A day is coming when the rest of the world will decide that it no longer has faith in U.S. dollars or in U.S. debt. When that day arrives, the game will be over. Traditionally, two of the biggest things that the U.S. economy has had going for it were the U.S. dollar and U.S. Treasuries. The U.S. dollar has been the default reserve currency of the world for decades. All over the globe it was seen as a strong, stable currency that was desirable for international trade. U.S. government debt has long been considered the "safest debt" in the entire world. Whenever there was a major crisis, investors would flock to U.S. Treasuries because they were considered a rock. Sadly, all of this is now changing. Today the rest of the world is losing faith in the U.S. financial system. In fact, even the United Nations is now warning of the collapse of the dollar. But if the U.S. dollar and U.S. Treasuries collapse, that will be an absolute nightmare for the U.S. economy. If the rest of the world does not want our dollars someday, then what are we going to give them in exchange for all of the oil and all of the cheap imported goods they send us? If the rest of the world does not want our debt someday, then how in the world are we going to be able to continue to consume far, far more wealth than we produce?
The rest of the world is watching the U.S. government run up record-setting budget deficits and they are watching the Federal Reserve print money like there is no tomorrow and they realize that the U.S. financial system is slowly imploding.
As mentioned above, now even the United Nations is warning that the U.S. dollar could collapse. The following is a brief excerpt from a recent news report put out by Reuters....
The United Nations warned on Wednesday of a possible crisis of confidence in, and even a “collapse” of, the U.S. dollar if its value against other currencies continued to decline.
In a mid-year review of the world economy, the UN economic division said such a development, stemming from the falling value of foreign dollar holdings, would imperil the global financial system.
But it is not just the United Nations that is concerned about the U.S. dollar.
On April 18th, Standard & Poor’s altered its outlook on U.S. government debt from "stable" to "negative" and warned that the U.S. could soon lose its prized AAA rating.
At one time, it would have been unthinkable for Standard & Poor's to do such a thing.
But today it is amazing that it has taken them so long to make such a move. U.S. government finances are falling apart.
When the credit rating of U.S. government debt starts declining, interest rates will go up. Just ask the government of Greece how painful that can be. Today, Greece is paying over 16 percent on 10 year bonds.
The following is what John Williams of Shadow Government Statistics recently had to say about why Standard & Poor's issued such a warning about U.S. government debt....
S&P is noting the U.S. government's long-range fiscal problems. Generally, you'll find that the accounting for unfunded liabilities for Social Security, Medicare and other programs on a net-present-value (NPV) basis indicates total federal debt and obligations of about $75 trillion. That's 15 times the gross domestic product (GDP). The debt and obligations are increasing at a pace of about $5 trillion a year, which is neither sustainable nor containable. If the U.S. was a corporation on a parallel basis, it would be headed into bankruptcy rather quickly.
Look, the rest of the world is not stupid. They know that the U.S. government is hurtling towards financial disaster. The appetite among foreigners for U.S. government debt is decreasing rapidly.
In fact, according to Zero Hedge, foreigners are dumping U.S. debt at a very rapid pace right now.
In addition, the cost to insure U.S. debt has risen sharply in recent days.
Right now, the Federal Reserve has been buying up most new U.S. government debt with dollars that it has created out of thin air. This is a giant Ponzi scheme, and it is a major contributing factor to the decline of faith in the U.S. dollar.
The dollar has fallen by 17 percent compared to other major national currencies since 2009. What makes that fact even sadder is that all major currencies have been rapidly losing value compared to hard assets over that time period. The dollar is just sliding faster than almost all of the other global currencies that are constantly losing value as well.
Anyone with half a brain could have seen that this would be the end result of reckless government borrowing, but unfortunately our politicians have been ignoring this problem for decades.
Now a day or reckoning is fast approaching and it is going to be very painful.
The U.S. government has piled up the biggest mountain of debt in the history of the world. Just consider a few shocking facts about this unprecedented debt....
*If the U.S. national debt (more than 14 trillion dollars) was reduced to a stack of 5 dollar bills, it would reach three quarters of the way to the moon.
*The U.S. government borrows about 168 million dollars every single hour.
*If Bill Gates gave every penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.
*It is now being projected that by the year 2021, interest payments on the national debt will amount to $1.1 trillion dollars a year.
In a previous article on The American Dream, I detailed some more absolutely horrifying statistics about U.S. government debt....
#1 If you divide the national debt up equally among all U.S. households, each one owes a staggering $125,475.18.
#2 The federal government has borrowed 29,660 more dollars per household since Barack Obama signed the economic stimulus law two years ago.
#3 During Barack Obama's first two years in office, the U.S. government added more to the U.S. national debt than the first 100 U.S. Congresses combined.
#4 In the new budget that the Obama administration has proposed, the U.S. government would spend 3.7 trillion dollars in 2012 and by 2021 the U.S. government would be spending a whopping 5.6 trillion dollars per year.
#5 The U.S. government currently has to borrow approximately 41 cents of every single dollar that it spends.
#6 The total compensation that the federal government workforce earned last year came to a grand total of approximately 447 billion dollars.
#7 The U.S. national debt is currently rising by well over 4 billion dollars every single day.
#8 The U.S. government is borrowing over 2 million more dollars every single minute.
#9 The U.S. national debt is over 14 times larger than it was just 30 years ago.
#10 Unfunded liabilities for entitlement programs such as Social Security and Medicare are estimated to be well over $100 trillion, and nobody in the U.S. government seems to have any idea how we are actually even going to come close to meeting all of those obligations.
#11 If you were alive when Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now. But this year alone the U.S. government is going to go about 1.6 trillion dollars more into debt.
#12 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.
So have our politicians learned anything from the mistakes of the past?
No.
The U.S. government continues to spend money on some of the most ridiculous things imaginable. For example, the Department of Health and Human Services has just announced a brand new $500 million program that will, among other things, seek to solve the problem of 5-year-old children that "can't sit still" in a kindergarten classroom.
Isn't it good to see the government investing our hard-earned tax dollars so wisely?
Of course if our kids weren't being constantly fed foods packed with sugar, high fructose corn syrup and aspartame we wouldn't have to spend 500 million dollars to deal with this problem.
When it comes to government waste, nobody seems to do it any better than the U.S. government.
Our politicians continue to assume that the rest of the world will always want our dollars and our debt, but that is simply not the case.
Over the past couple of years, global leader after global leader has publicly talked about the need for a new world reserve currency.
In fact, globalist institutions such as the IMF and the World Bank have been very busy discussing what the world is going to use as a global reserve currency after the death of the dollar.
The rest of the world is not sitting around waiting to see if the U.S. financial system is going to recover. They are already making plans for the demise of the dollar. They are increasingly using other currencies to trade with. They are becoming more hesitant to buy more of our debt. They are realizing that the days of U.S. dominance are coming to an end.
So what is that going to mean for us?
It is going to be a complete and total disaster.
Right now, we live far, far beyond our means. We borrow gigantic piles of money to make up the difference between what we produce and what we consume. We are absolutely dependent on the fact that the rest of the world will take our dollars in exchange for the things that we need.
The current situation is not sustainable.
It will come to an end.
When it does, our standard of living is going to feel like it has changed overnight.
You class warfare enthusiasts need to wise up:
http://iowahawk.typepad.com/iowahawk/2011/03/feed-your-family-on-10-billion-a-day.html
Yes, big banks, hedge funds, corporations, unions, and other special interest groups are dragging down the country. No argument there. BUT, this tax the rich BS is naive. According to BHO the rich are those making > $250K. This targets the small and medium sized business people, the engine of job creation.
Billions went to bailout banks and yet today the same clowns are still pulling down huge salaries for nothing. To fix this first: we need a wall street transactions tax. Then they could pay for their own bailout and it would discourage non productive gambling like high speed trading which adds nothing to the economy. Second, capital gains (and hedge fund managers income) should be taxed at the same rate as income people have worked for. The investors have not been creating jobs in the United States so their is no justification for giving them a lighter tax rate. Last, aa one hundred precent inheritance tax. People should work for what they receive. No one should have a free lunch because of who their grandma had sex with. These three changes would go a long way toward fixing our economic problem. That and putting a whole bunch of the wall street traders and mortgage brokers in jail for the fraud they pulled which has wrecked the economy.
Get yourself a bunker.
Protection against hurricanes, tornados and looters.
But make it look like a corrugated iron hut.
This will at least help the concrete and iron industry.
“On April 18th, Standard & Poor’s altered its outlook on U.S. government debt from “stable” to “negative” and warned that the U.S. could soon lose its prized AAA rating.”—Someone want to explain to me how S&P can change outlook from stable to negative and still have AAA rating? Oh, I forgot. That’s the same S&P that rated all the crap Wall Street was puting out as AAA. The same AAA that cratered the economy.
I like how a sizable portion of people who post here are religious nuts claiming that the end is near or bigots blaming minorities for America’s problems.
Jeff, where did you come up with this BS?
If you have any doubt that the Federal Reserve is a traitorous, maniacal and devious bunch of treason guilty parasites, then visit this site and try, just try to convince yourself otherwise. This is nothing more than a history lesson complete with all the data spelling out the Feds methodical destruction of our nations finances. The people at the Fed MUST be stopped at any and all costs. They and all their employees, politicians and sponsors must be eliminated to stop the bleeding, once and for all.
Think the value of the dollar went up during the period immediately following WWII when the USA was the ONLY economic power house left standing? Think the CPI went down because everyone needed our goods? WRONG! The FED saw to it we DID NOT prosper but instead took it all for themselves. See this site and see for yourselves….
http://mykindred.com/cloud/TX/Documents/dollar/
The interest on the US debt only costs 13% of the Federal Budget. If the Government could get rid of tax loopholes, take a chainsaw to military spending and seriously reform social programs, America would actually have a good shot at survival.
However, politicians that work for the common good, instead of against it, are needed first.
Greetings,
If I remember correctly, our biggest “issue” with the Soviet Union was the inherent Evil of a “Planned Economy”. We couldn’t be mad at them for lack of Democracy because they held elections. As a matter of fact, incumbents were reelected at a rate of about 70% as opposed to our 96% incumbent reelection rate in the U.S.A. Direct Democracy was a much bigger part of Soviet life than our Democracy that we are so proud of.
No, the Evil that was the Soviet Union was the pure evil of a Planned Economy because an economy the rested in the hands of an elite few was susceptible to a complete meltdown should that elite few mess things up or attempt to hoard all the benefits.
Who here can say that the Western Democracies are not now all Planned Economies? If this is true, and I very much believe it to be true, then our entire way of life is in danger. After all, I had it pounded into my head during the Cold War that the Soviet System was doomed to fail because no Planned Economy could ever survive and that a nation with a Planned Economy could only survive as long as it could wield the necessary force to keep its citizens in line.
That is where we are today – Soviet Union 1989.
It’s just a matter of time until the masses wake up and see they have no food, no money, no freedom and no say in their future. The will be as dispensable as a wad of spit. It’s always that way isn’t it. Only this time it’s for ALL the marbles.
ALL the marbles.
***************** they don’t know that every 50 years their national debts are to be forgiven. Wiped clean. And every 7 years their personal debts are to be wiped clean. But, since our forefathers, and the modern day sheep, have had God’s enemies put over them, by God himself, because of our sin’s, and because we won’t awaken, then don’t complain. Repent,Get Baptized in the Name of Jesus Christ for the remission of sins, and then the Holy Spirit comes to help you understand these things. Also, do you know what sin is????? Sin is Transgression of God’s Law’s. So what is this teaching we hear that God’s Law’s have been done away??? I think there are wolves in sheep clothing…..and a very large number of them are pastor’s of judao christian churchs…WAKE UP AMERICA. There is a REMNANT that have oil in their lamps, if you know what I mean….
Nut case!
Welome to the Matrix..will you take the red or blue pill?
If the United Nations were concerned about the US dollar they would have not given Obama permission to invade Libya.
Oh, we could try to get back into the game. We could try.
We could sell 48 inch LCD TV’s to China for fifty dollars. Sure, they’ll buy them! Of course, our Americans on the production lines would be paid about $5.00 an hour.
Sorry, that ship has sailed. We should have kept our manufacturing base when we still had it!!
Unions? Couldn’t most manufacturing jobs be done by a high school dropout?
Come live in Australia, our debt is only 2.5 billion and we should have that paid of in a few years. Yaaaaaay for the Aussies
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To Save America following must be done.
For example:
(1)End the wars. All wars are unnecessary. (2) Cut the Pentagon budget by $400 Billion a year, even then USA’s military budget will be the largest budget compared to the combined military budget of the rest of the world.(3) Bring all American military back to the USA. Close all the military bases around the world. (4) Increase the monthly Medicare Part B premium to $250 a month (now about $115); there are NO freebies in life. (5) Raise the amount of income that is Social Security taxable. (6) Go back to the 45% top marginal tax bracket. (7)Reduce the federal workforce by 20%, or more. (8) End the tax subsidies to highly profitable industries like oil. (9) End all foreign aid. (10) LET THERE BE REAL CAPITALISM, let all the big banks and useless industries be allowed to die.
RK, I think your real initials are RP and I support you!
If and when the USD collapse so will the rest of the world economy. Which country would take another fiat currency when the USD collapse? Are there sovereign currencies out there that are better? Will the IMF create another fiat and who will back it up? The US is still the largest consumer of foreign goods and still the largest food supplier in the world even after the USD collapses.
The way I see it when the USD becomes unsustainable the USA will go bankrupt and will decline to pay debt. Either the debtor countries will declare war or stay on the side while the US restructure and issue government currency backed by gold and silver.
The only thing keeping it all going is printing money and loans.If you just watch the actions and inaction of our government you would swear they want to destroy our country.And rebuild it in some commie kind of way.
The key point which is often overlooked is where does all this money to lend the government come from? Fact is, large chunks of it are just whipped up out of nothing by banks, and lent to the Treasury using big leverage…..why do we allow this game to go on? This article does a good job of explaining exactly how banks create money… http://www.thecactusland.com/2011/05/moral-hazard-of-modern-banking-how.html
I agree. The roads don’t get paved – a paramedic doesn’t remove that tree from your gut before making you look over an invoice – my kids don’t get books newer than 1930′s book on the social studies status of the darkies
I won’t pay taxes. No money no honey and vice versa.
The middle class sure has a sore rump and you guys are talking about taking away from the middle? Cut the fat where its at -stop powdering our bones- the 1% is where you need to go.
Americans are the most lethargic slothful people on the earth when it comes to effort and resistance of inequality (just hearing we are free enough makes them go oh ok…yippe im free).
BUT there is a point when you take SO much people will wake up. THEN the liberty bell will dong once more. Using a pouch of tarred and feathered balls of any politician or ceo/droogs.