#270 - Seven Stages Of Empire - Hidden Secrets Of Money Episode 2 - Mike Maloney
Updated: Apr 1, 2020
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Mike Maloney - Hidden Secrets of Money
Part 2 – Seven Stages of Empire
The “Seven Stages of Empire” is a long term cycle that echoes throughout history right to this very day and is basically a societal pendulum that swings from quality money to quantity currency and back again to quality money.
It always plays out in seven stages. It always ends with gold delivering a knockout blow to debased currencies, and it goes like this…
Stage One – A country starts out with good money which is either gold or silver or it is backed by gold or silver.
Stage Two – As it develops economically and socially it begins to take on more and more economic burdens adding layer upon layer of public works.
Stage Three – As its economic affluence grows so does its political influence, and it increases expenditures to fund a massive military.
Stage Four – Eventually it puts its military to use and expenditures explode.
Stage Five – To fund the war it steals the wealth of its people by debasing their coinage with base metals or by replacing their money with currency that can be created in unlimited quantities.
Stage Six – The loss in purchasing power of the expanded currency is sensed by the population and the financial markets triggering a loss of faith in the currency.
Stage Seven – A mass movement out of currency into precious metals and other tangible assets takes place. The currency collapses and gold and silver rise in price as they account for the huge quantity of currency that was created. This process transfers massive wealth to those who had the foresight to position themselves beforehand with gold and silver.
How Does This Affect You?
To understand the recent surge in Gold Prices, you need to understand Monetary History. Once you see where we’ve come from, you’ll have a much clearer picture of how things are playing out right now.
MUST WATCH the last 140 years of Monetary History in just 10 Minutes…(Paraphrased):
Most believe the US Dollar is still “Good as Gold”, but it hasn’t been since 1971…
1873 - Classical Gold Standard = 100% Reserve Ratio. Each “unit” backed up by equivalent amount of gold. Ex: In USA, $20 Bill = $20 Gold Coin in a vault; $20 is a “claim check” exchangeable for Physical Gold. Gives confidence, globally, in governments “fiat” currency.
1913 – Gold Exchange Standard = 40% Reserve Ratio. Federal Reserve is created. WWI, “Redemption Rights” stopped, currency no longer exchangeable, governments start printing more currency than money (gold and silver) exists in Treasuries. EX: US Federal Reserve Act allowed $50 Bill backed up by only $20 gold. WWII, American Myth: “War is good for the economy” = Unfortunate Truth: War is only good for the economy IF you’re not in it and you are selling the tools of the trade.
1944 - Dollar Standard = 0% Reserve Ratio. Bretton Woods established the USD as the world’s reserve currency. By the end of WWII, the US owned 2/3 of the World’s Gold (Central Bank Gold), the rest of the world shared the other 1/3, and Europe had none. The World’s Monetary System would longer work – it would collapse. United Nations holds Monetary Conference (Bretton Woods) creating a new world monetary system, where other world currencies would be backed by US Dollar AND US Dollar would be backed by gold at $35 per ounce. Gave confidence, world stability and pegged world currencies to each other through the US dollar. Exchange rates were fixed which made world trade boom. But, NO reserve ratio established.
1971 – All World Currencies = Fiat Currencies. US deficit spending for Korea, Viet Nam and Johnson’s “Great Society” of the 1960’s led to expansion of money supply (printing of more dollars) which were exported all over the world.
In 1965, Charles de Gaul, President of France, realizes US doesn’t have the gold to back up the dollars and states ”The fact that many countries accept as a principle, dollars being as good as gold, leads Americans to get into debt, and to get into debt for free, at the expense of other countries. Because what the US owes them is paid with dollars only they are allowed to emit, we consider it necessary that international trade be established, as was the case before the misfortunes of the World, on an indisputable monetary base, one that does not bear the mark of any particular country. Which base? In truth, one can’t see how one could really have any standard criterion other than GOLD!”
So, France starts trading in their dollars for gold and other countries do the same. Thus, the US lost 50% of its gold from 1959-1971 but, fraudulently had printed about 12 times more dollars than gold.
This giant, worldwide “run on the bank”, forced President Nixon in August of 1971 to “temporarily suspend the convertibility of the dollar into gold or other reserve assets”.
At this point, the world’s currencies became fiat currencies…and they still are today!
Review, In Short, Seven Stages of Empire:
1. Sound money, 2. Layers of Public Works, 3. Massive Military,
4. WAR, 5. Currency Debasement, 6. Loss of Faith,
7. Currency Crisis / Gold Accounts for Fiat Currency
*We are in the Sixth and beginning the Seventh Stage.
*In 1970, gold was $36 an ounce. In 2000 it was $279 an ounce. What’s an ounce today?
*People don’t understand Gold. For the past two generations, 35 years, gold has not been part of our economic curriculum! Please ask yourself………Why?
We’ve Learned That:
*Money was born about 630 BC, when it became fungible.
*It was free markets and sound money that led to Athens great prosperity.
*But, debasement of their money for deficit spending on war and public works played a large role in their demise.
*Gresham’s Law (Sir Thomas Gresham 1519-1570): Bad Money Drives Out good
*Over the past 140 years we have debased our own currencies; to the point where two generations of scholars don’t even understand gold (could there be a reason why it isn’t part of the economic curriculum?).
*In recent history there has been a new monetary system roughly every 40 years.
*There have been thousands upon thousands of fiat currencies throughout history.
*NONE have survived = a 100% failure rate. Will the Dollar will be any different?
*Since world currencies are now fiat, the world IS going to have a New Monetary System.
*After a huge deflationary crash, governments will try to print their way out, causing hyperinflation of all currencies.
*What do they always return to, time after time, throughout history? Gold and Silver.
Don’t just think about what’s immediately in front of you, look at history and see the patterns. History repeats itself. Learn from trends and movements. Look for indicators of the future.
In Episode 3, you’ll learn more about the chaotic state of the US Dollar Standard and how it’s going to affect you no matter where you live on the planet.