ounce ok but then with this automatic stabilization mechanism gone which was provided through bretton woods it was no longer around starting in the early seventies national currencies were free to flow resulting in this huge buildup that you see of foreign exchange exchange reserves over time so look at that huge buildup that you see of reserves of foreign exchange reserves is a direct. all of different nations central banks printing massive amounts of their currencies after one thousand nine hundred seventy one you can see that rise now the three most liquid currency markets in the world remain the euro they get and the u.s. dollar which we've been talking about but with the central banks responsible for maintaining the value of these currencies facing their own unique set of problems we may very well see a change in this mix in the not too distant future you could argue that something that we are talking about today and we'll continue to talk about so now when we do everyone watching will know what four axes and stick around stay right here geithner is in china talking of iran sanctions a

the classical gold standard before world war one the gold exchange standard between the wars the bretton woods system from one thousand nine hundred forty one nine hundred seventy one and now we've had the dollar standard from seventy one until today it's forty years old it's the longest lived of these currency system systems there are tremendous imbalances that have been building up for the fifteen trillion dollar debt all of our exportation of dollars around the planet it's eventually doomed to suffer some sort of collapse or transition and i believe this is going to happen in this decade but since the dollar's the majority of the world's currency if the dollar has a problem every country on the planet has a problem because more than half of all the dollars that exist exist outside the united states and also very happily why all of our international viewers should be paying very attention close. because this is not just a u.s. debate the u.s. dollar is the global reserve currency we're going to talk about where it's going we're going to talk about gold and silver because mike maloney says th

risks your colleague bill gross has said before that in the past forty years since breaking with bretton woods and going to a debt based money system the global economy has required constant credit expansion in order to grow if you're saying it's different this time does that mean growth is it the end of its rope and therefore this entire money system could be at the end of its rope to. so that's an excellent question i think the first thing we have to recognize is that there are two sets of countries in the world there is the west that has too much debt and too little growth and the reason why it has too much debt and too little growth is because it fell in love with this great age great not in the sense of wonderful great in the says it went too far of debt in title meant and credit and it did not work on the important elements of competitiveness you have another set of countries the emerging world and trying as an example of that that have hit their development break out phase and in fact until recently the problem in trying is there was growing too fast not too slow so the global economy h

outlook for january he writes referring to the modern money system created after the breakdown of bretton woods in one thousand nine hundred eighty one that unlike gold with its scarcity and hard money character the new credit based standard had no anger dollar or otherwise so what exactly does this mean what is hard money it is money that is backed by a hard tangible and lasting material so as to retain its relative value over time does acting as a reliable store of value now advocates of a gold standard or some other form of commodity based hard currency point to the huge growth in debt and other liabilities as a direct consequence of having money that isn't tied to anything and whose value fluctuates with the whims of central bankers this is of course money in a world of sound money debts that cannot be repaid will not be repaid and therefore write downs and bankruptcies must occur and debts cannot simply be papered over through money printing and inflation because print too much of that currency and you could wind up with this hyper inflation like zimbabwe where you have to have a one hundr

and american diplomats wrote the rules of the international financial system, specifically the bretton woods system that originated at the end of the second world war. at that time america's industrial production, america's industrial gdp was roughly equal to that of the rest of the world combined. and with that kind of leverage, the united states was in a position to dictate to the rest of the world. the world financial system, other currencies were linked to the dollar, and the dollar was pegged to gold. and that gold peg was considered quite important because something like a gold standard has always been a check on governments from producing more and more of the notes. if you have legal tender and, as i said, for the first time in the united states this came into effect in the 1860s. and it occasioned great controversy because until then governments could not be trusted not to just run the printing press and run the printing press until the dollar or the currency became worthless. that's what happened to the confederate currency during the civil war. the union government was more circums