1971 War: How Russia sank Nixon’s gunboat diplomacy

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Surprisingly I was never taught this at school, courtesy of Rbth:

Washington DC, December 3, 1971, 10:45am.

US President Richard Nixon is on the phone with Secretary of State Henry Kissinger, hours after Pakistan launched simultaneous attacks on six Indian airfields, a reckless act that prompted India to declare war.
Nixon: So West Pakistan giving trouble there.

Kissinger: If they lose half of their country without fighting they will be destroyed. They may also be destroyed this way but they will go down fighting.

Nixon: The Pakistan thing makes your heart sick. For them to be done so by the Indians and after we have warned the bitch (reference to Indian Prime Minister Indira Gandhi). Tell them that when India talks about West Pakistan attacking them it’s like Russia claiming to be attacked by Finland.

Washington, December 10, 1971, 10:51am.

A week later the war is not going very well for Pakistan, as Indian armour scythes through East Pakistan and the Pakistan Air Force is blown out of the subcontinent’s sky. Meanwhile, the Pakistani military in the west is demoralised and on the verge of collapse as the Indian Army and Air Force attack round the clock.

Nixon: Our desire is to save West Pakistan. That’s all.

Kissinger: That’s right. That is exactly right.

Nixon: All right. Keep those carriers moving now.

Kissinger: The carriers—everything is moving. Four Jordanian planes have already moved to Pakistan, 22 more are coming. We’re talking to the Saudis, the Turks we’ve now found are willing to give five. So we’re going to keep that moving until there’s a settlement.

Nixon: Could you tell the Chinese it would be very helpful if they could move some forces or threaten to move some forces?

Kissinger: Absolutely. Continue reading

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The Big Reset, Part 2

“Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold [is] an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs; upon virtue of the victims. Watch for the day when it becomes marked; Account overdrawn.”

Rand, Atlas Shrugged ,1957

Part 2 of the Big Reset, courtesy of @Koosjansen & In Gold We Trust:

This is part two of a Q&A with Willem Middelkoop about his new book The Big Reset. In his book a chapter on the ‘War on Gold’ takes a prominent position. Willem has been writing about the manipulation of the gold price since 2002 based on information collected by GATA since the late 1990’s. So part two of our interview will focus on this topic.

The War On Gold

Why does the US fight gold?

The US wants its dollar system to prevail for as long as possible. It therefore has every interest in preventing a ‘rush out of dollars into gold’. By selling (paper) gold, bankers have been trying in the last few decades to keep the price of gold under control. This war on gold has been going on for almost one hundred years, but it gained traction in the 1960’s with the forming of the London Gold Pool. Just like the London Gold Pool failed in 1969, the current manipulation scheme of gold (and silver prices) cannot be maintained for much longer.

What is the essence of the war on gold?

The survival of our current financial system depends on people preferring fiat money over gold. After the dollar was taken of the gold standard in 1971, bankers have tried to demonetize gold. One of the arguments they use to deter investors from buying gold and silver is that these metals do not deliver a direct return such as interest or dividends. But interest and dividend are payments to compensate for counterparty risk – the risk that your counterparty is unable to live up to its obligations. Gold doesn’t carry that risk. The war on gold is, in essence, an endeavor to support the dollar. But this is certainly not the only reason. According to a number of studies, the level of the gold price and the general public’s expectations of inflation are highly correlated. Central bankers work hard to influence inflation expectations. A 1988 study by Summers and Barsky confirmed that the price of gold and interest rates are highly correlated, as well with a lower gold price leading to lower interest rates.

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Continue reading

There Is Too Little Gold in the West

Courtesy of Peak Prosperity:

Western central banks have tried to shake off the constraints of gold for a long time, which has created enormous difficulties for them. They have generally succeeded in managing opinion in the developed nations but been demonstrably unsuccessful in the lesser-developed world, particularly in Asia. It is the growing wealth earned by these nations that has fuelled demand for gold since the late 1960s. There is precious little bullion left in the West today to supply rapidly increasing Asian demand. It is important to understand how little there is and the dangers this poses for financial stability.

An examination of the facts shows that central banks have been on the back foot with respect to Asian gold demand since the emergence of the petrodollar. In the late 1960s, demand for oil began to expand rapidly, with oil pegged at $1.80 per barrel. By 1971, the average price had increased to $2.24, and there is little doubt that the appetite for gold from Middle-Eastern oil exporters was growing. It should have been clear to President Nixon’s advisers in 1971 that this was a developing problem when he decided to halt the run on the United States’ gold reserves by suspending the last vestiges of gold convertibility. Continue reading