Warning: The U.S. Dollar Will Collapse And Take The Economy With It

[No DUplicitous DUpe]

The U.S. Dollar Will Collapse And Take The Economy With It
(posted with permission of the author from http://sane-ramblings.blogspot.com/2009/06/us-dollar-will-collapse-and-take.html

The worst of the financial crisis is over we are told. The economy is near its bottom and it will soon bounce back. If you believe this read on:

The U.S. national debt is $11.5 trillion, which is nearly $40,000 for every man, woman and child in America. This means a family of five is $200,000 in debt. But you may be thinking, "So what, I don't have to pay it."

Think again. Bailouts, stimulus plans, weapons and wars are extremely costly and the U.S. debt is already so large, there is no "growing out of it." And as it mounts by the day, the U.S. government has no idea how it will ever pay back its creditors. This leaves only two choices:

1) Tax you what you "owe." This could cost you thousands of dollars a year. And if others can't afford to pay their share, that burden would fall on you as well. But if the government ever tries to collect this money you will see the people revolt, as they lose everything they've worked for.

2) Inflate the currency. The U.S. government has already taken the initial steps as of last September by printing money out of thin air. They see no choice because they can no longer borrow enough money to pay their bills, unless they pay far higher interest rates. Far higher interest rates in itself will sink the economy.

So the government has chosen inflation, not taxation. But when your money loses all of its value, you will still have lost everything you worked for. Inflating its currency is just the spineless way of taking it from you.

What can you do to protect yourself? Please see "Your Money Will Become Worthless"

Until it went war mad and financially insane, America had been the envy of much of the world. However, the work ethic and creativity that built this nation still remains and it will allow the U.S. to rebuild itself on a far sounder footing.

But in the meantime, in the Depression to come, we will do as people did during the Great Depression, we will help one another. And in the end, it is our compassion and our sense of humanity that will make life special, and us a better people.

Dick

[WeDidIt]

1. Same shit has been predicted for the past thirty years

I've seen identical predictions with identical reasoning hundreds of times since 1979.

[JackRiddler]

12. Damn those late imperial Roman doomsayers!

It's been decades and Rome still hasn't been sacked. It will never happen.

You know, those global warming people have been predicting stuff for many years, and what? It snowed this winter, didn't it?

Maybe you should examine the debt numbers: personal, corporate, government (federal and state). And consider how likely the country is to pull out of it through sustained high economic growth (the trick the last time the public debt was so high relative to GDP, though the personal numbers were never).

[DireStrike]

19. There are new things going down.

The federal reserve buying US Debt is pretty huge and... I want to say unprecedented but I'm not quite confident in that. Anyway it's not a common thing.

[MercutioATC]

2. Monthly U.S. Treasury auctions have been in excess of $100B for a while.

Essentially, the Treasury is charging $100B+ per month on the nation's credit card...and that's in addition to government spending and the trade deficit.

Something wicked this way comes.

[No DUplicitous DUpe]

6. You nailed it...

Like an ILS approach in calm winds.

[Romulox]

3. Our country will fall apart long before any of these so-called "debts" are paid.

The idea of intergenerational debt is vampiric and parasitic to begin with--we can't live off of unborn generations for much longer.

[Horse with no Name]

8. I mean seriously

we have already hocked my kids and grandkids future easily...I guess my great grandkids piggy banks are on the chopping block next.
It is immoral.

[vadawg]

4. divest from america, but were to move your assets to, the rest of the world will suffer to

i guess you got to hope at least one of your income streams continues to get through the worst times.

[MercutioATC]

5. The Canadian Loonie looks good, at least in the near term.

Plus, Canadian money is easier to procure than many other currencies.

[Zynx]

13. A dollar collapse would utterly destroy the rest of the world.

Indeed, it would possibly be worse than it would be here. Bear in mind, we are among the countries suffering least from the present recession.

All of those countries who own a lot of U.S. Treasuries would see them vanish in value and then their central banks and commercial banks that are the large holders of them would see their equity vanish. It would create a severe banking crisis in the rest of the world.

Remember all of the people who pushed the idea of "decoupling" where the U.S. would suffer alone while the rest of the world prospered? This would be no different. A U.S. centered contraction hurts the rest of the world more than it does us, ironically. This is largely because we are not nearly as dependent on international trade for our economic activity as most countries are.

[Tierra_y_Libertad]

7. The band-aids the politicians are applying are very expensive.

And, the creditors loaning us money to buy them are getting nervous about repayment.

[snappyturtle]

9. PLUS, wait for the commercial real estate to fail big time. I read a

prediction yesterday that this could happen this fall. There isn't enough bailout money in the solar system to remedy the problem.

[ThomWV]

10. Just out of curiosity, what would constitute the collapse of the dollar?

Do you mean hyperinflation diminishing the value of the dollar or do you mean that it will not be accepted in trade for goods here or elsewhere? This is an honest question, because I really can't figure out what you are talking about. You can not at once bring fear of a dollar with no value left in it and then tell us a Depression is coming because history tells us that during the last Depression a dollar had a great deal of value, if one could be found.

[No DUplicitous DUpe]

15. The Author responds to your question.....

(Dick Kazan writes)
You asked an excellent question. The U.S. dollar is just paper and its value comes from the confidence Americans and others have in it. If that confidence is destroyed, so will be the value of the paper. Already, China and the U.S.'s other major creditors are "worried" to quote China's president.

What the U.S. is doing with its vast spending on bailouts, stimulus, weapons and wars is not unlike the German Weimar Republic in the early 1920's when they were overwhelmed by reparations from World War 1 and by demands of the industrialists to help them pay off their loans and for stimulus to get Germany back on its pre-war economic footing.

But rather than tax the working class people, who had borne enormous personal sacrifice during the war and then a lack of jobs after it, In desperation they printed money. Soon the value of the money spiraled out of control until it took a wheel barrel full of it to by a loaf of bread.

Since September, the U.S. government has been printing money out of thin air and since March, has picked up the pace. The government is borrowing so much money, that at current interest rates there are not enough buyers for the debt, so the government is printing money to buy its own debt. This week alone, the U.S. is trying to raise a record $104 billion.

As the U.S.'s creditors see this, they become even more worried.

In the Great Depression, if you had a dollar, it had real value. This time it will be just the opposite. The dollar will steadily lose its value and eventually we will be lopping off zeros. Finally, as we confront our economic problems and start to solve them, we will rebuild confidence among Americans and others, and replace the terribly tarnished dollar with the Lincoln or the Washington. This is what the Weimar Republic finally did, replacing the Papiermark with the Rentenmark.

In the meantime, Americans will get used to paying for their groceries and other necessities with ever cheapening U.S. dollars and Canadian dollars, Euros, Chinese Yuan, Japanese yen and certainly small gold coins, the most common of which will likely be the Swiss Philharmonic, which are 1/10 ounce gold coins.

This is a sad commentary about a nation much of the world had envied. But these severe problems will shake Americans from their comfort zones and get them mad enough and involved enough to solve them.

Dick

[Turbineguy]

11. Short Seller.

[No DUplicitous DUpe]

20. Nope, More like concerned citizen. nt

[Beam Me Up]

14. Doesn't matter. We're now a global military empire -- a well armed one.

The NEOCON/Bush doctrine implemented after 9/11, and sanctioned with the invasion of Iraq, gives us the right to intervene militarily in ANY nation that we ever "perceive" as a potential threat. What is supporting the US dollar right now is our ability to not only threaten but to wage WAR on not only a regional but global scale. I believe we have secretly militarized space, the ultimate high-ground. IF the US economy were to "collapse" so would the global economy and the outcome of that would be global war -- including on US soil. The MIC and international/global PTB know this.

[Greyhound]

16. We will be propped up just as long as we can bring everybody down with us.

That is what they are working toward, independence from us. The minute that China and India have sufficiently affluent markets to replace us, the world will walk away from us and we'll really be screwed.

We can still stop this, but the people in power will not let it happen easily, and before we can even try Americans will have to learn what "the economy" really is.

[Mike 03]

17. Kick. Just saw this thread under "Greatest" and it is very interesting.

Enjoying reading opinions on this issue, as it is one that has concerned me greatly for a few years now.

Thank you for raising this issue that a lot of people want to shrug off as nihilistic fantasy.

[Mike 03]

18. Rec, too, and What is everyone doing to hedge your portfolio against this scenario, should it

materialize?

(Please, other than gold... We get it about the gold. How about some other ideas, such as currency swaps, emerging markets, etc.?)