The World Reserve Part 1

The same financial problems from bank to bank and from company to company for the last six years have now found their way into the U.S. Treasury. I'll explain how this came to be. What it means is critically important to you and every American...
The next phase in this crisis will threaten our very way of life.
The savings of millions will be wiped out. This disaster will change your business and your work. It will dramatically affect your savings accounts, investments, and retirement.

It will change everything about your normal way of life.I'll explain how I know these events are about to happen. You can decide for yourself if I'm full of hot air. I know that debts don't just disappear. I know that bailouts have big consequences. And, unlike most of the pundits on TV, I know a lot about finance and accounting.
And this is all coming to a head much, much sooner than most Americants think.

Of course, the most important part of this situation is not what is happening... but rather what you can do about it. In other words... Will you be prepared when the biggest financial crisis in America in more than 50 years, hits? Instead, I want to show you exactly what I'm doing personally, to protect my family.

You see, I can tell you with near 100% certainty that most Americans will not know what to do when commodity prices – things like milk, bread and gasoline – soar. They won't know what to do when banks close... and their credit cards stop working. Or when they're not allowed to buy gold or foreign currencies. Or when food stamps fail... or their Social Security checks come to a halt. In short, our way of life in Amerika is about to change – I promise you. In this letter I'll show you exactly what is happening, and why it is inevitable. Again, you can challenge every single one of my facts and you'll find that I'm right about each allegation I make.

Then, I hope you'll take action for yourself. Will you act now to protect yourself and your family from the catastrophe that's brewing right now in Washington D.C.?
I hope so.

I believe that we as Americans are about to see a major, major collapse in our national monetary system, and our normal way of life.

Basically, for many years now, the government has been borrowing so much money (very often using short-term loans), that very soon, they will no longer be able to afford even the interest on these loans. You may not think things are THAT BAD in the U.S. economy, but consider this simple fact from the National Inflation Association...Even if all U.S. citizens were taxed 100% of their income... it would still not be enough to balance the federal budget! We'd still have to borrow money, just to maintain the status quo. That's absolutely incredible, isn't it? Yet, I've never seen this fact reported anywhere else. And right now, today, the federal government has to borrow 46 cents of every dollar they spend...spending that stands at a staggering average of $435.8 million per hour. How is that possibly sustainable?

Normally, I used to study these kinds of numbers when I was looking at a business to invest. But lately I've spent most of my time looking into our national balance sheet, because as the banking system collapsed in 2008... all of the bad debts were absorbed by the world's governments. And it continues to this day. The U.S. began the year 2013 with a net public debt that has more than doubled since the year BEFORE Barack Obama took office. These overwhelming public financial obligations are completely unprecedented in the history of our country, outside of the two major global wars we fought in the 20th century. But even these incredible figures don't tell the real story. Or even half of it. Various other government agencies and private companies taken over by the government also have obligations of nearly another $5 trillion. They've already booked complete losses on $140 billion worth of these obligations. Yet they remain completely off the federal balance sheet. When you add these other, genuine, federal obligations that exist right now, today, you come up with a total debt figure that's much more than $20 trillion. Far more than half of these debts were assumed under President Obama. It is not know what the full burden of these new and existing debts will be in total, over time.That's because the Federal Reserves power to manipulate interest rates is unlimited—at least for now that's the case.

The U.S. doesn't know how much of Fannie's and Freddie's bad debts will eventually be covered by the U.S. Treasury. (We do know they have an unlimited line of credit... so it's a safe bet that we haven't seen the last of these charges.) Finally, there is no idea what the eventual costs of the Federal Reserve's ongoing expansion of the monetary base will be over the long term. There is one thing that's certain, however: these debts will not be free. They will carry a burden.

Today, there is more government debt than any country in the history of the world. The U.S. has more debt than every country in the European Union... combined.
With each additional commitment amerikans sink further and further into debt... closing in upon the moment when one can simply no longer afford even the interest payments on the obligations. And here is the part that really matters... the costs of maintaining the debts are about to skyrocket. Right now the Federal Reserve is manipulating interest rates down to almost zero. As a result, the interest rate at which the government can borrow money is at a record low level. In fact, the Federal Reserve has lowered its benchmark interest rate ten times since August 2007, from 5.25% to a zone between zero and 0.25%. Obviously, the current rate won't last forever. But what will happen if the average real interest rate ends up being just 4% annually, and we pay it off over 30 years like a mortgage?
Incredibly, the U.S. will spend $34.3 trillion to simply repay what is owed right now. If the rate ends up being 6%, the U.S. will spend $43.1 trillion.

Now, of course, the politicians believe that through policy and currency manipulation, they can simply avoid paying any of these costs. They can order the Federal Reserve to prevent interest rates from ever rising to a level that would cost the Amerikan people anything. They believe they can manage the economy, so the debts of Fannie and Freddie won't go bad. They believe (without any proof whatsoever) that they can stimulate the economy by even more deficit spending, so that it grows faster, allowing tax revenues to produce a surplus. Repaying these debts, they say, will be easy and painless. But you know better, my friend. You must know better.

Just consider the plans of those who argue otherwise...Paul Krugman, one of the most widely read and respected "economists" in the country wrote about this incredibly naïve and ridiculous solution in a January 7th, 2013 New York Times column. He said: "There's a legal loophole allowing the Treasury to mint platinum coins in any denomination the secretary chooses. Yes, it was intended to allow commemorative collector's items – but that's not what the letter of the law says. And by minting a $1 trillion coin, then depositing it at the Fed, the Treasury could acquire enough cash to sidestep the debt ceiling – while doing no economic harm at all."
Very few people, even our most influential economists, seem to remember that the utility of money and credit are based upon their soundness. Which was pointed out in a previous post. Money allows people to exchange goods and services widely, greatly increasing the specialization of labor and facilitating the economic magic of competitive advantage. Money also plays the critical function of facilitating communications between and among many disparate actors. Price changes guide producers and consumers. But... when the money can't be trusted... and the illusion created is found...this entire system breaks down. The price signals can't be relied upon. And it becomes harder and harder for people to exchange labor and capital.

Likewise, credit enables an economy to grow by facilitating the growth of savings and capital investment through real interest rates. But very few people are willing to delay consumption and trust their savings in an economy that refuses to pay savers any return above inflation for their savings. And that's exactly where we are today.
Although to most Americants everything seems calm... and that they are enjoying an economic recovery, I can promise you this: This is an economic trap. There is no way out. And nobody in Washington – not Republicans, not Democrats, and not even Tea Partiers – Libertarians want you to realize how precarious the U.S. government's finances really are. They can't afford for you to understand this dilemma... or what it means. Because here's the thing...And this is the big secret the government hopes you never understand...According to even the most conservative calculations (again, using numbers provided by the Congressional Budget Office) a debt default by the U.S. government would be inevitable – were it not for one simple anomaly...the one thing that has saved the United States so far. I'm talking about the U.S.'s unique ability to simply print more money. You see, the U.S. government has one very important weapon to use in this crisis so far: They are the only debtor in the world who can legally print U.S. dollars. And the U.S. dollar is what's known as "the world's reserve currency." The dollar forms the basis of the world's financial system. It is what banks around the world hold in reserve against their loans.Again, that's a secret most politicians don't understand: As things stand now, the U.S. government can't go broke in any ordinary sense of the word because it can simply print dollars to pay for its bad debts. (It's been doing so since March of 2009.) That might sound pretty good at first. Since they can always just print more money, what is there to worry about...?

Well, let me show you...Why their biggest Advantage is About to Disappear....
You see, as things stand today, America is the only country in the world that doesn't have to pay for its imports in a foreign currency. Here's what I mean...
Let's say you're a German and you want to buy oil from Saudi Arabia. You can't just pay for your oil in German marks (or the new euro currency), because the oil is priced in dollars. So you have to buy dollars first, then buy your oil.And that means the value of the German currency is of great importance to the German government. To maintain the value of its currency, Germans must produce at least as much as they consume from around the world...otherwise the value of its currency will begin to fall, causing prices to rise and its standard of living to decline.

But in America...? They've been able to consume as much as they want without worrying about acquiring the money to pay for it, because their dollars are accepted everywhere around the world. In short, for decades now, they haven't had to produce anything or export anything to get all the dollars they needed to buy all the oil (and other goods) that their country required. All they had to do was borrow and print more money. And boy did they. Even as late as the 1970s, America was the world's largest creditor. But by the mid-1980s they had become a debtor to the world. And since the late 1990s they've been the world's LARGEST debtor. Today, the government owes more money to more people than anyone else in the world. With all of these bad debts piling up, they've had to begin repaying their debts by printing trillions of new dollars.

With QE3, the latest round of "quantitative easing," the Fed is now promising to print $85 billion a month. That's over a trillion dollars a year. And now, finally, the impact of this is being felt in a big way. As the U.S. creditors figure out what's happening, we are beginning to have very, very big problems. I see the U.S. creditors (which include foreign countries and other investors here and abroad) will either completely stop accepting dollars in repayment... or greatly discount the value of these new dollars. I'm sure you think that sounds crazy, but as I'll show you, it is already happening. In fact, Zha Xiaogang, a researcher at the Shanghai Institutes for International Studies, recently said: "The shortcomings of the current international monetary system pose a big threat to China's economy." That's why China is now actively taking steps to phase out the U.S. dollar because of its frustration with the U.S. government's mismanagement of currency. And how does the government respond? They have the audacity to label China a "currency manipulator!" Do you see the irony here? As a result of what the government is doing today, I'm confident we will soon see an end of the U.S. dollar standard. In fact, I'm 100% sure of it. It's not a matter of "if," but "when." And I think it's going to happen much, much sooner than most people think. When taking into account that the derivatives are due in 2015 and the combination of ICE to the global commodities, while being connected to individual retirement accounts...Most of these will be legally tied to the bonds created to allow this printing and when become due, then all assets will be FROZEN by ICE to render the debt paid. Of course, I'm not the only one saying this. Even some mainstream publications like the New York Post are recognizing the inevitability of this event. The Post recently reported that, "The US dollar is getting perilously close to losing its status as the world's reserve currency. Should it cross the line, the 2008 financial crisis could look like a summer storm."And billionaire Ray Dalio of Bridgewater Associates, the largest and best-performing hedge fund in the world, told CNBC that it is "inevitable that the dollar's role as the world's currency will diminish from the dominant world currency to one of a few." "It will fade probably fairly quickly, so the United States, which accounts for almost two-thirds of the reserves will probably go down to 50 percent of the world's reserves." Keep in mind, the U.S. dollar has been the world's reserve currency for decades now... so most Americans don't have a clue about what the repercussions are of losing this status.
And maybe you think it could never happen... but the truth is, this is exactly what happens when countries get too far in debt or when they consume too much or produce too little. In fact, the same thing happened to Great Britain in the 1970s.

First Britain… Now America. Most people don't know this, but Britain's sterling was the reserve currency for most of the world for nearly 200 years... for most of the 18th and 19th centuries. It continued to play this role until after World War II, when America was forced to prop up Britain's economy with foreign aid –remember the famous Marshall Plan, when the U.S. gave billions to help European countries rebuild?
Unfortunately though, Britain pursued a socialist national agenda. The government took over all of the major industries. Like Barack Obama, Britain's leaders wanted to "spread the wealth around." Pretty soon the country was flat broke. The final straw for Britain came in 1967, when things got so bad the Labour Party (the socialists) decided to "devalue" the British currency by 14%, overnight. They believed this would make it easier for people to afford their debts. In reality, what it did was make anyone holding British sterling 14% poorer, overnight, and it made everything in Britain, much, much more expensive in the coming years. And for the country as a whole, it ushered in one of the worst decades in modern British history.
Most Americans don't know about Britain's "Winter of Discontent" in the late 1970s, when the government put a freeze on wages. There were continuous strikes in nearly every sector... grave diggers, trash collectors... even hospital workers. Things got so bad at one point that many hospitals were reduced to accepting emergency patients. And mothers giving birth had to bring their own linens. In 1975, inflation in Britain skyrocketed 26.9%... in a single year! The government also imposed what was known as the "Three Day Week" in 1974. In short, businesses were limited to using electricity for only three specified consecutive days' each week and they were prohibited from working longer hours on those days. Television companies were required to cease broadcasting at 10:30pm... to save electricity.Just how bad were things, exactly?
The garbage that piled up because they didn't have enough money to pay trash collectors a fair wage... Imagine... Britain was a global superpower for 150 years. But when they started intentionally devaluing their currency, things went straight downhill. It's now obviously clear that the same thing that happened to Britain's sterling when it was the world's reserve currency, is now happening to the U.S. dollar. In fact, the exchange value of the U.S. dollar has fallen nearly 10% since June 2010. And its rate of decline is accelerating. As the U.S. dollar continues to lose its position as the world's currency, gas, oil, and other commodities will continue to skyrocket. Almost EVERYTHING we consume will get dramatically more expensive. All the clothing, furniture, and household goods we import from China. All the food we get from Central and South America... all the electronics, televisions, computers, and cars we get from Asia and Europe. And when you look back over the past few years, the numbers are startling...And the point here is simple... As they print more money, the price of the world's most essential commodities have soared. This is NOT a coincidence. Around the world, as they print, prices soar... citizens protest... governments get overthrown. And it's only going to get worse...Because here's the important fact you simply must understand about the United States right now:

The government can NOT stop printing money because there is no possible way for us to actually afford their existing debts. No one wants you to know this. No one.
That's why, despite the obvious inflation going on all around the world, the Fed continues to say there's no inflation at all. And that's the scary part, to me.
Just like in a Third World country, the government is radically devaluing the dollar and simply lying to everyone about what is really happening. Whether you realize it or not, there is already a "run" on the dollar. Many of their creditors, like the Chinese, are getting out of the dollar as fast as they can via strategic commodities, like copper, gold, and oil. That's partly why commodity prices are soaring. Unfortunately, skyrocketing commodity prices are just the beginning.
There are other disastrous consequences to the U.S. dollar losing status as the world's currency...For example, as demand for U.S. dollars around the globe decreases, interest rates will skyrocket. Instead of getting a mortgage at today's incredibly low rates of around 3%, it might cost you 8%... or even 10%... or 15%.a reply to: knightsofcydonia

a reply to: knightsofcydonia

I have a feeling the US will start a war and try circumventing this in the way they know best.
Call it a hostile takeover, except put countries where businesses should be. And the great part about it is after they totally destroy governments they can come back and add them to the kitty along with all their assets.
I think they took lessons from the mafia.

a reply to: knightsofcydonia

What you've presented here should be required learning in America's schools and broadcast from every MSM outlet in the land. Alas as you say that will never happen.

One thing you mentioned is that debt never goes away. If a war breaks out between say the US and China would that not end any debt owed? Not that the trillion or so we owe them will actually make a dent in what's really owed. Maybe debt only goes away for the victor.

Thanks for this thread.

Dude, did you get your memo about the last thread? This text appears on other websites and that was why your last thread was closed...

And you didnt answer my question in the last thread either

OP... As long as oil is traded in dollars we will be fine. The debt machine will keep moving on and on, you will see. Also, I would like to read further but you provided no sources.

originally posted by: Richn777
OP... As long as oil is traded in dollars we will be fine. The debt machine will keep moving on and on, you will see. Also, I would like to read further but you provided no sources.

That's a big part of it, nations are trying to get out of trading oil for dollars. China is doing it, Russia is doing it.

We can't keep the petrodollar going forever.