Practical Definitions and Scenarios Explaining Significant GCR Exchange Rates in a Coexisting Gold-backed and Fiat Currency Landscape
This is Part 2 of our continuing GCR Exchange Rate exploration. Here’s the link to Part 1: How RV Currency and Bond Exchange Rates Will Work
One of the most confusing and difficult components in our anticipated RV/GCR event is determining potential exchange rates when the time comes.
Over the past 10-15 years, we have been told many different exchange rates for different GCR currencies and/or bonds. Often, these rates have been explained away by referencing some numbers purportedly displayed on these all-mysterious ‘bank back screens’.
Yet even the ones reporting the purported ‘back screen’ exchange rate numbers have often referred to these rates as ‘placeholders’ which really doesn’t give us any meaningful insight into what any of this means. A placeholder simply means that whatever is shown are just arbitrary numbers.
Over my 14 years of trying to understand and make sense of how the RV/GCR will work, I always relied on self-education, research, interviews and rational thought to continuously increase my understanding of this monumental financial event.
Setting a Common Base Case
Given all of the variables (moving parts) in a global event like the GCR, a common set of assumptions must be established, as a base case, in trying to arrive at a logical and rational scenario for RV exchange rate scenarios.
At least that’s how I look at things…
My base case is derived from the following key assumptions:
- The GCR will introduce a gold-backed monetary system and currencies as an alternative to the current, global fiat financial system.
- A revaluation (RV) of certain exchange rates will be derived from the difference between the value, or purchasing power, of the new gold-backed currencies and fiat currencies.
- The new gold-backed system will once again create a definitive distinction between real ‘money’ and ‘currency’ since money and currency are two different things in a stable and sound economic model.
The Difference Between Money and Currency
Most of us have been born and raised in a financial system based exclusively on fiat currencies.
It is all we have ever known throughout our entire lives.
We have been conditioned to believe that our fiat currencies are actually money yet nothing could be further from the truth.
Money, by definition, is a stable store of value, meaning consistent purchasing power over time.
For thousands of years, gold (and silver to a lessor extent) has been a hands down successful form of Money. Gold and silver have never had a value or purchasing power of zero at any time in human history.
I read once, that back in the days of the Roman Empire, a hand-crafted, custom-tailored toga would could be purchased with one-ounce in gold coins.
Today, a finely crafted, tailored business suit can be purchased for one ounce of gold (current fiat dollar price of $2,300 per ounce).
That is the definition of Money being a stable store of value and purchasing power over time.
Modern Currency, by definition, is a ‘common medium of exchange’ that represents the purchasing power of Money.
I use the term ‘modern currency’ because carrying around gold and silver for everyday transactions became rather impractical as human populations and economies grew into the global trade and commerce systems we have today.
Imagine taking a foreign vacation and having to pack ample amounts of heavy gold and silver to carry along throughout your travels.
Fiat Currencies, by definition, have no tangible backing or intrinsic value.
Their value and purchasing power, is exclusively derived from the ‘confidence and good credit’ of the government that issues the currency.
Unlike gold and silver, every fiat currency ever adopted by a civilization, monarchy, or government throughout history eventually ended up with a value, purchasing power of zero.
What we have today is a global fiat currency experiment that will end as all fiat currency systems have ended. Zero value.
Using the same example as above, in the 1950’s a finely crafted business suit of the finest materials probably cost around $30-$50. Today, the same type of business suit costs around $2,000 or more.
This is called inflation.
Inflation is unique to fiat currency systems resulting from the fact that they are constantly losing purchasing power (value) over time.
It’s not that the intrinsic cost of our daily goods and services has increased, the truth is that it constantly requires more dollars to purchase those same goods and services because the dollar (and all other fiat currencies) are losing their value and purchasing power over time.
Inflation is a hidden and pervasive tax on everyone (wealth transfer from the many to the few) and it is an inherent function of fiat currency systems.
Previous to the introduction of Central Banks, we were on a traditional gold standard. Gold was Money, and the US dollar currency, for instance, was the representative common medium of exchange.
What made the gold standard real what that anyone could take paper currency dollars into a bank and redeem them for a specified amount of physical gold.
Hence, the dollar Currency was a representation of gold, even though the paper notes did not contain any physical gold in them. It is also very convenient and practical to carry and use paper dollars for everyday financial transactions.
Coexisting GCR Currencies and Fiat Currencies Equal High RV Exchange Rates
One of the key factors that support one country’s currency value against other national currencies is the economic ability for a country to maintain its currency’s purchasing power against other global currencies.
In a fiat currency world, most national currencies are pegged to a few, highly liquid and freely floating currencies. So, in order to maintain a currency exchange rate peg, a country has to manage its debt, GDP (gross domestic product) and trade balance with other countries appropriately.
This is how Kuwait, for example, is able to maintain the Kuwaiti Dinar’s peg at around $2.65 per one US Dollar.
Also see: Understanding Different Currency Exchange Rate Systems
In a GCR world, the only logical way to understand how significantly high RV exchange rates will exist is for something significant to change within the global Monetary System.
It’s very rational to conclude that both a gold-backed currency regime and the current fiat currency regime will exist simultaneously for some period of time.
This dual currency system coexistence would most certainly create a large value and purchasing power difference between the gold-backed currency and the fiat currency.
No, I do not believe that a new USN/USTN gold-backed dollar will be in place yet when we exchange our GCR currencies and/or bonds.
The high RV exchange rate differences we will see once the GCR is introduced and initiated would be generated by both the revaluation of gold and the amount (specific weight) of gold assigned to each GCR currency.
Likewise, given that fiat currencies have no tangible asset backing, other than the trust in the government that issues the currency, the new gold-backed currencies will intrinsically gain a substantial purchasing power advantage over any fiat currency.
This is why I firmly believe that a gold-backed dollar, euro, yen, British pound, etc. will not yet exist when the GCR is first introduced and implemented. Otherwise, there wouldn’t be a high RV exchange rate difference between different national currencies globally. Especially given that the ultimate goal of the GCR is to establish purchasing power parity between all global nations.
This is why I also believe that that we in GCR Land, the small percentage of the global population, are in the position to benefit from our unique awareness of the GCR and what it means.
What Happens Next?
Whether the GCR is first introduced by what the BRICS Alliance are planning (a gold-backed common trade currency) or the release of the historical, off-ledger gold amassed by the Elder/Royal families, or a combination of both – for all of us the resulting benefit is similar.
Still, many questions remain in ascertaining the process and product of the RV/GCR relative to our exchange rates, value and purchasing power.
Also see: How to Accurately Think About Our RV/GCR Exchange Rates
Afterall, if the fiat currency system is still around when we exchange our currencies and/or bonds, there has to be a formula of some kind that makes this all happen.
I will examine how this could all work in an upcoming article since the GCR is multi-faceted and dependent upon quite a few variables. Otherwise, these articles would be incredibly long. This article is already too long.
Hopefully we’ll get to a point of shared understanding and mindset, one step at a time, which is the best way to absorb all of the material at hand.
