Aka the shadow gold price.
The global monetary system rests on a fragile foundation of trust. Thanks to the actions of central banks, pressure on the system will keep growing.
Paper U.S. dollars sit at the heart of the global monetary system. Dollars are liabilities of the Federal Reserve. Just as houses are collateral for mortgages, Treasuries and mortgage bonds are collateral for U.S. dollars.
A central bank’s balance sheet is essentially a self-reinforcing feedback loop: Government bonds are the collateral for dollar liabilities, and bonds are streams of future dollar payments. So the dollar is backed by the promise of more dollars…
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