The Mechanics of How the Dollar Became the World's Reserve Currency

During WWII, I guess around the time of the Bretton Woods agreement, the US government decided to make the US Dollar the reserve currency of the world. The Treasury or Fed shipped out two types of huge boxes the size of refrigerators, Federal Reserve Boxes and Wells Fargo Boxes. Their destination were the governments/central banks of post war nations. The former were full of Federal Reserve notes and the latter were full of Federal Reserve notes, gold, and diamonds. These Federal Reserve notes were printed in exceptionally large denominations. The purpose of these contents was to serve as bank reserves for the world financial system after the war. They were never meant for general circulation.

Some boxes were lost because planes crashed in the mountains, ships sank at sea, or were captured. Several of these have been found over the years, some legitimate and many fake. People have tried to cash these in, mostly unsuccessfully.

Supposedly the Federal Reserve has seven men who are assigned the task of dealing with these as they come to light. Redeeming them is a complicated process. You cannot just fly these into America on a commercial plane or they will be seized. They have to be brought into the US via private aircraft.

If redeemed, they are currently being redeemed for 2% of face value, it used to be higher, 10%! But this still results in a huge amount of Federal Reserve Notes, a few billion worth. And they won't just hand you the cash, they will fund a charity.

The reason why the government does not just ignore the whole issue is because of embarrassment. They are embarrassed that these boxes are out there and still circulating and getting attention. I guess payments are hush money!

The problem with such treasure hunts, even if people find the high value notes, is that they rely on the U.S. Treasury or Federal Reserve to pay up at the end. Not a likely scenario. They are worth the same as all other Federal Reserve Notes in the end... worthless paper, zero.

The Silliness of the Iraq Study Group

In going through the Iraq Study Group Report, recommendation number 19 is pretty silly...something that a high school student might come up with for a current events report.

To have learned men suggest that the President and National Security team stay in close and frequent contact with the Iraqi leadership is amazingly simplistic.

Of course that is being done currently.

To make this a serious and grave recommendation is just silly.

More Prisons....

During Robert Gates' testimony for Defense Secretary this week, Senator Sessions of Alabama asked about the need for more prisons in Iraq.

Now isn't that just typical of the federal government to broach the subject of a prison building scheme?

They truly want to turn Iraq into another America...a land of prisons.

The White House Can’t Put Out the Mideast Fires It Ignited

"Remember when narrow-minded Republican know-nothings launched a hate campaign against French President Jacques Chirac and everything French because Paris would not go along with George Bush’s jolly little war in Iraq?

Well, it turns out that Chirac’s warnings in 2003 that a US invasion of Iraq would set the Mideast on fire, encourage terrorism, and produce a disaster have been tragically born out by events.

Iraq is falling ever deeper into chaos and sectarian conflict. Outgoing UN Secretary General Kofi Annan calls it “worse than a civil war.” Lebanon is teetering on the brink of civil war. The agonies of Palestine – now the world’s largest outdoor prison – continue without relent. Iran’s power and influence are surging, scaring the daylights out of Washington’s Sunni clients in Saudi Arabia, Jordan, and the Gulf.

For the latter, thank George Bush. He overthrew two of Iran’s bitterest enemies, Taliban and Saddam Hussein, then stuck US ground forces in the $250 million per day Iraq quagmire that is now estimated to cost at least $1 trillion before the United States admits defeat and pulls out."

Click here for the rest of the article.

Ron Paul Interview

Congressman Ron Paul of Texas was recently interviewed by Al Korelin.

Ron Paul sits on the Banking Committee in The House of Representatives. He makes an interesting comment. Members of the committee actually believe that the US Dollar is backed by gold. This is incredibly naive thinking.

The dollar has not been attached to gold since Nixon closed the gold window in the early seventies...and even then it was only superficially associated with gold.

Here is a link to the interview with Ron Paul.