Richard Russell - All Fiat Currencies Will Fail

With gold near record highs, in his latest commentary, the Godfather of newsletter writers Richard Russell stated, “It's obvious that Bernanke with the help of QE2 wants to drive longer-term interest rates down and at the same time push asset prices (particularly stocks and real estate) higher. Because of the sheer size of Bernanke's new spate of money-creation, some analysts are describing QE2 as "a whole new ball game."

November 11, 2010

Russell continues:

“Over the coming eight months the Fed will buy $600 billion of US Treasuries, but that's not all. The Fed will also buy up to $300 billion of agency debt which will be coming due. That means that roughly $900 billion of new money will be entered into the system, all of this new money created via computers and out of thin air.

So the question I'm asking myself is this: Will Bernanke (in the face of international criticism) back down on his strategy of defeating the forces of deflation by printing money?

My immediate answer to this question is that Bernanke will NOT back down. Bernanke is a true, dyed-in-the-wool Keynesian, and he's already apologized on the part of the Fed for allowing the money supply to shrink during the Great Depression of the 1930s.

To back down now would mean that Bernanke, in effect, was conceding that his whole strategy of quantitative easing has been misguided. To back down now, would mean that Bernanke was giving in to the forces of deflation. I can't see that happening. I think Bernanke would quit his chairmanship at the Fed before he gave in to the discipline of Austrian economics.

The second question I have been thinking about is whether fiat currencies, and I mean all of them, are going to survive? As subscribers know, I believe currencies created by government fiat are a fraud, and that they are both illogical and immoral. I believe that ultimately, fiat currencies, all of them, are doomed. Every fiat currency in history has died, and today's fiat currencies will be no different.”

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Richard Russell is correct, in the end all fiat money dies. 

Eric King

KingWorldNews.com