All language subtitles for 554321167

The strength of a nation's currency

is based on the strength
of that nation's economy,

and the American economy
is by far the strongest in the world.

Accordingly, I have directed
the secretary of the treasury

to take the action necessary
to defend the dollar

against the speculators.

I have directed Secretary Connally
to suspend temporarily the convertibility

of the dollar into gold
or other reserve assets,

except in amounts and conditions
determined to be in the interest

of monetary stability

and in the best interests
of the United States.

August 15th, 1971,

will stand as an important event
in economic history for many generations.

In fact, hundreds of years from now,
people will look back to that day.

The sun rises today
as it has a million times before.

Commuters wake up and travel
to their offices to begin the day's work.

Farmers tend to their crops.

Construction workers
build new infrastructure.

Today is a day like any other, or is it?

In 2008, the world experienced

one of the greatest financial turmoils
in history.

Markets around the world started crashing,
and major financial institutions,

once thought to be invincible,
started showing signs of collapse.

Governments responded quickly,
issuing massive bailouts

and stimulus packages in an effort
to keep the world economy afloat,

and it worked.

The global economy recovered much quicker
than most predicted,

and soon it was back to business as usual.

Yet, something still isn't quite right.

A growing sense of unease
fills the population.

In the world of finance,
indeed in all facets of modern life,

cracks have started to appear.

There's angst out there, and I think
if you talk to people on the street today,

they would tell you,
I don't know what's causing all this,

but this just doesn't feel normal to me.

The government's running
a trillion dollars worth of deficit.

Why isn't the economy improving?

The government's going
to spend almost $3.7 trillion.

Why don't I have a job?

Why is the unemployment rate
at nine percent?

I even think that number is understated.

A lot of people are feeling unsure
about the world today,

concerned that something terrible
is waiting in the wings.

We're told that
the global financial crisis

of a few years ago has been fixed.

However, what if the crisis isn't
the cause of the angst so many of us feel,

but rather the symptom
of a much deeper problem?

At Bretton Woods, New Hampshire,

delegates from 44 allied and associate
countries arrived for the opening

of the United Nations Monetary
and Financial Conference.

Our story begins in 1944.

With World War II coming to an end,

the allied nations met at Bretton Woods,
New Hampshire,

to create a new financial system

which would stabilize the world
once the war ended.

With America poised to enter
a golden age of prosperity,

the US dollar was chosen
as the world's reserve currency.

The Bretton Woods System was created
after the Second World War

at the Bretton Woods Conference
in New Hampshire,

and rather than using gold as the means
of exchange between countries,

as was the case
under the old gold standard,

the dollar was going to be used.

The dollar was chosen
because back then it was as good as gold.

Under this new system,

countries agreed
to fix their currencies to the US dollar,

and the US dollar would be tied to gold
at a price of $35 per ounce.

This meant countries around the world

could trade their currencies
for US dollars,

which they could then exchange for gold.

This created a system where all currencies
were essentially backed by gold.

To avoid the logistics of shipping
physical gold across the world

when countries did exchange
their currencies for gold,

it was usually stored safely in the US.

Under the Bretton Woods system,
you could exchange your currency

or your dollars for gold now only apply
to foreign countries and central banks.

We began to run budget deficits.

We were running the Great Society program
under Lyndon Johnson

and we were fighting a war in Vietnam,
and all of a sudden

we were running these deficits,
and countries were changing their dollars.

They said they wanted gold,
and it began with the French,

and then it started to spread.

With all the new spending programs
in the United States,

other countries became concerned
that the US was spending more money

than it had gold reserves.

They started exchanging their dollars
for gold and demanded physical delivery

as they felt
that there were more dollars being printed

than the gold that backed it.

To prevent this outflow of gold
from American vaults, President Nixon

called for an emergency suspension
of the gold convertibility system.

I have directed the Secretary
of the Treasury

to take the action necessary
to defend the dollar

against the speculators.

I have directed Secretary Connally
to suspend temporarily the convertibility

of the dollar
into gold or other reserve assets.

All of the problems
that we see today in the monetary system

are a direct result of the decision made
on August 15th, 1971,

to abandon a fixed link back to gold.

What gold did
is it provided discipline in governments

and provided discipline
on government spending.

Under the old system,
if you run a budget deficit,

then what would happen
is gold would flow out of your country

until there was a balance again.

Well, without any gold backing,
then countries ran perpetual deficits.

If you look at, for example,
this country, from 1971 on,

the US has never run a surplus.

Ever since we went off the gold standard,
it's just been a perpetual stimulus.

Good times, bad times,
always run a deficit.

What led Nixon
to abandon the gold standard in 1971,

he claimed it was temporary.

We've been waiting 40 years
and we're still off of it.

We ran up huge deficits during the 1960s.

We had the guns and butter economy

where the government was simultaneously
fighting a war in Vietnam abroad.

In addition, we were funding
manned missions to the moon

and the whole space program.

We were creating more money
than we had gold reserves to back it up.

A lot of our foreign creditors saw this
and began to demand gold

rather than their Federal Reserve notes
because they sensed that Washington simply

didn't have enough gold
to make its commitment to back the dollar.

By removing the link between gold
and the US dollar,

President Nixon created a system where
all currencies were backed by nothing.

This is what is known as a fiat currency.

Fiat currency is a currency
that's backed by nothing

except government promises.

The word fiat is a Latin word,

and it basically means the currency
that's circulating by force.

If people have confidence
in their currency

and if there's enough government force
that will enable the currency to circulate

for a period of time until people
lose confidence in the currency.

There is no nation on this planet
that currently uses money.

We all use currency.

There will come a day
when everybody knows the difference.

Money is a medium of exchange,
and the way it has evolved

is that it's always something
of intrinsic value.

Until the modern age,
when politicians say,

well, we don't need anything
of intrinsic value anymore,

all we need is a political decree.

We can say this is money,
this piece of paper is money.

Now money has a new characteristic,
but underneath it all,

there's this same concept in place
that nobody ever seems to challenge,

and that is that governments
have a right to declare something

of no value to be money,
and you must accept it.

That's really the problem
and it's still the problem today.

It's destroying
the economies of the world.

With currencies no longer backed
by anything real or tangible,

their value was measured only
in relation to each other,

Because countries
with relatively weak currencies

could make products cheaply,

countries devalue their own currencies
to make them desirable trading partners.

Every paper currency
measures itself against the dollar.

If the dollar goes down,
the other central banks respond to that

and they try and intervene
in the foreign exchange markets

to ensure that the impact
doesn't hit their domestic economies.

What is a Ponzi scheme?

A Ponzi scheme
is a fraudulent investment scheme

that promises high returns
for investors with little or no risk.

Sounds too good to be true, right?

That's because it is.

In a legitimate investment scheme,

the money invested
is used to build wealth,

typically through low-risk ventures
like stock or real estate portfolios.

Over time, this generates enough income
to pay the investor back

their initial investment,
plus some profit.

A Ponzi scheme, on the other hand,
promises massive returns quickly.

How does it accomplish this?

Instead of using the money
invested to build wealth,

a Ponzi scheme
simply brings in more investors

to pay off the previous investors.

Because these new investors
have also been promised large returns,

the scheme must then find
an even bigger group of investors

to pay them off.

All the while, the creators
of the scheme are skimming cash

from each group of investors.

Because a Ponzi scheme
doesn't generate any wealth itself,

it must constantly bring in larger groups
of investors to keep functioning.

Eventually,
no more new investors can be found

or large numbers of previous investors
all cash out at the same time,

and the scheme collapses in on itself.

By this time,
the perpetrators of the scheme

have siphoned off tremendous amounts
of money for themselves,

while the investors are left out of pocket
and out of luck.

Without a fixed link to gold,

the US Treasury has been able to borrow
and spend as much money as it wanted.

When the US government needs money,

it takes out a loan
with the Federal Reserve.

The Federal Reserve
prints the currency required for the loan

and in return
receives an IOU from the US Treasury.

These IOUs are called government bonds.

With the money
provided by these loans or bonds,

the US government
pays its bills and obligations.

Meanwhile, the US Treasury
and the Federal Reserve

work closely together
to sell these bonds at auction,

where foreign central banks,
pension funds,

and even individuals
buy these US government loans.

Why wouldn't they?

Loaning money to the US government
is virtually a risk-free investment.

However, if the loans are spent on bills
and paying off previous loans,

where does the government get the money
to pay back the current loan

and the interest that is charged on it?

Is investing in a US government bond
simply one small part

of a giant Ponzi scheme?

The Federal Reserve System
is definitely a Ponzi scheme.

There's no question about it.

They go through the appearance
of lending money to the governments,

and the governments agree
to pay back the money plus interest.

This money comes into being,

they create it for that purpose
and give it to the government.

You understand
that it didn't exist before.

Central banks just make it out of nothing
and click a few keys on a keyboard

of a computer and the Treasury
of the United States government

now has another trillion dollars
that it can spend.

That's where that money came from.

That creates a liability on the part
of the federal government

to pay it back, plus interest.

Think about that, plus interest.

When it comes time to pay it back,
plus the interest, they can't pay it back

and they certainly can't pay it back,
plus interest, too.

What they do is they borrow more
to cover the original loan,

plus the interest.

Then by that time,
Congress wants more money anyway,

so the debt just keeps going up.

Under the current monetary system,
we borrow all of our currency

into existence and we promise
to pay it back plus interest.

If you borrow
the very first dollar into existence

and that's the only dollar
that exists on the planet

but you promise to pay it back,
plus another dollar's worth of interest,

where do you get the second dollar?

The answer is you have to borrow that.

It's a Ponzi scheme
because you can never pay it off.

It always requires
that we go deeper into debt.

Since 1971, the United States
has been running trade deficits

with the rest of the world,

meaning we've been buying a lot
more products from the rest of the world

than they have been buying from us.

The Japanese and Koreans
sell us cars and electronics.

The Middle East sells us oil,

and the Chinese sell us
seemingly everything

on our Walmart shelves.

The US pays for these products
with US dollars and everyone is happy.

However, if countries were to convert
these US dollar profits

back into their own currencies,
their currencies would rise in value,

making their economies
less desirable to trade with.

Instead, countries
invest their dollar profits

by buying US government bonds.

Countries around the world
sell their goods to the US in exchange

for US dollars that have been borrowed
through the Federal Reserve,

creating IOUs.

Countries then loan
their US dollar profits back

to the US by buying more IOUs.

The money from these loans
is spent on paying government expenses

as well as paying back previous IOUs.

However, in order to do this,
larger loans must be made

in order to pay back
the principal and the interest.

By paying back old loans
with new and larger loans,

it would appear as if the entire world
has been investing their hard-earned money

into a Ponzi scheme of epic proportions.

In this business of creating money
for federal governments

and national governments around the world,

if they didn't keep
creating new money in larger amounts,

the whole thing would crash

because that's where the money
comes from to pay off the previous loans.

It's the new loans.

That's why it's a Ponzi scheme.

It's a classic Ponzi scheme.

In order for the US economy to function,

we have to borrow more
and more money from the rest of the world.

The more money they loan us today,

the more money
they have to loan us in the future.

If they ever stop loaning,

the whole thing collapses
and we can't pay them back.

Every Friday night, Julius Job
is to compare the grocery prices

of our neighborhood stores
for Saturday morning shopping.

There are five big neighborhood markets
within a couple of blocks of our house,

and Julius spreads her shopping around,

going where the prices are lowest
and the quality best.

Remember
when a chocolate bar cost a quarter?

When you could fill your car up for $5,
and feed a family of six for $35 a week?

Whatever happened to those days,

without anything
tangible backing currencies,

governments could borrow
and print as much currency as they wanted.

This has gradually led to the value
of our currency being eroded.

With the creation of all this money

that dilutes the value of all
of the dollars that were out there before,

so that the purchasing power
of the dollar gets crowded down.

We used to be able
to buy a gallon of gas for 0.31 cents.

Now it's hitting around $5.

The average guy in the street
is affected by inflation

because of the loss of purchasing power.

As a consequence,
his standard of living is declining

if he can't keep up
with the inflation rate.

In many measures of a standard of living,
Americans today are actually worse off.

You can take my grandparents.

My grandmother never worked,

despite the fact that
my grandfather was a carpenter,

and they had eight children.

Could a carpenter, somebody without
even a high school diploma,

just working in a blue-collar job,
support a wife and eight kids today?

Not a chance.

With inflation rising faster than income,

people were forced
into more and more drastic measures

to maintain their standard of living.

With each new day,
the work of a family begins again.

When we went off gold backing
on the dollar,

what used to happen prior to that is,
the husband went to work

and the wife stayed at home
and raised the family.

Because of inflation in the 70s,
the wife went to work.

Now you had two incomes
that was necessary to produce

and buy the same goods and services.

In the 90s, we stopped saving.

The savings rate basically got down
to zero because people were spending

and they couldn't save in order
to buy the same goods and services.

Then we got to the last decade.

The wife was already working,
the savings were down to zero,

and they borrowed money.

We've gone from two earners,
getting rid of our savings rate,

to borrowing money
to keep pace with inflation.

The average person is now forced
to borrow well beyond their means.

Getting themselves deeply into debt.

At first, this was to maintain
a nice standard of living.

However, slowly
it has become necessary just to survive.

By printing so much currency
and devaluing it so heavily,

it would seem that governments
are essentially levying a hidden tax

on their people.

Central banks tried to say
that two percent

or three percent inflation is a good thing
and they make that a target.

Well, it's still a tax.

Why is two percent inflation
or three percent inflation better

for the country than no inflation?

You will be told, of course,
that it's better than deflation

and you'll be told
that people like to feel that their money,

jobs, or their wages
are going up by two percent

and this is something.

With effect, that two percent is robbery

and what they get
is going down by that amount.

We are experiencing inflation these days.

They say the CPI is up,
whatever it is, two or three percent.

Anybody who's alive
knows that inflation is well beyond that,

probably running double digits.

The purchasing power of the average person
has been deteriorating drastically.

However, in order to disguise this,

governments have been skewing
the figures in their reports

to make it seem as if inflation
is much lower than it really is.

There is this curious distinction
made that most people don't understand

between core inflation
and headline inflation.

The core inflation
is this basic two percent target,

which doesn't matter.

The headline inflation
is once you include all sorts of things

like energy prices
and sudden tax rises and the rest.

Well, the inflation rate is skewed.

They use all kinds of contrivances
to make the inflation rate look lower

than it really is.

If the US government
was using the same CPI model

that it did when President Carter
was in the White House in the late 1970s,

inflation rate today in the United States
would be nine or ten percent.

That's how badly
the currency is being debased.

The reason why they do that
is there are a lot of inflation-adjusted

responsibilities that the US government
has to pay out money to.

For example,
people on the Social Security system

earn on an inflation-adjusted basis.

If they keep the inflation rate low
according to their own statistic,

that means they're paying out less
and government budget deficit is less.

A thriving metropolis.

Toledo is one of the world's
greatest glass processing center.

In Akron, the state's fifth-largest city,
that story deals primarily with rubber.

Akron is the rubber manufacturing capital
of the nation and the world.

Her very name is synonymous with rubber.

In a global economy where currencies
are measured only against each other.

Countries are able to artificially
lower the value of their own currency,

making their industries more competitive.

A country with a weak currency
can make products cheaper,

causing entire industrial centers
to move overseas.

This effect has been seen countless times
in cities around the world,

some of which still haven't recovered
from the loss of their industrial base.

I think the guy on the street
is frustrated.

They go, gosh, I went to college,
I don't have a job,

I can't get a job, I spend all this money
and I've got student loans.

It's costing me more to live.

The Fed is telling me there's no inflation
yet I go to the store

and I see the price of milk,
eggs, and meat have up.

I pull into a gas station
and it's costing me more for gas.

They don't really understand how
all this affects them on a personal level,

and that's why I think they're frustrated

because there isn't an educational system
that explains that look,

when you print money,
when you have nothing backing it,

and when you debase it,

you have all the side effects
that you see.

Higher inflation costs,
corruption, cronyism,

all the things that would have been
in the headlines that we've seen

over the last four or five years.

The protest movements
are an interesting phenomenon.

A lot of people are terribly upset
with Wall Street.

They're upset about what's happening
to their purchasing power.

They're upset with the news
that they hear of the fact

that the executives of these giant banks
are getting million dollar bonuses

at the same time, they're dipping
into the pockets of the taxpayers

to get all this bailout money,
so they're angry.

Unfortunately, people are demonstrating
against the economic crisis,

and yet at the same time,

they're demanding more welfare
and demanding more medical benefits.

They're demanding more state control
and regulation of their lives.

They're demanding more money be created
and pumped into society.

They don't realize
that those are the very things

that have brought them onto the street
in the first place in their anger.

While the person on the street
is struggling to get by,

we're told that what we're experiencing
is a typical recession.

Why then
does this current crisis feel different

from previous economic recessions?

This is far from typical.

I think this is the end game.

I think what we're experiencing now
are the pains

of the 40-year experiment
in fiat currency coming to an end.

It is an absolute failure
not only for America

but for the entire world.

Up until 2008,

we've been borrowing more and more money
to maintain our standard of living.

Are we now at the point
where we're maxed out

and cannot take on any more new debt?

What we're seeing today
is deleveraging at all levels of society.

Consumers are maxed out.

Each succession that we had in the economy

when we went
through this boom and bust period,

we'd go through a bust
they would reinflate again,

and the economy would start up again
but we kept piling on levels of debt.

Finally, we reached the point
where you can't pile up any more debt.

Banks are no longer willing
to give out credit so freely,

and many people are more concerned
with paying off existing debt

as opposed to taking on new debt.

While this is prudent, sensible behavior,

it's also a serious threat
to the global economy.

Having set itself up
as a giant Ponzi scheme,

the global economy is reliant
on more and larger debt

being issued to keep itself functioning.

If you try to just live within your means

and get by with just the amount
of dollars that we have today,

paying the interest on them
collapses the currency supply.

We continually have to borrow more units
of currency into existence every month

than we extinguish by paying off debt.

The system,
as it's been presently structured is that,

they have to continue
expanding the money supply,

otherwise, the system is going to die.

Politicians and pundits
talk about living within our means

and paying down the debt.

You can't do that
without collapsing the entire economy.

We would just vanish into this black hole.

All the politicians are in a situation
where if they don't come to the rescue,

we could just have an overnight shutdown,
which they can't ever imagine happening

while they're in power.

There's always this wish to move on

and the expression
kicks the can down the road,

which is really what we're doing.

The problem is we've run out of road.

There is no place to kick the can anymore.

We've got to deal with the can
and it's not simply a can,

because every time
we kick it down the road,

unfortunately, it got bigger.

Now it's an enormous can
and it's going to crush us.

While the financial crisis of 2008
may have been the first death throes

of the Ponzi scheme,

governments around the world
weren't about to sit back and let it fail,

so they delayed the inevitable collapse,

pushing it down the road by bailing out
struggling financial institutions,

buying toxic mortgages, and taking on
debt on behalf of its citizens.

In 2009 and 2010, what happened
was the crisis was papered over

through bailouts,
guarantees, money printing,

expansion of the money supply, et cetera.

Governments can do that.

Don't underestimate
the ability of governments

to dictate results in the short run,
but in the long run,

none of the problems were solved,
the bad debts are still there.

The banks are still insolvent.

The banks are not lending.

The economy is not growing.

We haven't really solved anything.

By buying their way out of these crises,
by creating money out of nothing

and flooding it into the economy,
and diluting the purchasing power,

they're not solving the problem.

What they're doing
is pushing it off a little bit

into the future and making it worse.

Now, do we keep going down this road?

Do we print more money?

The Fed's balance sheet
went from 800 billion to 3 trillion.

Should it now go to 6 trillion?

We had an $800 billion stimulus.

Should we now have a $2 trillion stimulus?

In theory, you could,

but this is where people
could lose faith entirely in the currency

and the currency could collapse.

The Federal Reserve's money
printing exercises

may help prop up
the economy in the short term.

However, what are the consequences
of money printing on such a large scale?

I think you're going to see
a very rapid decline

in the value
of the dollar in a matter of days,

whether it's 20 percent,
30 percent, or 40 percent.

A lot of people
have been buying the dollar

as a safe haven.

When they find out
that there's no safety there,

in fact,
they need a safe haven from the dollar.

Right now, the dollar
is benefiting from the fear trade.

What if the fear trade
is afraid of the dollar?

Aside from causing
an enormous amount of inflation,

the Federal Reserve's reckless money
printing exercises

also run the very real risk
of creating a worldwide loss of confidence

in the US dollar.

I think a currency crisis
is highly likely,

but it'll be very difficult to know
exactly what will cause it and when.

I think it will be something unforeseen,
could be a natural disaster,

could be a political shock.

It could be just a general loss
of confidence.

It could be something as simple
as a treasury auction that goes bad.

There are no buyers and all of a sudden
the interest rate starts to go up.

Then the financial players,

the big hedge funds
start to react to it, dumping dollars.

Then all of a sudden
you have foreign central banks

that begin dumping dollars, get me out,
and when that happens, just like that.

At some point,
just like all Ponzi schemes,

the participants wake up to the con,
they don't want to participate anymore,

and the whole thing implodes.

Now, when private factors,
when people are voluntarily participating,

foreigners, foreign central banks,
when they stop buying,

the one difference is the Federal Reserve
can come and supply the demand

for the people who are waking
up to the Ponzi nature

of what we're doing.

However, when the Fed
becomes the only buyer,

that's the end game
or the beginning of hyperinflation.

Hyperinflation is a rapid increase
in the inflation rate,

so much so that people
lose faith in the currency,

and you see what is in fact
a flight from the currency.

Defeated Germany has runaway inflation.

In Germany, the mark becomes so worthless,
it is used to paper walls

or to light stoves.

What happens is the government
spends so much money forcing it to borrow.

It gets to the stage
where it's borrowing more money

than the market is willing to lend to it.

The central bank then steps in

and turns that government debt
into currency.

The great question is,
and I don't know the answer,

is what level of inflation?

Five percent, ten percent,
15 percent, or 20 percent?

Do you start to panic?

All I know is when that level comes,
everybody panics together.

The consequence of hyperinflation
is the price of goods and services

rises very rapidly,
and that feeds upon itself

causing people to get rid
of the currency even more quickly.

You then have a situation
where people go out

and they buy things just
to get the hell out of paper money.

Paradoxically, that then starts driving
and accelerating demand for paper money

because they want more paper money
to go and buy things.

You have this situation
where the value of paper money

starts collapsing in advance of its issue.

In everyday life,

you'll be scrambling
from day to day to get tangible things.

If you're thinking
of buying one can of tuna,

you're going to buy two
because you know that tomorrow

or even later on that day
or the next hour,

that can of tuna
is going to be costing you more.

You're going to be scrambling
to get anything that's tangible.

This period is going to involve
a lot of economic pain.

A lot of people
who are currently retired in America

are going to have to get jobs.

Their retirement is gone.

It's been bankrupted
because they put their faith

in a Bernie Madoff-type
national Ponzi scheme.

Of course, a lot of the property
is going to decay

if people are spending
money on the necessities.

They don't have money to make the repairs
necessary to maintain their properties.

If the landlords can't collect rent
from their tenants,

how are they going
to maintain their properties?

How are they going to pay the taxes?

I think the whole economy
is going to crumble

beneath the weight
of this runaway inflation.

Of course, the initial reaction by the Fed
will be to create even more inflation,

to try to stimulate the economy
by printing even more money,

which, of course,
is the source of the problem.

On the surface,

it would appear that this is a problem
facing the United States alone.

However, with so many countries
holding their savings

in US government bonds,
a loss of confidence in the US dollar

could trigger a global crisis
that would affect every nation on Earth.

If the US dollar hyper-inflates,
the implications are really profound

because you can go to a country
like Zimbabwe

and see the impact of hyperinflation.

What happens when the world's
reserve currency hyperinflates?

We've never been in this situation before.

It's impossible to predict
what the outcome is going to be.

However, logic suggests
that if the US dollar hyper-inflates,

most, if not all,
of the currencies of the world

will also have severe economic problems,

because at the end of the day,

the reserves of all of these currencies
are basically dollars.

There have been dozens of currency
collapses since the end

of the Second World War,
and they all result from the same thing.

Bad policies and bad management.

The US right now is pursuing bad policies.

Central Bank is doing a bad job
managing the currency

and as a consequence, it's inevitable
that the dollar is going to collapse.

It's on this road
that I call the fiat currency graveyard.

The markets, the private sector,
however you like to decide it, people,

they suddenly move in a herd instinct.

They suddenly understand things
and this can happen overnight.

It really can.

The timing of this is,
I think, very difficult,

it is impossible for us to say.

However, I would point out
that there is a danger

that I use a metaphor.

One morning we will wake up

and find
that we are in a very different world.

It may not be one morning,
it may be a week, a month, I don't know.

When it happens,
it will happen quite quickly

and we won't be able
to predict when.

Hyperinflation may be
one of several scenarios

facing the world today,

but history has shown us that whenever
a nation tried to run its economy

using an artificial fiat system,

the end result
is always the same, disaster.

There is a proven
100 percent failure rate.

There is no exception to this.

Fiat currencies always fail.

Then 40 years ago,
we tried this grand experiment

where all the world's currencies
became fiat at the same time,

when we ended the Bretton Woods system.

The world is going
to have to extricate itself

from this monetary system
based on the dollar

because if you want to back your currency,
you have to back it with something.

You can't back it with nothing.

You always think
of that old Superman movie

where the first one was Lois Lane,
she falls off the top of the building

and Superman catches her
and he says, I got you.

Don't worry, I got you,
and she says, well, you got me.

Who's got you?

That's the dollar.

Who's got the dollar?

It's not Superman.

The dollar can't fly on its own.

The dollar used to be backed by gold.

It was gold that had the dollar.

It's like everybody
has tethered their ships

to the Titanic of currencies
and so we're all going to go down.

If there is a loss
of confidence in the US dollar

and I think there will be in this decade,

it happened before
so it'll just be history repeating.

Then we'll probably have to go back
to something that will instill confidence

and what instills confidence is gold.

The only real solution is to go back
to a real sound currency,

real money, with something behind it.

It doesn't have to be gold or silver.

Historically that's been what societies
have chosen through trial and error.

They've tried this, they've tried that

and they always
wind up with gold or silver.

I think that probably is a clue
that it's not a bad way to go.

With all the uncertainty
facing the world today,

a return to a gold-backed economy
would seem logical.

How come there isn't so much
as a discussion about such a return?

The answer is as simple as it is alarming.

The people at the top,

the ones who have been benefiting
from the current Ponzi system,

don't want the ride to end.

Many now believe
that the price of gold and silver

have been artificially suppressed

to make it seem less desirable
as a unit of global exchange.

What governments try to do
is to maintain a low gold price

because by doing that

it makes the dollar look worthy
of being the world's reserve currency,

when in fact we know the dollar
is not worthy of that esteemed position

because it's being so badly
mismanaged by the United States.

Groups like the Gold Antitrust
Action Committee or GATA,

have been tracking what they believe
is the deliberate suppression

of gold and silver prices
through a variety of dubious means.

In 12 years, we've amassed nothing

but evidence of the supports
the manipulation of the gold price.

It'd be like talking about a murder trial

when the jury would say guilty
beyond a reasonable doubt.

However, you're going to have
to present each point of evidence

and how it all fits together.

There are numerous methods that they use
to suppress the price of gold.

Some are harder to prove than others.

However, some of them are fully reported,
and that's central bank sales.

Between 1999 and 2002,
the Bank of England foolishly sold

a massive amount
of Britain's gold reserves

at an average price of $275 an ounce.

The proceeds were spent buying euros
and US dollars.

The governments of Canada, France,
and Switzerland, among others,

were also sellers of their gold
around this time.

We know that the central banks
used to sell 400 tonnes every year.

Why were they selling 400 tonnes?

Obviously, it was the dumbest decision
anyone could have made in the decade.

By far the dumbest,
but they did it every year.

Sell 400, now gold goes
from 300 to 1,600, almost 1,700.

Why were you selling the gold?

Because they were trying
to keep the price down.

It was a coordinated thing
to keep everyone focused

on believing in currencies.

Alan Greenspan, in testimony to Congress,
admitted that they were manipulating

the price of gold when he said,
the world's central banks

stand ready to lease gold
in increasing quantities,

meaning they were already doing it.

Should the price of gold rise,

meaning the target
was to suppress the price of gold.

They were already doing it

and their target
was to suppress the price of gold.

He admitted it in testimony to Congress.

Although central banks
are able to sell off

their country's gold holdings legally,

they may have also been suppressing
the price of gold

using some other
rather questionable means.

Some investigators believe
that Western central banks

have been loaning
their countries' gold to bullion banks.

A bullion bank is an institution
that sells gold with the intention

of buying it back sometime
in the future at a cheaper price.

With the proceeds of this sale,

these banks have been known
to buy US government bonds.

While this isn't a problem in itself,
central banks report the gold they have

and the gold they've loaned
to these bullion banks as one item.

While a central bank may claim it has
a certain amount of gold in reserves,

much of that gold
may be on loan to a bullion bank

which may have sold the gold
in exchange for government bonds.

One means of intervention
in the gold market

is the lending of gold
to so-called bullion banks,

and they sell it in the market.

This suppresses the price

as if the central banks
would sell it directly.

However, this lending does not appear
in the book of the central banks.

The US Treasury a few years ago
changed the way they account for gold

and they are accounting
for some of their receivables

and their inventory as one line item.

They're accounting
for what they actually have

and what people
owe them as the same thing.

That is basically illegal accounting.

It's fraudulent.

Why work so hard
to keep the price of gold and silver low?

Why do healthy gold and silver prices
threaten to collapse the Ponzi scheme?

There's this competitive relationship
between gold and national currencies

because gold is the only competitor
to a national currency.

Gold is money

and these national currencies
are money substitutes

that circulate in place of gold.

Fiat money gives the power to government.

Real money keeps the power
with the people.

When you have real money,
the government is limited.

It can only spend what it taxes
and the public will resist taxation.

However, if the government
can simply print and borrow,

there's a lot less resistance.

It's a lot easier
for the government to grow

when it can promise something for nothing.

That's what they do.

Gold is what protects the people

from the reckless policies
of the government.

Gold is the government chaperone.

The government wants to be able to do
whatever it wants, gold stands in its way.

Yes, gold is an enemy of big government,
but it's a friend of freedom.

It's a protector of individuals
from the government.

Gold is a competitor to the dollar.

When it's going way up,
it's a threat to inflation.

It's a barometer of the well-being
of the United States.

Look at gold screaming now
and the world's falling apart.

It calls attention to how bad things are.

The US government
has an interest in Wall Street

and the politicians,
to keep the price suppressed.

Wall Street doesn't want you
going down to a coin dealer

buying gold and silver coins.

They want to sell you paper.

The government wants to sell you paper.

I would say it's the government
and Wall Street.

Golden hands of people
are the way you control government.

Governments cannot create money
out of thin air.

If it's gold, they can only create paper
out of thin air.

If they can create paper out of thin air,
they can use that paper to wage wars,

or they can use that paper
as a political contrivance

to enrich their friends.

As a consequence,

governments have been fighting gold
all century long.

Despite this desire to keep gold
and silver down,

the recent instability
in the markets has seen the demand

for gold and silver skyrocket.

This, in turn,
has exposed a deeper problem

within the central banks.

The problem of central banks
in the West now face is that

they have sold an awful lot of gold
to try and suppress the price of gold.

They are now embarrassed
by the fact that central banks

not in that original cartel,
are now really very keen buyers of gold.

We're talking about the Chinese,
the Russians,

the Indians, and Mexico.

All these non-mainstream central banks,
not part of, if you like,

the top club members of the Bank
of International Settlements.

The little guys in that context,

they're picking up hundreds
of tons of this stuff.

To suppress the price of gold,

Western central banks have had to sell
or loan out their country's gold holdings.

However, because the gold they sell
rarely leaves their vaults,

no one can be certain they aren't selling
or loaning out more gold

than they physically own.

If this is true, then this could be one
of the biggest scams

ever perpetrated in history.

A massive con perpetrated
not by individuals

but by entire governments.

The central bank gold, most of it sits

at the New York Federal Reserve
and the Bank of England.

It's in the basement of these two places
and it doesn't actually move.

When a country is doing
international settlement,

they basically take a bar off of this pile
and put it on that pile,

or they'll just change the labels
or it's a book entry, it's accounting,

except there's been some
creative accounting on all this gold.

I don't think all of it is there.

The question remains if everybody,
especially the big players,

wanted all of their gold
delivered at the same time,

it is physically impossible to do it.

Most gold that exists on the planet,

there's more than one claim
on each ounce of gold.

There's several people that think

that they have a title
to that same ounce of gold.

I have said many times
over and over again,

if you can't hold it, you don't own it.

The game can't go on forever
because sooner or later

people are going to demand
their physical gold or silver

and that already is happening.

The lack of accountability in gold sales
by Western central banks

hasn't been a concern so far.

However, as more and more buyers of gold
have started to demand physical delivery,

central banks that have oversold
or loaned out their country's gold

will find themselves caught
in a major scandal.

The result of such fraudulent activity
means buyers of gold,

be they individuals, pensions,
hedge funds, or even entire nations,

could be ripped off
for billions of dollars.

It's a little similar
to the Murdoch scandal

here at Fox News in London,

the Madoff scandal.

It's a very incestuous relationship
between the press,

big money, and the politicians.

Unfortunately, these things
don't get corrected until they blow up.

Madoff blew up.

Murdoch blew up.

The gold market is going to blow up

and I think it will be a bigger scandal
than either of them

because
it's a worldwide financial situation.

It's only a trick
that the politicians in power today know

and the central bankers,
the only trick they know

is to create more money out of nothing,
to inflate the currency.

They have no other trick.

As long as we keep looking to them
to be our leaders and solve the problem,

how can we expect anything else?

That's the only trick they know.

The other trick there is,

is to stop inflating
and to go back to a sound currency.

They'd say, oh, no, we can't do that.

The reason they can't do that is because,
it would put them all out of business.

They wouldn't be able
to continue the Ponzi scheme.

Even with cracks
forming in the current financial system,

the only solutions offered by governments

are in fact
more steps down the road to disaster.

However, while a single person
may not be able to save the world,

there is still something you can do
to protect your family and yourself.

You cannot turn to a Ponzi scheme
and ask him to run a real business,

because he doesn't know how.

You can't turn to all
of these Ponzi schemers in government

who are inflating the currency and say,

well, let's solve the crisis
in some other way

because they don't know how.

The solution is to quit
depending on the same people

with the same mentality
to solve our problems.

If governments won't go back
to a gold standard,

individuals can go back
to the gold standard all by themselves.

Politicians can create fiat money at will.

That's why it's fiat.

Why would you want
to put your faith in that?

Put your trust in politicians
and bureaucrats and central bankers

when you can just have something real
that has intrinsic value,

that is scarce,
and that is going to remain scarce.

Would you rather have gold
or a fiat currency?

We see what's happening in the world
and obviously,

people are starting to figure out
that gold is likely to sustain its value

way more than a piece of paper is.

It's not that the price of gold
is going up,

it's that the value
of the dollar is going down.

The price remains constant
in terms of human effort

and purchasing power.

An ounce of gold today
will buy the same thing

it bought 2,000 years ago.

An ounce of gold today is approximate,

it takes so much human effort
to get out and refine

the same human effort that it took
to do certain things 2,000 years ago.

It's the human effort equation
that maintains stability.

How much effort does it take?

Gold is financial insurance.

The thing about it is you own it
because you want to be protected.

You just have to have it
if you want to have a sleepless night

because there's nothing else.

If some catastrophic event happens
and we've seen them,

how are you going to be protected?

The current financial system may be dying,
but where there is chaos,

there is also opportunity.

As the old model falls apart,

the door may be opened
for great prosperity.

It's clearly not the end of the world,
it's probably not even the end of America.

For many countries,

this is going to be the beginning
of an economic boom,

a giant burden
being lifted off their shoulders

where the world no longer has
to loan trillions of dollars to Americans

so that we can continue
to consume what we don't produce.

When this comes to an end,
the world will benefit.

It is not something that we should fear.

We should embrace it as a world.

This is the greatest wealth transfer
in history.

If we have a global currency crisis,

then you're going to see
a greater wealth transfer

than has ever happened in all of history.

It's all going to happen at once.

Therefore, it's the greatest opportunity.

We have millions of people
now taking an interest in, what is money.

The question of what is money?

What should it be?

They're learning,
especially a lot of young people.

The sun will rise tomorrow
as it has a million times before.

Commuters will wake up
and travel to their offices

to begin the day's work.

Farmers will tend to their crops

and construction
workers will build new infrastructure.

However, will the world they live in
still be the same?

In 2008, the world was given
a wake-up call.

The biggest financial crash
in human history

was delayed by the same poor decisions
that brought it about in the first place.

What that massive bailout bought us
was not a solution, but merely time.

Time for the people responsible
to wring the last few dollars

out of a dying system.

However, for those able to see
the cliff edge approaching,

time to protect themselves,
and their families,

from the imminent plunge.

In the end, that time may prove to be
the most valuable commodity of all.

There are these brief moments in history

where the safe haven asset
for the last 5,000 years

simultaneously becomes the asset class

that has the greatest single
potential gains in purchasing power.

We're in one of these cycles right now
where money is the best investment.

Get out of currency, buy money,

and you're probably going to be able
to buy a whole lot more stuff later.

However, the best thing
that people can do of all

is really to take on
their own responsibility

for getting financially educated.

This is the most important thing.

Don't let the banks
and brokerage houses and other people

guide all of your decisions.

Find out what's going on for yourself,
and empower yourself.