The Long-term Cycle of Monetary Crisis


QUESTION: Mr. Armstrong, I have been following you for all my adult life and that has exceeded 20 years by now and am shocked to say, I found your article on how things evolve GOLD-Oil-Dollar.  I must say this is a eye-opening evolution you are talking about. Has this always been the case with things changing coming into play and then vanishing?

ANSWER: Absolutely. I have written about how gold vanished from use with the Dark Age following the fall of Rome. Gold did not reappear in coinage for nearly 600 years. The first gold coin to reappear in Britain came during the 13th century issued by Henry III.

The Gold Cups of Mycenae

The same thing took place with the Dark Age in Greece. This is when the Mycenae ruled known as the Heroic Period of which Homer wrote. Scholars thought it was just fiction written by Homer until the ancient city of Troy was discovered. Troy VIIa appears to have been destroyed by war around 1184 BC. However, scholars did not believe the writings of Homer because Homer was born sometime between the 12th and 8th centuries BC. He remains famous for his work The Iliad and The Odyssey. So once again there is about 600 years separating the Heroic Age and the Hellenistic Age.

If we turn to Japan, here too we find that the emperor abused his power to issue money and once again we find money vanish for about 600 years. Each new emperor devalued all previously issued coinage to 10% of his new coinage. People simply refused to accept coins because they were devalued and were no a store of value.

Therefore, throughout economic history we always have long-term structural reform. Do not expect either gold or oil to always be a valuable component. If you go all the way back to a Dark Age, governments collapse as does money because civilization reverts back to a tribal state and then the only value becomes food once again.

Naturally, both the dollar will vanish and oil will ultimately be replaced. Hence, the concept of the “petro dollar” has little to do with the value of the dollar itself. As I have stated before, people who keep talking about oil and the dollar are living in the past. The USA is now a net exporter – not an importer. That has completely reversed from the 1970s and the OPEC embargo. OPEC is just not really relevant any more for they have been unable to manipulate the price of oil.

I have stated many times, we have a counter-trend rally against the dollar as to be expected going at least into the German elections, which could carry on into the first quarter 2018. Nevertheless, ONLY a rising dollar will break the world monetary system. A lower dollar will buy everyone a lot more time because most foreign borrowing is in dollars. When that happens, then we will see the Monetary Crisis Cycle revise once again what we call money. Nothing is ever permanent. Remember that!

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