was happening throughout the 1960s and 1970s, before the euro. The only way that Germany could keep down the value of its mark was to buy something that cost dollars. It didn’t buy American exports, because America already was making and exporting less and less, except for food – and Germany can only eat so much wheat and soybeans. So the only thing that Germany could buy that was priced in dollars were U.S. Treasury bonds. That kept the German mark from rising even more rapidly, and kept the balance of payments in balance.


Japan had a similar problem. The Japanese tried to buy U.S. real estate, but they didn’t have any idea of what made real estate valuable here. They lost a reported billion dollars on buying Rockefeller Center, not realizing that the building was separate from the land value, and the land was owned by Columbia University. The building itself was running at a deficit. Most of the rental value paid was to the owner of the land’s ground rent. The Japanese had no idea of how American real estate worked.

The euro is only a satellite currency of the U.S. dollar

Some Americans worried that the euro might become a rival to the dollar. After all, Europe is not de-industrializing. It is moving forward and producing better cars, airplanes and other exports. So the United States persuaded foreign politicians to cripple the euro by making it an austerity currency, creating so few government bonds that there’s no euro vehicle large enough for foreign countries to keep their foreign reserves in. The United States can create more and more dollar debt by running a budget deficit. We can follow Keynesian policies by running a deficit to employ more labor. But the eurozone refuses to let countries run a budget deficit of more than 3 percent of its GDP.

Now running more than 3 percent of their GDP. That level is very marginal compared to the United States. And if you’re trying not to run any deficit at all – and even if you keep it less than 3% – then you’re imposing austerity on your country, keeping your employment down. You’re stifling your internal market, cutting your throat by being unable to create a real rival to the dollar. That’s why Donald Rumsfeld called Europe a dead zone, and why the only alternatives for a rival currency are the Chinese yuan. They’re moving into a gold-based currency area along with Russia, Iran and other members of the Shanghai Cooperation Organization.

Bonnie Faulkner: The European Union not allowing European countries within the eurozone to not run deficits more than 3 percent was basically cutting their own throat. Why would they do such a thing?


Michael Hudson: Because the heads of the Central Bank are fighting a class war. They look at themselves as financial generals in the economic fight against labor, to hurt the working class, lower wages and help their political constituency, the wealthy investing class. Europe always has had a more vicious class war than the United States does. It’s never really emerged from its aristocratic post-feudal system. Its central bankers and universities follow the University of Chicago free-market school, saying that the way to get rich is to make your labor poorer, and to create a government where labor doesn’t have a voice. That’s Europe’s economic philosophy, and it’s why Europe has not matched the growth that China and other countries are experiencing.


Bonnie Faulkner: So it sounds like then the United States has been able to dominate the world economy since 1971 from a debtor position.


Michael Hudson: When it was losing gold, from 1950 to 1971, that wasn’t dominating; that was losing America’s gold supply to France, Germany, Japan and other countries. Only when it stopped the gold-exchange standard and left countries with no alternative for their international savings but to buy U.S. Treasury bonds or other securities was it able to pay for its military spending without losing its power.

Since 1971, world diplomacy has essentially been backed by American military power. It’s not a free market. Military power keeps countries in a financial strait jacket in which the United States can run into debt without having to repay it. Other countries that run payments deficits are not allowed to expand their economies, either to rival the United States or even to improve living standards for their labor force. Only countries outside the U.S. orbit – China, and in principle Russia and some other countries in Asia – are able to increase their living standards and capital investment and technology by being free of this globalized financial class war.


Bonnie Faulkner: In Super Imperialism you write that, “Pressures to create a New International Economic Order collapsed by the end of the 1970s.” Are you saying that other countries simply gave up and acquiesced to American monetary imperialism? What happened?


Michael Hudson: I’m told that there was wholesale bribery. Officials in the Reagan administration told me that they just paid off foreign officials to support the U.S. position, not a New International Economic Order. U.S. agencies maneuvered within the party politics of European and Near Eastern countries to promote pro-American officials and sideline those who did not agree to act as U.S. satellites. A lot of money was involved in this meddling.


So the United States has corrupted democratic politics throughout Europe and the Near East, and much of Asia. That has succeeded in sterilizing foreign independence in the United States. Meanwhile, Thatcher’s and Reagan’s neoliberal ideas were promoted instead of the kind of mixed economy that Roosevelt and social democracy had been pressing for fifty years.

Who will plan economies: Financial managers, or democratic governments?

Bonnie Faulkner: If there were pressures to create a New International Economic Order in the 1970s, what was this new order looking to achieve?

Michael Hudson: Other countries wanted to do for their economies what the United States has long done for its own economy: to use their governments’ deficit spending to build up their infrastructure, raise living standards, create housing and promote progressive taxation that would prevent a rentier class, a landlord and financial class from taking over economic management. In the financial field, they wanted governments to create their own money, to promote their own development, just like the United States does. The role of neoliberalism was the opposite: it was to promote the financial and real estate sector and monopolies to take economic management away from government.

So the real question from the 1980s on was about who would be the basic planning center of society. Would it be the financial sector – the banks and bondholders, whose interest is really the One Percent that own most of the banks’ bonds and stocks? Or, is it going to be governments trying to subsidize the economy to help the 99 Percent grow and prosper? That was the social democratic view opposed by Thatcherism and Reaganism.


The international drive to de-dollarize

Bonnie Faulkner: Was this pressure that blocked a New International Economic Order brought on by the United States going off the gold-exchange standard?

Michael Hudson: No. It was a reaction against the U.S. policy of siphoning off the commanding heights of foreign economies. The United States wants to control their raw-materials exports, especially their oil and gas. It wants to control their financial system, so that all of their economic gains will go to foreign investors, mainly U.S. investors. It wants to turn other economies into service economies to the United States, and to make them into a kind of super-NATO military alliance that will oppose any country that does not want to be part of the U.S.-centered unilateral global order.

Bonnie Faulkner: How does today’s monetary imperialism – super imperialism – differ from the imperialism of the past?

Michael Hudson: It’s a higher stage of imperialism. The old imperialism was colonialism. You would come in and use military power to install a client ruling class. But each country would have its own currency. What has made imperialism “super” is that America doesn’t have to colonize another country. It doesn’t have to invade a country or actually go to war with it. All it needs is to have the country invest its savings, its export earnings in loans to the United States Government. This enables the United States to keep its interest rates low and enable American investors to borrow from American banks at a low rate to buy up foreign industry and agriculture that’s yielding 10 percent, 15 percent or more.

So American investors realize that despite the balance-of-payments deficit, they can borrow back these dollars at such a low rate from foreign countries – paying only 1 percent to 3 percent on the Treasury bonds they hold – while pumping dollars into foreign economies by buying up their industry and agriculture and infrastructure and public utilities, making large capital gains. The hope is that and soon, we’ll earn our way out of debt by this free ride arrangement.


Imperialism is getting something for nothing. It is a strategy to obtain other countries’ surplus without playing a productive role, but by creating an extractive rentier system. An imperialist power obliges other countries to pay tribute. Of course, America doesn’t come right out and tell other countries, “You have to pay us tribute,” like Roman emperors told the provinces they governed. U.S. diplomats simply insist that other countries invest their balance-of-payments inflows and official central-bank savings in US dollars, especially U.S. Treasury IOUs. This Treasury-bill standard turns the global monetary and financial system into a tributary system.


That is what pays the costs of U.S. military spending, including its 800 military bases throughout the world, and its foreign legion of Isis, Al Qaeda fighters and “color revolutions” to destabilize countries that don’t adhere to the dollar-centered global economic system.


Bonnie Faulkner: You write: “Today it would be necessary for Europe and Asia to design an artificial, politically created alternative to the dollar as an international store of value. This promises to become the crux of international political tensions for the next generation.” How does the world break out of this double-standard dollar domination?


Michael Hudson: It’s already coming about. And Trump is a great catalyst speeding departing guests. China and Russia are reducing their dollar holdings.

They don’t want to hold American Treasury bonds, because if America goes to war with them, it will do to them what it did to Iran. It will just keep all the money, not pay back the investment China has kept in U.S. banks and the Treasury. So they’re getting rid of the dollars that they hold. They’re buying gold, and are moving as quickly as they can to be independent of any reliance on U.S. exports. They are building up their military, so that if the United States tries to threaten them, they can defend themselves. The world is fracturing.

Bonnie Faulkner: What are foreign countries like China and Russia using to buy gold? Are they buying it with dollars?

Michael Hudson: Yes. They earn dollars or euros from what they’re exporting. This money goes into the central bank of China, because Chinese exporters want domestic yuan to pay their own workers and suppliers. So they go to the Bank of China and they exchange their dollars for yuan. The Bank of China, the central bank, then decides what to do with this foreign currency. They may go into the open market and buy gold. Or, they may spend it in foreign countries, on the Belt and Road Initiative to build a railway and steamship infrastructure and port development to help China’s exporters integrate their economy with others and ultimately with Europe, replacing the United States as customer and supplier. They see the United States as a dying economy.


Bonnie Faulkner: Can the Chinese build up their Belt and Road infrastructure projects with dollars?

Michael Hudson: No, they are getting rid of dollars. They already are receiving such a large surplus each year that they only use the dollars to buy gold or some goods, such as Boeing airplanes, but mostly food and raw materials. When China buys iron from Australia, for instance, they sell dollars from their foreign-exchange reserves and buy Australian currency to pay Australians for the iron ore that they import. They use dollars to pay other countries that are still part of the dollar area and still willing to keep adding these dollars to their official monetary reserves instead of holding gold.


Bonnie Faulkner: Well, it is kind of surprising, Michael, that countries haven’t started doing this a lot sooner.

Michael Hudson: There has been political pressure not to withdraw from the dollar-debt system. If countries act independently, they risk being overthrown.

It takes a strong government to resist American interference and dirty tricks to put its own country first instead of following the U.S. advisors and agents who pay them to serve the U.S. economy rather than their own, or to resist brainwashing by University of Chicago’s junk economics.

Bonnie Faulkner: How far along is the dollar’s demise as the world’s reserve currency?

Michael Hudson: It’s already slowing. Trump is doing everything he can to accelerate it, by threatening that if foreign countries continue to recycle their export earnings into dollars (raising the dollar’s exchange rate), we’ll accuse them of manipulating their currency. So he would like to end it all by the end of his second term in 2024.


Bonnie Faulkner: What would the United States look like if the dollar is no longer the world’s reserve currency?


Michael Hudson: If it continues to let Wall Street do the economic planning, the economy will look like that of Argentina.


Bonnie Faulkner: And what does Argentina look like?

Michael Hudson: A narrow oligarchy at the top, keeping labor at the bottom, taking away labor’s rights to unionize – an economy whose financial and military sectors have won the class war.

Bonnie Faulkner: China, with its Belt and Road infrastructure project, is now buying gold on the open market, as are a number of other countries. Has the Western banking system penetrated China? And if so, how would you characterize China’s banking system?

Michael Hudson: There’s an attempt by the United States to penetrate China. In the recent trade agreements China did permit U.S. banks to create their own credit. I’m not sure that this is going to really take off, now that Trump is accelerating the trade war. But basically, in America you have private banks extending credit to corporations. In China you have the government banks extending the loans. That saves China from having a financial crisis in the way that the United States does.


About 12 percent of American companies are said to be zombie companies. They’re already insolvent, not able to make a profit after paying their heavy debt service. But banks are still giving them enough credit to stay in business, so they won’t have to go bankrupt and create a crisis. China doesn’t have that problem, because when Chinese industry and factories are not able to pay, the public Bank of China can simply forgive the debt. Its choice is clear: Either it can let companies go bankrupt and be sold at a low price to some buyer, mainly an American; or, it can wipe the bad debts off the books.


If China had been crazy enough to have student loans and leave its graduates impoverished instead of providing free universities, China’s central bank could simply write off the student loans. No investors would lose, because the banks are owned by the government. Its position is, “If you’re a factory, we don’t want you to have to close down and unemploy your labor.

We’ll just write down the debt. And if your employees are having a really hard time, we’ll just write down their debts, so that they can spend their money on goods and services to help expand our internal market.”

America’s banks are owned by the stockholders and bondholders, who would never let Chase Manhattan or Citibank or Wells Fargo just forgive their various categories of loans. That’s why public banking is so much more efficient from an economy-wide level than private banks. It’s why banking should be a public utility, not privatized.

Bonnie Faulkner: Can you explain further how writing down debts is good for the economy?

Michael Hudson: Well, think of the alternative to writing down debts. If you don’t write down America’s student debts, the graduates are going to have to pay so much of the student debt service (now to the government) that they’re not going to have enough money to be able to buy a house, they won’t have enough money to get married, they won’t have enough money to buy goods and services. It means that most people who can buy houses are graduates with trust funds – students whose parents are rich enough that they didn’t have to take out a student loan to pay for their children’s education. These hereditary families are rich enough to buy them their own apartment.


That’s why the American economy is polarizing between people who inherit enough money to be able to have their own housing and budgets free of student loans and other debts, compared to families that are debt strapped and running deeper into debt and without much savings. This financial bifurcation is making us poorer. Yet neoliberal economic theory sees this as a competitive advantage. For them, and for employers, poverty is not a problem to be solved; it is the solution to their own aim of profitability.


Bonnie Faulkner: So is this whole privatization scheme, particularly the privatization of the banking system and privatizing a lot of infrastructure what’s bankrupting the United States?

Michael Hudson: Yes, just as it’s bankrupted England and other countries that followed Thatcherism or the neo-liberal philosophy since about 1980.

Bonnie Faulkner: Michael Hudson, thank you again.

Michael Hudson: It’s always a pleasure to have these discussions.

Bonnie Faulkner: I’ve been speaking with Dr. Michael Hudson. Today’s show has been: De-Dollarizing the American Financial Empire. Dr. Hudson is a financial economist and historian. He is President of the Institute for the Study of Long-Term Economic Trend, a Wall Street Financial Analyst and Distinguished Research Professor of Economics at the University of Missouri, Kansas City. His 1972 book, Super Imperialism: The Economic Strategy of American Empire, the subject of today’s broadcast, is posted in PDF format on his website at michael-hudson.com. He is also author of Trade, Development and Foreign Debt, which is the academic sister volume to Super Imperialism. Dr. Hudson acts as an economic advisor to governments worldwide on finance and tax law. Visit his website at michael-hudson.com.




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Ladies and Gentlemen

Thanks to this brilliant historian and excellent interviewer you now know and understand what most of this world does not understand.

KNOWLEDGE IS POWER. So you now have the chance and opportunity to have a future. If you do nothing it is a 100% certainty that you will become the victims and your chances of survival will be left to your own circle of influence and their knowledge and skills.

I have done more than my part to be of help to anyone that came to this thread started on December 3, 2016 FREE OF CHARGE.

I have decided to move on and I will post here from time to time however shortly all my knowledge and trading experience and methods will only be available at a paid website. You can contact me either by email or by my cellphone number. I am moving to a new location on Monday, July 15, 2019 and I may not post until my operations and computers are set up at my new office and home.