How will the dollar die?

The days of the fiat dollar are numbered, unless it returns to a credible gold standard. Using history as our guide, we walk through the process of the death of a fiat currency

Introduction

Commentators find it hard to explain why the dollar price of gold has soared in recent months, variously attributing it to risk aversion by nervous investors, speculation, and market seizures. None of them take it as an advance market signal of an accelerating decline in the dollar’s purchasing power and of the other major currencies which refer to it, believing instead that the normality of lower interest rates and bond yields will return.

But gold’s signals must be taken seriously. The dollar is only credit, whose value is based on faith. Gold is the true, legal money without counterparty risk, signalling danger for fiat currencies, notably from a credit bubble implosion, which is the obvious risk ahead.