Where the hell is this going? Billingsly wondered. None of this is making any sense. “I don’t understand. Why would two trillion dollars be a gun held to our head?”
Cummings looked as frustrated as Billingsly felt. “The leverage of the debt they held was the gun. By dumping the debt on the market all at once, China forced us to give them the bullets for the gun. We’re printing U.S. dollars to buy back the debt. When China dumps the dollars on the international market in exchange for other currencies, we can’t print other country’s currencies to buy back the dollars. With a glut of U.S. dollars that size, our currency becomes worthless. Our whole economy would crash overnight. You’re looking at $1,000 for a loaf of bread, $5,000 for a gallon of gasoline. Nobody will be able to afford anything!”
“Come on, it can’t be that bad,” Billingsly said. “The international market will absorb the dip in the value of the dollar. It’ll be fine.”
“No it won’t,” Cummings replied emphatically. “Just over a hundred years ago the U.S. dollar was backed 100 % with gold and silver. Our paper currency had ‘Gold Certificate’ or ‘Silver Certificate’ printed right on it, depending on the amount. That’s why the world came to depend on the U.S. dollar as the world’s reserve currency — it was directly redeemable in gold or silver. Anyone could walk into any American bank and exchange the paper currency for gold or silver coins. Franklin D. Roosevelt changed that when he took our currency off the gold standard in 1933. Nixon took our currency off the silver standard in 1971. All of our currency now says Federal Reserve Note on it. A note is a promise to pay, but pay what? It doesn’t say. While we had oil contracts set up around the world to be paid only in U.S. dollars, our currency could always be used to buy oil, so it retained some semblance of value. Now oil contracts can be paid in any currency, so the dollar has to compete with other currencies on the global market.
“Right now the only things of value that back the dollar are the Treasury Notes and U.S. Bonds, and those are debt instruments. They’re worth only what the world believes they’re worth.”
“Go on,” Billingsly said, as he sat in near shock at what he was hearing. Cummings is an expert in finance. If he says it’s bad, it’s probable worse that he thinks.
“Remember the new financial system I told you about? How Brazil, Russia, India, China and South Africa are forming their own banking system? Those five countries comprise about half of the world’s economy. Once the U.S. dollar falls, that financial system becomes the new standard. They’ve already talked about introducing a new currency, a gold-backed currency. China has announced the Yuan is now a gold-backed currency. Russia is doing the same thing, making the Ruble gold-backed. India and Brazil are talking about the same move. When the world moves to the new financial system, a gold-backed currency, U.S. dollars will be relegated to third world, banana republic status. Every country that holds U.S. debt will want a gold-backed currency in exchange for the debt. Yes, we can print more paper dollars, but who’s going to want them? Nobody! That’s when America dies.”
Billingsly sat in total disbelief. “So you’re saying paper money is a more powerful weapon than nuclear bombs?”
“China has been buying gold for decades,” Cummings said. “Once the dollar crashes, China could buy every American business, every piece of property, including government buildings, for a fraction of a penny on the dollar. They wouldn’t have to fire a shot. Instead of beating us, they’d own us, right down to the last toothpick.”
“But we’re the greatest superpower in the world,” Billingsly protested.
“Which will be sold at fire sale prices,” Cummings replied. “Every person in America would be working for a company owned by the Chinese, paying rent to the Chinese on what used to be their own house.”
“That’s not possible,” Billingsly stated. “We have our own gold supply. We could back our own currency again. It might take all of the gold in Fort Knox to do it, but it could be done.”
Cummings looked at the floor and shook his head. “You don’t understand. We don’t have any gold in Fort Knox. It’s all been sold or paid out to cover trade imbalances through the Bank of International Settlements in Basel, Switzerland.”
“Aw come on!” Billingsly roared. “What about the damned Federal Reserve System? They have gold!”
Cummings shook his head again. “The Federal Reserve Banks are all privately owned, and they have sold off their gold reserves, too.”
“No, no, no,” Billings shouted. “The Federal Reserve is a government agency. We own it.”
Cummings looked Billingsly in the eye. “A common misunderstanding. Only the Board of Governors of the Federal Reserve is a government agency. Their role is to help direct or control the economy through fiscal policy and interest rates, and to review financial legislation and place their interpretation of the law into the Code of Federal Regulations. That’s all the Board of Governors does. It doesn’t own anything. All of the Federal Reserve Banks are privately owned.”
“This can’t be happening,” Billingsly fumed.
“Federal Reserve Banks are supposed to hold gold for other countries,” Cummings said. “You remember when Venezuela demanded all of its gold back from the Federal Reserve Bank of New York?”
“Yeah,” Billingsly replied. “I watched on TV when the gold arrived back in Venezuela. So what?”
“What you don’t know is that it took the Federal Reserve Bank of New York seven years to quietly buy back enough gold to return it to Venezuela. They used the U.S. legal system to delay the process long enough to collect the gold.”
“Bullshit!” Billingsly exclaimed. “All of those gold bars have serial numbers stamped into them. Each one is individually identified.”
“And each bar is simply melted down, recast and a new serial number is stamped into it. That’s what the New York Bank did. They collected gold, melted it down, cast it into new bars and stamped the old serial numbers into the bars. Then they sent the gold bars back to Venezuela.”
“You can’t be serious.” Billingsly bellowed.
“I’m deadly serious,” Cummings replied. “I should make a correction here. There is gold in Fort Knox, it’s just that we don’t actually own any of it. It all belongs to other countries.”
“How could this happen?” Billingsly asked.
“Over that last hundred years, top U.S. politicians and International Bankers have played fast and loose with our gold reserve. Now there’s nothing left.”
Billingsly closed his eyes and breathed out heavily. “That I can actually believe.”
CHAPTER 46
Captain Jacobs sat with Silverton, Stephanos and Adams in the wardroom. “This is what I see at this time,” Jacobs said. “I was thinking the ghost sub was North Korean, it has the screw signature of an old Russian Alfa, but it didn’t make sense because it was decommissioned nearly twenty years ago and was supposed to be cut up into scrap. We have a Chinese frigate with full ASW capability riding shotgun on the surface, effectively hidden from radar and satellite surveillance by the hurricane on the surface. That didn’t make any sense, either. Russia and China aren’t exactly friends but North Korea and China are, at least to some degree. Yet I can’t really see them cooperating with each other on something like this.”