The Wall Street Journal published a superb chart (see below) to help you understand the timeline of the U.S. banking and currency crises.
Could you look carefully at the first two dates on the chart – Feb 24, 2023, and March 9, 2023?
On the first date, Feb 24, 2023, Silicon Valley Bank (SVB) received a “clean bill of health.” Two weeks later, on March 9, 2023, the FED shut down the “insolvent” bank.
How could this happen?
In 1971, President Nixon took the United States dollar off “the gold standard.” Toward the end of World War Two (1944), 44 nations’ leaders met at Bretton Woods, New Hampshire, and agreed that the U.S. dollar would become “the world’s reserve currency” for international trade.
In that Bretton Woods agreement, the U.S. government pledged to back the U.S. dollar gold, setting the price of 1 oz of gold at $35.00 U.S. dollars.
The U.S. government could only spend as much money as the U.S. kept in gold at Fort Knox to back up the U.S. dollar. In addition, nations that traded in dollars could always go to the U.S. Treasury’s Gold Window and exchange 35 dollars of U.S. currency for 1 oz of gold.
The Bretton Woods agreement lasted for a quarter of a century.
Sadly, during the 1960s, U.S. politicians began breaking our side of the agreement. The U.S. government began spending more dollars than it held in gold reserves.
Nations began “demanding their gold” instead of U.S. dollars. France famously parked a warship in August 1971 in New York Harbor, insisting the U.S. Treasury give France its gold in exchange for dollars.
The U.S. was in trouble.
The U.S. government needed more gold to meet its spending obligations and international agreements. But it takes too much time, fiscal discipline, and effort to restrain spending and mine gold.
So, on Sunday night, August 15, 1971, President Nixon interrupted the #1 Television Show in America (Bonanza) and announced that the U.S. dollar was being taken “off the gold standard.”
What did that mean?
The U.S. government could now spend whatever it desired without ensuring enough gold was in Fort Knox to cover its spending. In addition, nations who came to “the gold window” of the U.S. Treasury and asked for gold instead of U.S. dollars would not receive it – because the U.S. didn’t have it.
Interestingly, the U.S. Treasury’s gold in Fort Knox hasn’t been audited for decades. Nobody knows how much gold the U.S. government has in reserve. Had I gone to Congress, one of the first bills I intended to introduce was a demand for Fort Knox to be audited annually.
Gold in 2023 is now worth $2,020 an oz. in American dollars. In 1971, it was worth $35.00 an oz.
Gold has not gone “up in value.” The dollar has depreciated in value.
When a currency “depreciates” in value, purchasing items with that currency costs more (inflation).
Gold backing is historically a hedge against currency inflation.
A NEW CURRENCY – THE RENMINBI
Brazil, China, Russia, India, and Saudi Arabia (BRICS) have hoarded gold for years. China has now introduced a new currency called the “renminbi.”
The Chinese renminbi is backed by gold.
Yesterday (April 4, 2023), the BRICS nations announced they would begin trading with each other using either the renminbi or the Russian ruble. President Putin pegged the Ruble to gold during the Ukrainian War when the U.S. issued “economic sanctions” against Russia.
The Russian ruble is worth more today than it was at the beginning of the Ukraine war.
Oil can now be traded without the American “petro-dollar” (e.g., the U.S. dollar). Saudi Arabia has chosen to side with China, Russia, and other BRICS nations in this 2023 currency war.
80% of the world’s population lives in BRICS nations. Other nations are begging to become a part of BRICS.
The Russian/Ukraine war will not affect you and your family. The BRICS/USA currency war will blow up your family’s future.
Let’s go back to my original question.
How does a massive U.S. bank with a “clean bill of health” fail within two weeks?
Easy peasy. Nothing backs up your dollars in a U.S. bank except “the good faith and credit of the United States government.”
There’s no silver backing (a silver certificate) of your dollars in the bank. There’s’ no gold backing of your dollars in the bank (since 1971).
The bank “loans” your money to other banks, commercial institutions, and businesses. The number of dollars the bank “loans out’ is 8 to 10 times the number of dollars in the bank’s deposits.
If Americans, all of a sudden and at the same time, begin “losing faith” in the economy (think SVB bank), there’s an old-fashioned “run on the bank” (think Jimmy Stewart and “It’s a Wonderful Life”).
And you may find your money is gone.
“But,” you say, “The U.S. government is backing my banking deposits.”
Re-read this post. World War III is underway, and it is a currency war.
The U.S. government is 32 trillion dollars in debt. The American dollar has lost 99% of its value in the last century.
Our nation is bankrupt morally, spiritually, and financially.
So, what are the solutions for you and your family in this modern-day currency crisis?
1. Be your own bank.
Begin taking ownership of and possessing small items to “barter” when the dollar collapses. You’ll know the collapse is final when it takes $30,000 to buy a meal at a restaurant (do some research on the Internet about the 1930s Weimar Republic of Germany). You don’t know world history if you think this drastic financial collapse cannot happen in the U.S.
2. Store food to share with others in your family and plant a garden.
Also, keep some water in reserve, using water preservatives. When people can’t afford to eat, the prepared people thrive.
3. Trust the LORD.
Your Creator holds the keys to your life and to your death. There’s nothing to fear when you revere the God behind the history of this world. He is the God of your eternity.
Throughout the history of nations, the Creator has used famine, pandemics, wartime conflicts, and economic collapse to humble proud countries and proud people.
It’s America’s turn.