The Foreseeable End of the Post-World War II Monetary System

The article I am linking today is from Doug Casey. You can find it here. The article is a succinct description of the political economy of the last 70+ years.

After World War II, the US took the leadership position in the world when previously strong European nations were weakened by the prolong war and its destructive aftermath. The US leadership resulted in a new world order that included a revised monetary system where the US Dollar reigned supreme and the values of all remaining currencies were linked to it.

The US Dollar was backed by gold, but in 1971 the US delinked the currency completely from it. Since that time the entire world has been operating under a fiat monetary system, which relies exclusively on the willingness and ability of governments not to spend beyond its means. However, the reality is that governments rarely ever exercise self-control in terms of spending.

And what we have seen since 1971 is an international financial system supported almost entirely by debt. For example, at the moment the total federal debt for US is approximately $27 trillion dollars, which is light years away from where it stood in 1971 (about $390 billion).  At some point, the debt load will become unsustainable, a tipping point will be reached, and an implosion of monumental proportions will occur. This will mark the end of the Post-World War II monetary system and a new one will emerge.