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Source: Egon von Greyerz

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DOW Priced in Ounces of Gold

Gold should have been valued at $2050 in February of 2006.

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US DEBT MONETIZATION = DOLLAR DEVALUATION = HIGHER GOLD PRICES

The U.S. dollar is "seriously overvalued

William Cline and John Williamson, The Peterson Institute for International Economics June 3, 2009
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Gold Up 300+%

Dollar Down 30+%

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Source: James Turk

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Gold in all Currencies Combined

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Fractional Reserve Banking

Banks can lend some 10x deposits. Think of it as lending the same money 10x. The money supply must be continuously expanded or the system collapses. Thats whats happening now. Nobody is borrowing so the system cant expand.
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Fractional Reserve Banking

A $100 United States Note only costs America 4 cents, while a $100 Federal Reserve Note costs America $100 + $5 a year (5%) in interest for a total of $315 (30 year loan). When the government buys one dollar from the federal Reserve The government automatically owes that dollar PLUS 5 cents in interest. +
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Fractional Reserve Banking

The problem with this is that although the dollar is created, the extra 5 cents in interest is NOT created. This means there is not enough money in the economy for the government to pay back it's debt. After awhile it's not even possible for the government to pay the interest on it's debt unless the money supply is increased. So out of necessity, the federal reserve & government will start a program of expanding the supply of money.

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Fractional Reserve Banking

This causes malinvestment, which means: People are encouraged to make wrong decisions because of false signals they are receiving from the marketplace. Businesses will tend to over expand when they shouldn't and over produce certain goods. (build too many houses for example.) Consumers will feel richer and so will wind up buying more cars, homes, etc. when they really cannot afford to. These bubbles are unsustainable.

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