Currency

A Dollar Collapse? No Way – The U.S. Dollar Rocks! (Propaganda)

Are we on the verge of a dollar collapse?  Don’t believe the skeptics.  The truth is that there is no currency in the world that is stronger than the old greenback.  The U.S. dollar is the reserve currency of the world.  Virtually all of the nations on the face of the earth use it for trading and they always will.  Why?  Because the U.S. dollar is awesome.  No currency on earth can compete with our awesomeness.  So what that the dollar hit a new all-time record low against the Swiss franc today?  Do you really want to move over with the Swissies and eat chocolate and make watches?  No, you want to live in the land of American Idol, the NFL and apple pie – the good old USA.  Who cares if it takes about a dollar and a half to buy a single euro now?  Do you really want to go live with the Frenchies and eat a bunch of French bread while you wear a beret every day?  Of course not.  There isn’t going to be a dollar collapse.  As long as the USA is still number one the rest of the world is still going to need U.S. dollars.  So quit your worrying.

The other day all of the “doom and gloomers” were crying that the sky was falling because the U.S. dollar had fallen for 8 trading days in a row.  They were proclaiming that the “end of the dollar” was near because the dollar index was approaching a new record low.

The following is how an article from yesterday in the Washington Post described the recent slide of the dollar….

The dollar has fallen against a basket of six major currencies — the euro, Japanese yen, British pound, Canadian dollar, Swiss franc and Swedish krona — for the past eight trading days. That measure struck its lowest point since July 2008 on Monday, at 72.72. It hit bottom in April 2008 at 71.33. Its highest point since the euro’s creation was 120.92 in July 2001.

Well guess what?

The dollar index moved back up today.

That is what happens – currencies go up and currencies go down.

There is no need to get your pants in a twist over it.

When the U.S. dollar goes down, it makes our products more affordable overseas.  When other nations buy more of our stuff that helps our businesses.

So when the dollar declines a little bit that is nothing to be alarmed about.

So far in 2011, the U.S. dollar has only lost about 6.5 percent of its value.

Should we be freaking out about a measly 6.5 percent?

I don’t think so.

Do you want an even “scarier” number?

The dollar has fallen by 17 percent compared to other major national currencies since 2009.

Oooooooooohhhhhhhhhhhh – are you frightened out of your mind yet?

You better run outside Chicken Little – the sky might be falling.

The problem is that there are so many tinfoil hat wearing conspiracy theorists running around declaring that the U.S. dollar is dying that some people are actually starting to believe it.

Do you want proof that the U.S. dollar is going to be just fine?

Here you go….

Just check out what U.S. Treasury Secretary Timothy Geithner recently told the Council on Foreign Relations….

“Our policy has been and will always be, as long as I will be in office, that a strong dollar is in the interest of the country.”

Bam!

You have the very words of the U.S. Treasury Secretary right there.

He has promised the we “will always” have a strong dollar policy.

Geithner has said it and that settles it.

Any questions?

Who are you going to believe?  Are you going to believe the U.S. Treasury Secretary or are you going to believe a bunch of crazy Internet bloggers with blogs with titles such as “Economic Disaster” and “The American Dream Has Been Flushed Down The Toilet”?

Let’s get real.

The U.S. dollar is just fine and there is not going to be some mythical “dollar collapse”.

But isn’t the price of gasoline going up?

Sure it is.

But that isn’t the fault of the Federal Reserve.  They don’t set prices for gasoline.

The reality is that prices for different things go up and down.  That is what a free market economy looks like.

Right now the price of gasoline is actually lower than it was back in 2008….

So shouldn’t we actually be talking about falling gasoline prices?

I don’t know about you, but I sure am glad to be paying less for gasoline than I was back in mid-2008.

But the tinfoil hat crowd will “cherry pick” statistics to make it seem like things are worse than they really are.  They will break out scary sounding statistics such as the fact that over the past 12 months the average price of gasoline in the United States has gone up by about 30%.

LOL – cry me a river.  Life is tough.  People will cry over just about anything these days.

Who really cares that the average American driver will spend somewhere around $750 more for gasoline in 2011?

That is just a sign that the economic recovery is in full swing.

Do you know how much all of that money is going to help our oil companies?

They are going to be swimming in cash, and all of that wealth will “trickle down” and help out the folks on main street.

You would think that the half-crazed economic bloggers out there would be thrilled by all of this, but no – they just keep trotting out the “inflation boogeyman” over and over and over.

Well, you know what?

According to no less of an authority than Federal Reserve Chairman Ben Bernanke, we basically have close to zero inflation in the United State right now.

You believe the Federal Reserve, don’t you?

If not, there is probably something wrong with you.

Unfortunately, we have got a whole bunch of these self-proclaimed “experts” (who are really just legends in their own minds) running around proclaiming that inflation is not calculated the same way that it used to be.

Well, you know what?  They are right.  But it isn’t some great conspiracy.  The truth is that we have “improved” the way that inflation is calculated 24 times since 1978.

The government is always trying to become more accurate.

What is wrong with that?

But today we have a bunch of amateurs running around trying to tell us what the “real” rate of inflation actually is.

For example, a New York post analysis claims that the rate of inflation in New York City has been about 14 percent over the past year.

So how many prices did they measure?

A dozen?

Two dozen?

Who are you going to trust more – the Federal Reserve or the New York Post?

Perhaps the New York Post should just stick to reporting on the latest Elvis sighting and leave economics to the big boys.

If hack reporting by publications like the New York Post wasn’t bad enough, we’ve also got numbskulls like John Williams from a website called “Shadow Government Statistics” running around proclaiming that the sky is going to fall because of U.S. government debt.

The following is a sampling of the smelly stuff that Williams is spreading around….

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.

Does anyone actually believe any of that nonsense?

How long has Williams been predicting that U.S. government finances are going to collapse?

Yes, he has been doing it for a very, very long time.

Has the sky fallen yet?

Are we living in an economic wasteland?

Has there been a U.S. dollar collapse?

No.

Look around you – everything is just fine.

Every time the U.S. economy has had a recession in the past, what has happened?

The economy has recovered and has gotten larger than ever.

And that is exactly what is happening again.

But sadly, there are more Americans than ever that actually believe that we are headed for economic disaster.  In fact, there are some websites where they actually debate what the best place to live in the United States will be when the “economic collapse” happens.

Can you believe that?

People need to grow up.

Yes, the U.S. government is in debt.  That should be no surprise.  U.S. government debt is normal.  The truth is that our financial system is designed to have U.S. government debt constantly expand and for there to always be a little bit of inflation in the system.

When the U.S. government goes into more debt, more money is created.  If there was no debt in our society there would be no money.

So all of these bozos that claim that they want to get rid of all government debt don’t know what they are talking about.

We need to trust that the experts over at the Federal Reserve know what they are doing.  The prudent moves by Ben Bernanke have helped the economy to recover after the horrible financial crisis of 2008.  Instead of being criticized, he should be commended.  There is a reason why he was named “Person of the Year” by Time Magazine in 2009.

The Federal Reserve is watching inflation.  If it starts spiking up a little bit they will stomp it out.  They know what they are doing.

This is 2011 – the people running things were produced by some of the greatest academic institutions on the planet.  Nothing is going to catch them by surprise.  They know exactly what our problems are and how to solve them.

So quit listening to the tinfoil hat crowd.  Yes, the U.S. dollar will fluctuate a little bit relative to other major currencies.  That is nothing to be alarmed about.

There is not going to be a dollar collapse so stop waiting for one.  The U.S. dollar is always going to be the greatest currency on earth.  Why?  Because the United States is the greatest nation on earth.

After all, what other nation on earth could produce Justin Bieber, Jim Carrey, Simon Cowell, Pamela Anderson, Catherine Middleton, Michael J. Fox, Seth Rogen, Brendan Fraser, Jason Priestly, Tom Green, Ryan Reynolds, Mike Myers, Kiefer Sutherland, Howie Mandel, Keanu Reeves and William Shatner?

——————–

Hopefully by now you have figured out that this is a satirical piece demonstrating how ridiculous much of the propaganda in the mainstream media really is.  Thank you for taking the time to read my twisted attempt at humor.

Feeling Depressed? 27 Depressing Statistics About The U.S. Economy That Will Make You Feel Even Worse

If you know someone that believes that the U.S. economy is in great shape, just show that person the following statistics.  But please don’t show these statistics to anyone that is feeling depressed or that has just lost a job – it might push such a person over the edge.  The sad truth is that the U.S. economy is in the midst of a long-term decline and it is coming apart at the seams.  Right now the Obama administration and the Federal Reserve are attempting to “paper over” our economic problems with massive amounts of government debt and paper currency, but in the end it is not going to work.  When you analyze the numbers objectively, it leads to the inescapable conclusion that we are headed for another Great Depression.  That is a very depressing thought, but there is no denying that decades of debt and incredibly bad decisions are starting to catch up with us.  The economic pain that is coming is going to be absolutely mind blowing.

It would be nice if our politicians and our business leaders suddenly started making incredibly wise decisions so that we could bring the U.S. economy in for a “soft landing”, but the chance of that happening is so small that it is not even worth mentioning.

It is time for all of us to face up to the truth.  In this day and age it is really easy to get caught up in the trap of feeling depressed, but once we understand exactly how bad our problems are it can be empowering because then we can start focusing on solutions.

The following are 27 depressing statistics about the U.S. economy that are almost too crazy to believe….

#1 The Obama administration projects that the federal budget deficit will be approximately $1,600,000,000,000 this year.  Right now the Republicans and the Democrats are fighting tooth and nail over budget cuts.  The Republicans are proposing to cut the budget deficit by 3.8%.  The Democrats only want to cut it by 2.1%.

#2 The U.S. economy actually grew more between 1930 and 1940 than it did during the decade that recently ended.

#3 Over the last decade, the number of Americans without health insurance has risen from about 38 million to about 52 million.

#4 Agricultural commodities are absolutely soaring.  The price of corn has more than doubled over the last 12 months.  Considering the fact that corn is in literally thousands of our food products, that is a very frightening statistic.

#5 Between 1999 and 2009, real median household income in the United States declined by 5.0%.

#6 It is being estimated that total U.S. government debt will grow by 42 percent by the year 2015.

#7 According to the Pentagon, the cost of the first week of attacks on Libya was 600 million dollars.

#8 The average American now spends approximately 23 percent of his or her income on food and gas.

#9 According to the U.S. Energy Department, the average U.S. household will spend approximately $700 more on gasoline in 2011 than it did during 2010.

#10 It is being projected that for the first time ever, the OPEC nations are going to bring in over a trillion dollars from exporting oil this year.  Their biggest customer is the United States.

#11 According to the Economic Policy Institute, almost 25 percent of U.S. households now have zero net worth or negative net worth.  Back in 2007, that number was just 18.6 percent.

#12 China produced 19.8 percent of all the goods consumed in the world last year.  The United States only produced 19.4 percent.

#13 The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

#14 The U.S. trade deficit with China in 2010 was 27 times larger than it was back in 1990.

#15 U.S. home values have fallen an astounding 6.3 trillion dollars since the peak of the real estate market in 2005.

#16 According to RealtyTrac, one out of every 45 U.S. households was hit with a foreclosure filing in 2010.

#17 The number of homes that were actually repossessed reached the 1 million mark for the first time ever during 2010.

#18 New home sales in the United States set a brand new all-time record low in the month of February.

#19 Now home sales in the United States are now down 80% from the peak in July 2005.

#20 The financial condition of American families continues to deteriorate rapidly.  In 2010, one out of every eight American families had at least one family member that was unemployed.  That number was the highest it has been since the U.S. Labor Department began keeping track of that statistic back in 1994.

#21 There are now more than 6 million Americans that the government says have given up looking for work completely.

#22 According to the U.S. Bureau of Labor Statistics, the average length of unemployment in the U.S. is now an all-time record 39 weeks.

#23 Americans now owe more than $900 billion on student loans, which is also an all-time record high.

#24 Average household debt in the United States has now reached a level of 136% of average household income.

#25 According to the Federal Reserve, between 2007 and 2009 median household net worth in the United States fell by 23 percent.

#26 The Federal Reserve also says that median household debt in the United States has risen to $75,600.

#27 According to a recent article posted on the website of the American Institute of Economic Research, the purchasing power of a U.S. dollar declined from $1.00 in 1913 to 4.6 cents in 2009.  Sadly, the Federal Reserve is working very hard to get rid of the little bit of purchasing power that the U.S. dollar has left.

The G-7 Forex Intervention Is A Perfect Example Of How Manipulated The Global Currency Market Really Is

What do governments and central banks do when they don’t like what is happening in the financial markets?  They directly intervene and they manipulate the financial markets of course.  On Friday, the central banks of the G-7 acted in concert to drive down the value of the surging yen.  So why did they do this?  Well, the fear was that a rising yen would hurt Japanese exports at a time when the economy of Japan needs all of the help that it can get.  So, as central banks have been doing with increasing frequency, they directly intervened in the Forex market in order to bring about the result that they desired.  Unfortunately, this is not an isolated incident.  The truth is that foreign governments, central banks and large financial institutions are constantly manipulating the Forex, precious metals and stock markets all over the globe.  You see, in today’s global economy the “stakes are so high” that the free market cannot be trusted.

The reality of the matter is that none of the financial markets are really “free markets” anymore.  Not that they are completely rigged, but to say that they are very highly manipulated would not be a stretch.

At least this time the manipulation was made public.  Of course it would have been really hard to hide the fact that all G-7 central banks intervened in the Forex on the same day.

The last time there was such a coordinated intervention in the global currency market was back in 2000 when central banks intervened to boost the struggling euro.

But the truth is that individual central banks attempt to manipulate the Forex all the time.

Some of these interventions become public.  In September 2010, a bold 12 billion dollar move by the Bank of Japan to push down the value of the yen made headlines around the globe but had only limited success.

Another example of this from last year was when the Swiss National Bank experienced losses equivalent to about 15 billion dollars trying to stop the rapid rise of the Swiss franc.

Many nations around the world have become extremely sensitive to currency movements.

In particular, there are several Asian nations that are known to be constant currency manipulators.  For example, Singapore is very well known for intervening in the foreign exchange market in order to benefit exporters.

And that is what this most recent intervention on behalf of the yen was all about.  It was about making Japanese exports cheaper.

But who is going to say no to Japan right now?  It is believed that Japan asked the G-7 to do this, and so they did.

Japanese Finance Minister Yoshihiko Noda told the media the following about this massive intervention in the marketplace by the G-7….

“Given yen moves after the tragic events that hit Japan, the United States, Britain, Canada and the European Central Bank have agreed with Japan to jointly intervene in the currency market.”

So isn’t the Forex supposed to be a free market?

If you still believe that, I have a bridge to sell you.

According to Kathleen Brooks, the research director at a major Forex trading firm, it looks like there is a certain level that global authorities simply will not allow the yen to rise to….

“It looks as though global authorities are willing to pull out all of the stops to defend the 80.00 level in dollar/yen.”

The following is the full statement released by the G-7 defending their currency intervention….

Statement of G-7 Finance Ministers and Central Bank Governors

March 18, 2011

We, the G-7 Finance Ministers and Central Bank Governors, discussed the recent dramatic events in Japan and were briefed by our Japanese colleagues on the current situation and the economic and financial response put in place by the authorities.

We express our solidarity with the Japanese people in these difficult times, our readiness to provide any needed cooperation and our confidence in the resilience of the Japanese economy and financial sector.

In response to recent movements in the exchange rate of the yen associated with the tragic events in Japan, and at the request of the Japanese authorities, the authorities of the United States, the United Kingdom, Canada, and the European Central Bank will join with Japan, on March 18, 2011, in concerted intervention in exchange markets. As we have long stated, excess volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability. We will monitor exchange markets closely and will cooperate as appropriate.

But it is not just foreign governments and central banks that manipulate financial markets.

If you want to try to make money on the Forex, you had really better know what you are doing, because most “little fish” get swallowed up and spit out.

A number of years ago I actually invested in the Forex and I rapidly learned that it is not a “clean game”.  I discovered that there are industry insiders that openly confess that several of the “big fish” in the industry brazenly “stop hunt” and regularly trade against the positions of their clients.

Not that stock markets around the globe are much better.  It would take thousands of pages just to document the well known cases of stock manipulation and insider trading.

And don’t get me started on the precious metals markets.  As I have written about previously, very compelling evidence of manipulation in those markets has been handed to the U.S. government and they have essentially done next to nothing with that evidence.

Not that people don’t make money in the financial markets.  Some people make a ton of money.  But those people are experts and they know how to survive in a “dirty game”.

If you are an amateur, you really need to think twice before diving too deeply into the financial markets.  If you think that you can jump into the Forex or the U.S. stock market and “get rich quick” you are in for a rude awakening.

The financial markets have become a game that is designed to funnel money to the “sharks” and to the “big boys”.  Once you put your money into the game, the odds are that “the house” is going to win.

For those that still do believe that the financial markets are a good way to build wealth, at least be prudent enough to get some sound financial advice.  There is no shame in having a financial professional invest your money for you.

But it is no guarantee of success either.  The truth is that millions of Americans have experienced a lot of pain in the financial markets over the last few years.

As the global economy becomes even more unstable, the manipulation of the financial markets by governments and by central banks is going to become even more dramatic.

As financial markets around the world crash and rise and crash again a whole lot of people are going to be wiped out financially.

You don’t have to be one of them.

6 Charts Which Prove That Central Banks All Over The Globe Are Recklessly Printing Money

If the U.S. dollar is being devalued so rapidly, then why does it sometimes increase in value against other global currencies?  Well, it is because everybody is recklessly printing money now.  The 6 charts which you are about to see below prove this.  The truth is that it is not just the U.S. Federal Reserve which has been printing money like there is no tomorrow.  Out of control money printing has also been happening in the UK, in the EU, in Japan, in China and in India.  There are times when one particular global currency will fall faster than the others, but the reality is that they are all being rapidly devalued.  Unfortunately, this is a recipe for a global economic nightmare.

Right now you can almost smell the panic as it rises in global financial markets.  Investors all over the world are racing to get out of paper and to get into hard assets.  Just about anything that is “real” and “tangible” is hot right now.  Gold hit a record high last year and it is on the rise again.  In fact, it just hit a new five-week high.  Demand for silver is becoming absolutely ridiculous right now.  Oil is marching up towards $100 a barrel again.  Agricultural commodities have exploded in price over the past year.  Many investors are even gobbling up art and other collectibles.

Paper money is no longer considered to be safe.  All over the globe investors are watching all of the reckless money printing that has been going on and they are becoming alarmed.  An increasing number of investors and financial institutions are putting their wealth into hard assets that are real and tangible in an effort to preserve their wealth.

The other day, a reader of this column named James sent me some charts that he had put together.  I thought they were so good that I asked him if I could include them in an article.  These charts show how central banks all over the globe have been recklessly printing money.  Over the last 30 years virtually the entire world has developed a great love affair with fiat currency….

So is everyone printing money?

The U.S. is printing lots of money…..

Source, The St. Louis Fed

The Bank of England is printing lots of money…..

Source: The BoE

The EU is printing lots of money….

Source: The ECB

Japan is printing lots of money…..

Source: The BoJ

China is printing lots of money…..

Source: The People’s Bank of China

India is printing lots of money…..

Source: Reserve Bank of India

Of course anyone with half a brain can see where all of this is ultimately headed.  In the end, inflation is going to spiral out of control and we are going to witness financial implosion on a global scale.

So why don’t these nations just adopt sound money?

Well, it turns out that if you are a member of the IMF, you are specifically prohibited from having gold-backed currency.

Yes, you read that correctly.

In fact, U.S. Representative Ron Paul once sent an open letter to the U.S. Treasury and the Federal Reserve asking about this and he received no response.  The following is the content of that letter….

Dear Sirs:

I am writing regarding Article 4, Section 2b of the International Monetary Fund (IMF)’s Articles of Agreement. As you may be aware, this language prohibits countries who are members of the IMF from linking their currency to gold. Thus, the IMF is forbidding countries suffering from an erratic monetary policy from adopting the most effective means of stabilizing their currency. This policy could delay a country’s recovery from an economic crisis and retard economic growth, thus furthering economic and political instability.

I would greatly appreciate an explanation from both the Treasury and the Federal Reserve of the reasons the United States has continued to acquiesce in this misguided policy. Please contact Mr. Norman Singleton, my legislative director, if you require any further information regarding this request. Thank you for your cooperation in this matter.

Ron Paul
U.S. House of Representatives

Sadly, the truth is that the global elite don’t want nations to start adopting gold-backed currencies.  They want countries to use fiat currencies that they can openly manipulate for their own benefit.

At this point, every nation on earth (to the best of my knowledge) uses a fiat currency.  All of the major global currencies are being continually devalued.  In fact, there are times when counties will purposely devalue their currencies even more rapidly in order to gain a competitive advantage in world trade.

This is why so many investors now have such an aversion to paper currency.  It starts losing value the moment you take possession of it.

In some areas of the world, “gold fever” is absolutely exploding.  For example, China imported five times as much gold in 2010 as it did in 2009.  On the Shanghai Gold Exchange, trading volume soared 43 percent during the first 10 months of 2010.

Gold, silver and other precious metals are now seen as a great hedge against inflation worldwide.  Investors all over the globe are demonstrating a strong preference for “real money” over “paper money”.

So what does all of this mean?

It means that some tremendous imbalances are being built up in the global financial system.  The central banks of the world must continue to inflate these bubbles with constantly increasing amounts of paper money and debt in order to keep the game going.  If at some point the reckless money printing comes to a screeching halt it is going to unleash hell on global financial markets.

But if all of this reckless money printing continues we are eventually going to see horrific inflation all over the planet.  In fact, we are already seeing significant inflation happening in many areas of the globe.  Almost every single day a new headline about inflation in China seems to pop up in the financial news.  Rising food prices are sparking unrest in the Middle East and elsewhere.  Even U.S. consumers are starting to see some uncomfortable price increases at the gas pump and in the supermarket.

So it is not just Federal Reserve Chairman Ben Bernanke that is off his rocker.  The whole world is going crazy with money printing.

Hopefully this whole thing is not going to end as badly as many of us fear that it will.  But right now the central banks of the world are pumping unprecedented amounts of cash into the global financial system, and those in the global financial system are funneling a very large percentage of that cash into hard assets.  Unless something changes, that is going to mean that prices for basic necessities such as food and gas are going to continue to rise.

This is quite a fine mess that we are in.

Does anyone see a way out?

Shocking New IMF Report: The U.S. Dollar Needs To Be Replaced As The World Reserve Currency And SDRs “Could Constitute An Embryo Of Global Currency”

The IMF is trying to move the world away from the U.S. dollar and towards a global currency once again.  In a new report entitled “Enhancing International Monetary Stability—A Role for the SDR“, the IMF details the “problems” with having the U.S. dollar as the reserve currency of the globe and the IMF discusses the potential for a larger role for SDRs (Special Drawing Rights).  But the IMF certainly does not view SDRs as the “final solution” to global currency problems.  Rather, the IMF considers SDRs to be a transitional phase between what we have now and a new world currency.  In this newly published report, the IMF makes this point very clearly: “In the even longer run, if there were political willingness to do so, these securities could constitute an embryo of global currency.”  Yes, you read that correctly.  The SDR is supposed to be “an embryo” from which a global currency will one day develop.  So what about the U.S. dollar and other national currencies?  Well, they would just end up fading away.

CNN clearly understands what the IMF is trying to accomplish with this new report.  The following is how CNN’s recent story about the new IMF report begins….

“The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world’s reserve currency.”

That is exactly what the IMF intends to do.

They intend to have SDRs replace the U.S. dollar as the world reserve currency.

So exactly what are SDRs?

Well, “SDR” is short for Special Drawing Rights.  It is a synthetic currency unit that is made up of a basket of currencies.  SDRs have actually been around for many years, but now they are being heavily promoted as an alternative to the dollar.

The following is how Wikipedia defines SDRs….

Special Drawing Rights (SDRs) are international foreign exchange reserve assets. Allocated to nations by the International Monetary Fund (IMF), a SDR represents a claim to foreign currencies for which it may be exchanged in times of need.

The SDR is a hybrid.  SDRs are part U.S. dollar, part euro, part yen and part British pound.  In particular, the following is how each SDR currently breaks down….

U.S. Dollar: 41.9%

Euro: 37.4%

Yen: 9.4%

British Pound: 11.3%

Now there are calls for other national currencies to be included in the basket.

Russian President Dmitry Medvedev has publicly called for the national currencies of Brazil, Russia, India and China to be included in the SDR.

In January, the Obama administration said that it fully supports the eventual inclusion of the yuan in the SDR.

So yes, it looks like we are definitely moving in the direction of the SDR becoming a true global currency.

But is this a good idea?

Globalist organizations such as the IMF say that having a true global currency would facilitate world trade, it would make currency wars less likely, it would stabilize the global economy and it would make the rest of the globe less reliant on what is going on in the United States.

In fact, there is a lot of discussion in international financial circles that oil should be traded in SDRs rather than in U.S. dollars.

In a recent interview, IMF Deputy Managing Director Naoyuki Shinohara even suggested that the IMF may actually consider issuing bonds that are denominated in SDRs.  Apparently the goal would be to promote the use of the new “currency”.

But once again, it is important to remember that the IMF does not see SDRs lasting forever either.  Rather, the IMF considers the SDR to be an “embryo” from which a true global currency could emerge.

An IMF paper entitled “Reserve Accumulation and International Monetary Stability” that was published last year even proposed that a future global currency be called the “Bancor” and that a future global central bank could be put in charge of issuing it….

“A global currency, bancor, issued by a global central bank (see Supplement 1, section V) would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy. As trade and finance continue to grow rapidly and global integration increases, the importance of this broader perspective is expected to continue growing.”

In fact, at one point the IMF report from last year specifically compares the proposed global central bank to the Federal Reserve….

“The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present. Such liquidity was provided in the most recent crisis mainly by the U.S. Federal Reserve, which however may not always provide such liquidity.”

Yes, unfortunately this is what the IMF really has in mind for all of us.  A one-world economic system with a one-world currency and a one-world central bank.

Is that what we really need?

A “global Federal Reserve” that dominates the currency and the economy of the entire planet?

At least with the U.S. Federal Reserve there is hope that someday the American people can convince Congress to shut it down.

A “global Federal Reserve” would not answer to anyone.  Individual nations could attempt to pull out, but then they would potentially be isolated from the rest of the globe and potentially cut off from world trade.

That may sound very far-fetched now, but that is the direction we are headed.

And shifting away from the U.S. dollar as the reserve currency of the world would be disastrous for the U.S. economy.

Right now the fact that the U.S. dollar is the primary reserve currency of the world is one of the only things holding it up.  If you took that support away the U.S. dollar could end up collapsing quite quickly.

Let us hope that the American people wake up and start insisting that we want no part in a global currency.  If we ever allow a world currency to start replacing the U.S. dollar to a large extent, we will lose a great deal of our economic sovereignty.  Not that we haven’t lost most of it already, but at least if we are still using our own national currency there is a greater chance that we can reclaim it.

What the IMF is proposing right now may seem very innocent, but the long-term consequences of going down the road they want to put us on could potentially be absolutely catastrophic.

The American people need to send a very clear message to their representatives in Washington D.C…..

#1 We do not want a one-world economy.

#2 We do not want a one-world currency.

#3 We do not want a one-world central bank.

Which Of The Currencies Of The World Is Going To Crash First?

Last year was an absolutely fascinating time for world currency markets.  The yen, the dollar and the euro all took their turns in the spotlight.  Each experienced wild swings at various times, but the overall theme that we saw was that faith in paper currencies is dying.  The biggest reason for this is the horrific sovereign debt crisis that has swept the globe.  The United States, Japan and a whole host of European nations are all drowning in debt.  The U.S. and Japan are both steamrolling toward insolvency, and several European nations would have already defaulted on their debts if they had not been bailed out.  So which of the major currencies of the world is going to crash first?  Will one (or more) of the big currencies fall before the end of 2011?  Once one major currency collapses will the rest start to fall like dominoes?  The truth is that the world has never seen a sovereign debt crisis of this magnitude in all of human history.  Almost the entire globe is drowning in a sea of red ink and it has brought us right to the brink of financial disaster.

So which of the currencies of the world is going to be the first to come crashing down?  Well, let’s take a quick look at the yen, the euro and the dollar….

The Yen

Japan has the 3rd biggest economy in the world, but they are also deeply swamped in debt.  At well over 200%, the Japanese government has the biggest debt to GDP ratio of all of the major industrialized nations.  In fact, it is estimated that this massive pile of Japanese government debt amounts to approximately 7.5 million yen for every person living in the entire nation of Japan.

So why hasn’t Japan defaulted yet?  Well, a big reason is because Japan has one of the highest personal savings rates on the entire globe, and Japanese citizens have been more than happy to gobble up huge amounts of Japanese government debt at very, very low interest rates.

However, Standard & Poor’s has warned that they may have to slash Japan’s credit rating if the debt gets much bigger, and once confidence starts to falter Japan is going to have to start paying higher interest rates.

At some point Japan is going to be facing a financial meltdown, but for the moment they are hanging in there.

The Euro

Several large European nations would have already defaulted on their debts if they had not been bailed out last year.  Greece, Portugal, Ireland, Italy, Belgium and Spain are all on very shaky ground right now.  Several of them have already had their credit ratings slashed.

Bond yields all over Europe have been absolutely soaring in recent months.  It is getting really expensive for many of these nations to take on new debt.  Interest rates on 10-year Greek bonds went from 6 percent up to 13 percent in just a single month at one point in 2010.  In fact, even some of the nations that aren’t in the most danger are even feeling the pain.  For example, the cost of insuring French debt hit a new record high on December 20th.

Right now there are all kinds of rumblings that more European nations are going to need bailouts very soon.  Professor Willem Buiter, the chief economist at Citibank, is warning that quite a few EU nations could financially collapse in the next few months if they are not rapidly bailed out….

“The market is not going to wait until March for the EU authorities to get their act together. We could have several sovereign states and banks going under. They are being far too casual.”

So where is all of this bailout money coming from?  Well, a lot of it is coming from Germany and a significant amount of it is actually coming from the United States.

But will wealthy nations such as Germany be willing to pour hundreds of billions of euros into these financial black holes indefinitely?

Are the Germans going to accept a situation where they are permanently bailing out the “weak sisters” all over the rest of the continent?

Already some prominent politicians in Europe are calling for the European “bailout fund” to be doubled in size to about 2 trillion dollars.  Other analysts believe that it is going to take at least 4 or 5 trillion dollars to properly bail out all of the European nations that need it.

In any event, the truth is that the situation is really, really bad.  If at some point the bailouts stop, the defaults are going to begin.

The Dollar

The United States has the biggest national debt of all.  The 14 trillion dollar threshold has just been crossed, and the national debt is now less than 300 billion dollars away from the 14.294 trillion dollar debt ceiling.  If the U.S. Congress does not raise the debt ceiling, the U.S. government will shortly begin to default on its debts.  Of course everyone fully expects that the U.S. Congress will indeed raise the debt ceiling just like they have every time before.

However, U.S. politicians are not going to be able to keep kicking the can down the road forever.  Today the U.S. national debt is more than 14 times larger than it was just 30 years ago.  Everyone around the world is beginning to realize that this debt is not even close to sustainable.  Investors are beginning to become more hesitant about loaning the United States money.  The Federal Reserve has been forced to step in and “buy” more and more of the debt the U.S. government is issuing.

Yields on U.S. Treasuries have been moving up in recent months and this could eventually become a huge problem.

Why?

Well, the sad truth is that the U.S. government has been increasingly using short-term debt.

At this point, the average maturity of U.S. government bonds has fallen to 4.4 years.  The is the lowest figure of all the major industrialized nations. That means that the U.S. government must constantly roll over massive amounts of debt.

As a point of comparison, UK government debt has an average maturity of approximately 13 years.  That obviously gives them a lot more breathing room.

For the United States, the situation could become incredibly dire if interest rates start to go up.

If interest rates on U.S. government debt reach an average of 7 percent, interest payments on the debt would gobble up approximately 45 percent of the tax revenue that the U.S. government takes in each year.

Yes, at that point the game would be over.

But what the United States has going for it that the European nations do not is that the United States can just have the Federal Reserve keep printing currency.  Unfortunately for the nations involved in the euro, they do not have that option.

That is why an increasing number of analysts believe that it will be the euro that will crash and burn first.

But only time will tell.

There are even many that believe that authorities at the highest level actually want the dollar, euro and yen to fail.

Why?

Well, many of the same individuals and groups that brought us NAFTA, the WTO, the IMF, the OECD and the World Bank believe that it would be absolutely wonderful for humanity if we could all have a single, united global currency.  The “chaos” produced by the fall of our existing global currencies could provide the perfect “opportunity” to provide the grand “solution” that they have been hoping to introduce all along.

All over the world top politicians and financiers have been very open about the fact that a world currency is coming.  In fact, men like George Soros are openly talking about these things.  The United Nations has been publicly calling for the U.S. dollar to be replaced with a new global currency for some time now.  Just this week Chinese President Hu Jintao stated that “the current international currency system is the product of the past.”

So will the American people just sit back and accept it when their dollars are replaced with a new global currency?

Well, sadly, when things go badly most Americans seem to be willing to accept just about anything if it will mean that things will go back to “normal”.  When the global economy falls to pieces, and there already lots of signs that we are on the verge of such a collapse, will the American people be willing to say goodbye to the dollar if politicians from both major political parties tell them that the new global currency is the “answer” to our problems?

Hopefully the American people will wake up and will realize that “globalism” is rapidly wiping away almost everything that it means to be an “American”.  Now even many of our children and teens are primarily identifying themselves as “citizens of the world” rather than “citizens of the United States”.

Even if the U.S. dollar does collapse, it is absolutely imperative that we continue to have our own national currency.  The U.S. Constitution does not make any provision for any sort of “world currency”.  If we allow the globalists to push a truly global currency down our throats it will be another giant step towards the creation of a totalitarian one world system.

So what do you think about all of this?  Please feel free to leave a comment with your thoughts below….

Currency Crisis! So What Happens If The Dollar And The Euro Both Collapse?

Some analysts are warning that the U.S. dollar is in danger of collapse because of the exploding U.S. government debt, the horrific U.S. trade deficit and the new round of quantitative easing recently announced by the Federal Reserve.  Other analysts are warning the the euro is in danger of collapse because of the very serious sovereign debt crisis that is affecting nations such as Greece, Portugal, Ireland, Italy, Belgium and Spain.  So what happens if the dollar and the euro both collapse?  Well, it would certainly throw the current world financial order into a state of chaos, but what would emerge from the ashes?  Would the nations of the world go back to using dozens of different national currencies or would we see a truly global currency emerge for the very first time?

Up until recently, the idea of a world currency was absolutely unthinkable for most people.  In fact, the notion that all of the major nations around the globe would agree to a single currency still seems far-fetched to most analysts.  However, if enough “chaos” is produced by a concurrent collapse of the U.S. dollar and the euro, would that be enough to get the major powers around the world to agree to a new financial world order?

Let’s hope not, but it is getting hard to deny that we are heading for a major currency crisis, and if the U.S. dollar and/or the euro collapse, the world will certainly never be the same afterwards.

In case you missed it, China and Russia made a very big announcement the other day.

They told the world that instead of using the U.S. dollar to trade with each other, they will now be using their own national currencies.

Most Americans don’t realize it, but that is a very, very big deal.

The fact that the U.S. dollar has been the primary reserve currency of the world for decades has given the United States a tremendous amount of economic power.

But now nations are beginning to lose confidence in the U.S. dollar and they are slowly starting to move away from it.

When the Federal Reserve announced a new round of quantitative easing in early November, it created a huge backlash from other nations.  For decades, many other countries have been heavily investing in dollar-denominated assets, and now they are quite upset that those assets are going to be devalued.

Chinese Finance Vice Minister Zhu Guangyao used very strong language in denouncing the Fed’s new quantitative easing scheme earlier this month….

“As a major reserve currency issuer, for the United States to launch a second round of quantitative easing at this time, we feel that it did not recognize its responsibility to stabilize global markets and did not think about the impact of excessive liquidity on emerging markets.”

German Finance Minister Wolfgang Schäuble was even more blunt.  He has called current Federal Reserve policy “clueless”, and he says that he is absolutely disgusted with the Federal Reserve at this point….

“They have already pumped an endless amount of money into the economy via taking on extremely high public debt and through a Fed policy that has already pumped a lot of money into the economy. The results are horrendous.”

So where is all of this going?

If the Federal Reserve keeps flooding the system with new dollars, the rest of the world could eventually totally reject the U.S. dollar and U.S. Treasuries.

If that day ever arrives, the results would be beyond catastrophic as the following short video from the National Inflation Association demonstrates….

But it is not just the U.S. dollar that is in trouble.

The euro is in danger as well.

Just consider the financial problems that some major European nations are experiencing right now….

*Standard & Poor’s has slashed Ireland’s credit rating two notches to “A”, and is warning that there could be further downgrades.  The Irish budget deficit is projected to reach 32 percent of national output this year.  Ireland’s finances are being called “just one big pyramid scheme”, and they recently accepted a huge European bailout.  Unfortunately for Ireland, this bailout comes with strings.  The Irish government is now being forced to implement an austerity program that is being referred to as “draconian”.

*Analysts are projecting that Portugal is going to need a bailout of at least 50 billion euros.  The government of Portugal has implemented some harsh austerity measures in an attempt to get the red ink under control, and the people are not pleased.  On Wednesday, a massive national strike shut down travel and basic services across the country.

*Things are so bleak in Portugal right now that Foreign Affairs Minister Luis Amado recently stated that his nation “faces a scenario of exit from the euro zone” if a solution is not found for this financial crisis.

*Greece was the first nation to need a European bailout, and now there are rumors that they may need even more assistance.  The statistics agency for the EU, Eurostat, recently revealed that Greece’s budget deficit for 2009 was actually 15.4% of GDP rather than 13.6% of GDP as originally thought.  The Greek national debt is now well over 120 percent of GDP.  The financial problems in Greece never seem to stop.

*Belgium’s debt has reached 100 percent of annual national income, and the cost of insuring that country’s debt has now hit record levels.

*Even Spain is in trouble.  Rates on Spanish 10-year government bonds have risen to frightening heights in recent days, and the official unemployment rate in Spain is hovering around 20 percent.

*In a recent article entitled “A Spanish Bailout Would Test Europe’s Strained Finances“, the New York Times quoted Jordi Galí, the director of the Center for Research in International Economics at Barcelona’s Pompeu Fabra University as saying that rumors that Spain is in financial trouble could end up making it a self-fulfilling prophecy….

“If investors expect Spain to have trouble refinancing its debt, now or somewhere down the road, then Spain will have trouble,” he added. “This is only aggravated by the fact that the reluctance of investors to purchase the country’s public debt leads to an increase in the interest rate it has to pay and thus in the budget deficit and the amount of debt it has to issue.”

So could this sovereign debt crisis actually cause the euro to collapse?

Well, it depends who you ask.

European Financial Stability Fund chief Klaus Regling says that there is “zero” chance that the euro will collapse….

“There is zero danger. It’s inconceivable that the euro would collapse.”

Other European leaders are not so sure about that.

EU President Herman Van Rompuy recently warned that if some of the weaker countries in Europe are forced to abandon the euro it will likely cause a total meltdown of the European Union….

“We’re in a survival crisis. We all have to work together in order to survive with the euro zone, because if we don’t survive with the euro zone we will not survive with the European Union.”

German Chancellor Angela Merkel is also warning that a failure of the euro could bring down the entire European Union….

“If the euro fails, then Europe fails.”

But is this likely to happen any time soon?

No, probably not, but in 2010 top European officials are actually acknowledging the possibility, and that shows just how serious things have gotten.

So if the U.S. dollar and the euro do collapse, what would happen?

Well, already many world leaders are openly speaking of the need for a true global currency.

After all, they argue, there won’t be any “currency wars” if we are all using the same currency.

In fact, the Institute of International Finance, an organization that represents 420 of the biggest banks and financial institutions on the globe, recently declared that the time has come to adopt a one world currency.

In fact, as I wrote in an article entitled “Bancor: The Name Of The Global Currency That A Shocking IMF Report Is Proposing“, a recent IMF policy paper actually proposed a name for the “global currency” that they believe could be coming….

A paper entitled “Reserve Accumulation and International Monetary Stability” by the Strategy, Policy and Review Department of the IMF recommends that the world adopt a global currency called the “Bancor” and that a global central bank be established to administer that currency. The report is dated April 13, 2010 and a full copy can be read here. Unfortunately this is not hype and it is not a rumor. This is a very serious proposal in an official document from one of the mega-powerful institutions that is actually running the world economy. Anyone who follows the IMF knows that what the IMF wants, the IMF usually gets. So could a global currency known as the “Bancor” be on the horizon? That is now a legitimate question.

So will any of this ever come to fruition?

Well, it would likely take one whale of a crisis to get the countries of the world to agree to such a thing.

However, we do live at a time when the world financial system seems to be perpetually on the edge of chaos.  If at some point the U.S. dollar and the euro totally fall apart perhaps we will see a “new order” arise out of all of that chaos.

But let’s hope not.  Once we give any organization the power to issue a global currency the odds of us ever getting our economic sovereignty back will be greatly reduced.  The internationalists are going to use any crisis as an opportunity to argue for greater centralization of the world financial system, and it will be very important for the American people not to fall for those arguments.

Hopefully the U.S. dollar and the euro can remain stable currencies for at least a little while longer.  Because once they collapse things will never, ever be the same again.

It Is A Race To The Bottom For Global Currencies And The Winner Will Be Gold

In 2010, any nation that has a weak currency has a very significant competitive advantage in global trade.  A weak currency means that the products and services produced by that nation will be less expensive for other nations.  Therefore other nations will buy more of those products and services.  When exports go up, employment goes up and more wealth flows into the country.  Alternatively, when the value of a national currency declines, exports do down, unemployment increases and less wealth flows into the country.  Therefore, dozens of exporting nations around the globe have become increasingly determined to keep their national currencies very weak in an attempt to maintain a competitive advantage in the global marketplace.  Essentially what we have is a race to the bottom among global currencies.  Whenever any nation wants to gain a little bit more of an edge in global trade they push the value of their currency down just a little bit more.  So who is the winner in all of this?  Well, that is easy.  Gold, silver and other precious metals will continue to be the winners as fiat currencies all over the globe continue to decline in value. 

Quite a few nations have been openly manipulating their national currencies for many years, but now currency issues are starting to make front page news.  Things are starting to get quite tense out there.  Major importing nations are starting to resent the fact that they have been burned by all of this currency manipulation and major exporting nations are absolutely determined not to lose the economic gains that they have achieved as a result of their currency manipulation.   

In recent months, nation after nation has been taking steps to weaken their national currencies.  Every time another currency gets devalued the hostility in the global marketplace just seems to grow.  In fact, Brazil’s finance minister recently was very honest about the fact that the nations of the world are now engaged in a very open “international currency war”….

“We’re in the midst of an international currency war, a general weakening of currency.”

So where does all of this end?

Well, to some the answer is to adopt a global currency.  But let us hope that never, ever happens because it would be the end of economic sovereignty for every nation on the face of the earth.

To others, the answer is for the nations that are being taken advantage of to stand up and to declare that they are not going to take it anymore.

Perhaps the most glaring example of one nation taking example of another is what China is doing to the United States.

In my recent article entitled “Currency War” I described the effect that currency manipulation by the Chinese government is having on trade between the U.S. and China….

For years, China has kept the value of their currency artificially low.  Even though China has made a few small moves toward a more free-floating currency policy, at this point China’s currency is still pretty much pegged to the U.S. dollar.  It is estimated that the Chinese government is keeping China’s currency at a value about 40 percent lower than what it should be.  This is essentially a de facto subsidy to China’s exporters.

By keeping their currency essentially pegged to the U.S. dollar at such a low value, China is able to flood the U.S. market with incredibly cheap goods and services.  But this has created an absolutely massive trade imbalance.  Today, the United States spends $3.90 on Chinese goods for every $1.00 that the Chinese spend on American goods.  Jobs and wealth are flowing out of the United States and into China at a pace that is almost unimaginable.

The Chinese know that if they let the value of their currency rise substantially it would have a devastating impact on their economy.  Chinese Premier Wen Jiabao was recently quoted in The Telegraph as saying the following about what would happen if the value of Chinese currency was to rise substantially….

“I can’t imagine how many Chinese factories will go bankrupt, how many Chinese workers will lose their jobs.”

So instead American factories get to go bankrupt and millions of American workers get to lose their jobs.

Is that fair?

Meanwhile, other nations around the world are busy debasing their currencies.  For example, Japan recently made a 12 billion dollar move in world currency markets to debase the value of the yen.

Earlier this year, the Swiss National Bank experienced losses equivalent to about 15 billion dollars trying to stop the rapid rise of the Swiss franc.

It truly is a race to the bottom.

So who benefits?

Gold, silver and other precious metals of course.

Gold recently topped $1,300 an ounce. 

Silver has been absolutely soaring.

Exporting nations such as China and India have been gobbling up gold and other precious metals every time there is a little bit of a dip.  They are tired of piling up endless amounts of U.S. dollars and they are seeking to diversify into something more solid.

The trend toward gold and precious metals is so hot that one German firm that installs gold vending machines now has plans to introduce them into the United States later this year.

It seems like everyone wants gold right now.

Not that gold is any more valuable than it ever has been.

It is just that it is not going down in value like all of the fiat paper currencies around the world are.

This is not a good time to have faith in paper currencies – particularly the U.S. dollar.

Already the dollar has been slipping substantially and the Federal Reserve has not really even cranked up the next round of quantitative easing yet.

One of the easiest things to do when there are economic problems in a nation is to pump more paper money into the economy.  More paper money gives people something to spend, it spurs economic activity, it helps exports (as described above), and it helps put people back to work. 

Of course it also destroys the value of the currency, but we will get to that in a minute.

With millions upon millions of Americans out of work, and with millions of homes being foreclosed, and with poverty statistics soaring into uncharted territory, it is very tempting for our politicians in Washington to borrow even more paper money and to pump it into the economy in an attempt to get things going again.  But right now an election is coming up and the Tea Party has raised such a ruckus about government debt that there isn’t much appetite for more “stimulus packages” right now.

Of course the truth is that “stimulus packages” never solve any of our long-term problems anyway.  The reality is that they just give our economy a short-term “high” and make our long-term debt problems even worse.

Not that the U.S. government is not quietly up to some monkey business.  On Friday, federal regulators announced a 30 billion dollar bailout of the nation’s wholesale credit union system.

Another bailout?

Just what we need, eh?

But in general, the U.S. government is not doing a whole lot more reckless spending right now.

However, the Federal Reserve can inject more paper money into the economy without the help of Congress.  Under the guise of “quantitative easing”, the Federal Reserve makes up money out of thin air and pumps it into the economy by buying up U.S. Treasuries, mortgage-backed securities or anything else that they feel like buying.

So is this going to happen again any time soon?

There are all kinds of whispers on Wall Street that this is exactly what the Fed is going to do and that it is going to be massive.

And quantitative easing would probably stimulate the U.S. economy in the short-term.

However, it would also seriously damage the value of the U.S. dollar.

You see, the truth is that when more dollars are introduced into the system, the value of each existing dollar goes down.

It is called inflation, and it is a hidden tax on all of us. 

Think of it this way.  If you put five dollars away today and you anticipate that you will be able to buy two loaves of bread with it three years from now, you will be greatly disappointed if when that day arrives a loaf of bread now costs five dollars and you can only purchase one loaf.

When the purchasing power of the dollar declines, it is a tax on every single dollar in every single wallet and bank account in the United States.

Since 1913, the U.S. dollar has lost over 96 percent of its value.  Unfortunately, as ever increasing mountains of paper money continue to be required to keep our financial system solvent, the rate of decline of the value of the dollar is only going to increase in the years ahead.

So when you are watching the news and you hear that the Federal Reserve has announced some more “quantitative easing”, you might want to watch your wallet because you are about to be taxed.  Your dollars will still be there – they just won’t go as far as they used to.

But in the twisted global economic system that our politicians have created, if the U.S. does not devalue the dollar we will lose factories, jobs and wealth at an even faster pace. 

How sick is that?

So do not put your trust in the U.S. dollar.  In the end, it will fail.

So what do all of you think?  Feel free to leave a comment with your opinion (sane of otherwise) below….

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