Deluded Currency Cultists Believe The Dollar Is Invincible

currency cultists

At the onset of the derivatives collapse in 2007/2008 it would have been easy to assume that most of America was receiving a valuable education in normalcy bias.

In 2006, the amount of ego on display surrounding mortgage investment was so disturbingly grotesque anyone with any true understanding of the situation felt like projectile vomiting. To watch the smug righteousness of MSNBC and FOX economic pundits as they predicted the infinite rise of American property markets despite all evidence to the contrary was truly mind blowing. When the whole system imploded, it was difficult to know whether one should laugh, or cry.

The saddest aspect of the credit crisis of 2008 was not the massive chain reaction of bankruptcies or the threat of institutional insolvency. Rather, it was the delusional assumptions of the public that the grand mortgage casino was going to go on forever. There is nothing worse than witnessing the victim of a Ponzi scheme defend the lie which has ultimately destroyed him. As much as I am for people waking up to the nature of the crisis, there comes a point when those who are going to figure it out will figure it out, and the rest are essentially hopeless.

The cultism surrounding the U.S. economy and the U.S. dollar is truly mind boggling, and by “cultism” I mean a blind faith in the fiat currency mechanism that goes beyond all logic, reason and evidence.

In recent weeks it has become more visible as global financiers play both sides of the Ukrainian conflict, luring Americans into a frenzy of false patriotism and an anti-Russo-sports-team-mentality. My personal distaste for Vladimir Putin revolves around my understanding that he is just as much a puppet of the International Monetary Fund and international banks as Barack Obama, but many Americans hate him simply because the mainstream media has designated him the next villain in the fantasy tale of U.S. foreign policy.

Open threats from Russia that they will dump U.S. treasury bond holdings and the dollar’s world reserve status if NATO interferes in the Ukraine have been met with wildly naive chest beating from dollar cultists.  I am beginning to see the talking points everywhere.

“Let them dump the dollar, Russia’s holdings are minimal!” Or, “Let them throw out Treasuries, they’ll just be shooting themselves in the foot!” are the battle cries heard across the web. I wish I could convey how insane this viewpoint is, especially in light of the fact that many alternative economic analysts, including myself, have been predicting just such a scenario for years.

Despite the childish boastings of the dollar devout, there is an extraordinarily good possibility that the life of the greenback will be snuffed out in the near term. Here are the facts…

1) Russia will not be alone in its decouple from the dollar system. China, our largest foreign creditor, and India (a supposed ally) have clearly sided with Russia on the Ukranian issue. China has stated that it will back Russia’s play in the event that sanctions are brought to bear by NATO, or if a shooting conflict erupts.

2) China has already been slowly dumping the dollar as a world reserve currency using bilateral trade agreements with numerous countries, including Russia, India, Australia, Brazil, Germany, Japan, etc. These agreements allow FOREX currency swaps and export/import purchases to be made with China without the use of the dollar. China has been preparing itself for a divorce from U.S. economic dependence for at least a decade. The idea that they would actually follow through over political tensions should NOT surprise anyone if they have beenpaying attention.

3) A total drop of the dollar or U.S. treasury bonds by Russia and China would send shock waves through global markets. Russia is a major energy supplier for most of Europe. China is the largest export/import nation in the world. If they refuse to accept dollars as a trade mechanism, numerous countries will fall in line to abandon the greenback as well. The fact that so many Americans refuse to acknowledge this reality is a recipe for disaster.

The only advantage the U.S. has traditionally offered in terms of international trade has been the American consumer, whose unchecked debt spending partly fueled the rise of the industrialized East, not to mention the biggest credit bubble in history. The role of America as a consumer market is collapsing today, however. The mainstream media and the Federal Reserve can blame the steady decline in retail sales on the “weather” all they want, but negative indicators in global manufacturing often take many months to register in the statistics, meaning, this destabilization began long before the days turned cold.

4) China has been shifting away from export dependency since at least 2008, calling for a larger consumer based market at home. This process of enriching the Chinese consumer has almost been completed. The lie that China “needs the U.S.” in order to survive economically needs to be thrown out like the utter propaganda it is.

5) China (and most of the world) has ended new dollar purchases for their FOREX reserves, and has no plans to make new purchases in the future.

6) China executed the second largest dump of U.S. Treasury bonds in history in the past month.

7) Russia, China, and numerous other countries, including U.S. “allies”, have been calling for the end of the dollar’s world reserve status and the institution of a new global basket currencyusing the IMF’s Special Drawing Rights (SDR). Even Putin has suggested that the IMF take over administration of the global economy and issue the SDR as a world currency system. This flies in the face of those who argue that the IMF is somehow “American run”. The truth is, the IMF is run by global banks and no more answers to the U.S. government than the Federal Reserve answers to the U.S. government.

 

8) The Federal Reserve has been creating trillions of dollars in fiat just to prop up U.S. markets since 2008, and we are still seeing a considerable decline in global manufacturing, retail, personal home sales, and a general malaise in consumer demand. Without a full audit, there is no way to know exactly how much currency has been generated or how much is floating around in foreign markets. Any loss of world reserve status would send that flood of dollars back into the U.S., most likely ending in a hyperinflationary environment.

9) Another rather dubious argument I see often is the claim that the Federal Reserve and the U.S. Treasury could simply “negate” a Treasury dump by refusing to acknowledge creditor liabilities. Or, that they could simply print what they need to snap up the bonds, much like the German government tried to do during the Weimar collapse. Unfortunately, this plan did not work out so well for the Germans, nor has it worked for any other nation in history, so I’m not sure why people think the U.S. could pull it off. However, this is the kind of cultism we are surrounded by. These folks think the U.S. economy and the dollar are untouchable.

Yes, the Fed and the Treasury could hypothetically erase existing liabilities, but what dollar cultists do not seem to grasp is that the dollar’s value is not built on Treasury purchases. The dollar’s value is built on faith and reputation. If a nation refuses to pay out on its debts, this is called default. A default by the U.S. would immediately damage the reputation of bonds and dollars as a good investment. Global markets will refuse to purchase or hold any mechanism that they think will not earn them a profit. How many investors today are anxious to jump into Greek treasury bonds, for instance?

Finally, it is unwise to operate on the assumption that foreign creditors will accept dollars as payment on U.S. Treasury bonds if they believe the Federal Reserve is monetizing the debt. When Weimar imploded under the weight of currency devaluation, many foreign governments refused to accept the German mark as payment. Instead, they demanded payment in raw commodities, like coal, lumber and ore. Expect that China and other debt holders will demand payment in U.S. goods, infrastructure, or perhaps even land.

10) Most treasury holdings in foreign coffers are not long term bonds. Rather, they are short term bonds which mature in weeks or months, instead of years. Dollar proponents constantly cite the continued accumulation of treasury bonds by other governments as a sign that the dollar is still desirable as ever. Unfortunately, they have failed to look at the nature of these bond purchases. When China rolls over millions in short term bonds and replaces them with other short term bonds, this does not suggest they have much faith in America’s long term ability to service its debt. It would also make sense that if China had plans to remove itself from the dollar system, they would move into short term bonds which can be liquidated quickly.

11) China is on the fast track to becoming the largest holder of physical gold in the world. Russia has also greatly expanded its gold purchases. Whatever losses they might suffer from a dump of their Treasury bond investments; it will be more than made up in the incredible explosion in precious metals prices that would follow.

12) The most common argument against the dollar losing world reserve status has been that such a shift would be “impossible” because no other currency in the world has the adequate liquidity needed to replace the dollar in global trade. These people have apparently not been paying attention to the Chinese yuan. China has been quietly issuing trillions in yuan denominated bonds, securities and currency around the world. Current estimates calculate around $ 24 trillion created by the PBOC and the banks under its control.

Mainstream talking heads are calling this a “debt bubble.” However, this debt creation makes perfect sense if China’s plan is to create enough liquidity in its currency in order to offer a viable alternative to the U.S. dollar. Linking the yuan to the IMF’s basket currency would complete the picture, forming a perfect dollar replacement while dollar cheerleading-economists stand dumbstruck.

13) China’s retreat away from dollar denominated investments has left a hole in the U.S. bond market.  Recently, that negative space was filled by an unexpected source; namely Belgium.  A country whose GDP represents less than 1% of total global GDP buying more U.S. bonds than China?  The whole concept sounds bizarre.  Here is the capital coming from?

Think about it this way – Belgium is the political center of the European Union and a haven for international financiers.  There are more corporate cronies, lobbyists, bureaucrats, and foreign dignitaries in Belgium than in all of Washington D.C.  But more importantly, Belgium struck a deal with the IMF in 2012 to begin pumping SDR denominated funds into “low income economies”.  I would suggest that this funding flows both ways, and that now, the IMF is feeding capital into Belgium in order to buy U.S. Treasury Bonds.  That is to say, the IMF is going to start using smaller member countries with limited savings as proxies to purchase U.S. debt using IMF money.

The ultimate danger of the IMF (run by internationalists, not the U.S. government) pre-positioning itself as the primary buyer of U.S. debt is that when the U.S. finally defaults (and it will), the IMF is likely to become the “guardian angel” of the U.S. economy, offering aid in exchange for total administrative control of our financial system, and the institution of the SDR as a world reserve replacement for the dollar.

14) The serious prospect of regional conflict or world war over tensions between the Ukraine and Russia, Japan and China, the U.S. and Syria, the U.S. and Iran, the U.S. and North Korea, etc., could make the effort of exposing the plan to shift economic power into a one world system centralized under the IMF almost meaningless.  How many people will truly care about the financial power grab by banking elites if it drifts under the surface of catastrophic engineered wars?  They’ll be too busy hating and fighting artificially created boogeymen to pay attention to the real globalist culprits.

I have been pointing out for quite a long time that globalists need a “cover event”; a disaster, an economic war or a shooting war, in order to provide a smokescreen for the collapse of the dollar. Alternative analysts have been consistently correct in predicting the trend towards the dump of the dollar. Years ago, we were laughed at for suggesting China would shift towards a consumer based economy and away from U.S. dependence. Today, it is mainstream news. We were laughed at for suggesting that nations like Russia and China would drop the dollar as a reserve currency. Today, they are already in the process of doing it. And, we were laughed at for suggesting that Russia or China would use their debt holdings as leverage against the U.S. in the event of a geopolitical conflict. Today, they are openly making threats.

I have to say, I’ve grown tired of the dollar cultists. How many times can a group of people be wrong and still argue with those who have been consistently right? The answer is that zealots never actually escape their own delusions, even when their delusions lead them and those around them to ruin. I suspect that in the face of complete dollar collapse, they will still be rationalizing the chaos and pontificating on our “lack of understanding” while the theater burns down around them.

You can contact Brandon Smith at:  brandon@alt-market.com

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SHTF Plan – When It Hits The Fan, Don’t Say We Didn’t Warn You

What Does a Currency Collapse Look Like?

This analysis has been contributed by The Common Sense Show.

In Part one of this series, I detailed how this administration has set themselves up to roll out martial law like no other martial law in history. Part one further revealed that the mechanisms needed for hard-core martial law are either active or merely waiting in the wings. All that is needed for unmistakable martial law to be rolled out in its entirety, is for the right trigger event to take place.

Will It Be a False Flag Attack Or a Currency Collapse?

currency-collapse1My initial response to that question is, does it really matter? The pattern of societal collapse and subsequent governmental enslavement of the American people will be largely the same whether the precipitating incident is a false flag attack or a currency collapse. For the purpose of simplicity, let us call the precursor event to all-out martial law, a currency collapse.

The Federal Reserve Is the Enemy of Humanity

The Federal Reserve has been bleeding this country to death for exactly one century. What the dollar bought 100 years ago, can only buy three cents of product today. This means that 97% of the value of our currency has gone into the pockets of the Federal Reserve.

I am amazed at the abject ignorance of the American people and that they think the Federal Reserve is actually part of the federal government. As we like to stay in the alternative media, the Federal Reserve is no more federal than Federal Express.

The Dollar Is Diving

The world is running from the dollar. Until recently, our dollar was used as the currency of international trading. Further, the dollar was also the reserve currency for oil. All foreign countries wishing to purchase oil from the Middle East, first had to purchase dollars from the Federal Reserve. After FDR took us off the gold standard during the Great Depression and Richard Nixon finished the task of providing America with a totally Fiat currency, the only backing that our dollar enjoys is that of being the reserve currency for both trading and for oil (i.e. the Petrodollar scam).

The major cause of the present calamity is fractional reserve banking. When the government goes to the private Federal Reserve and asks for one trillion dollars, the federal reserve gets to print one trillion for the government, at interest, and 10 trillion dollars for themselves and to lend out at high interest rates. This inflationary practice erodes the value of your dollar while enriching our Federal Reserve masters. Ultimately, the currency upon which we depend on will be destroyed and life as we know it will be changed forever.

A Changing of the Financial Guard

currency-collapse2Today, many important nations are running from the dollar. Countries such as India, China, Iran, Japan, and Australia have signed their own trade agreements and their currency of choice is no longer the dollar!

When the collapse of the dollar occurs, it will literally and figuratively come like a thief in the night, and I do mean overnight!

We are all familiar with the concept of inflation, which is the intentional byproduct of the Federal Reserve.  But I am not just talking inflation, I’m speaking about hyperinflation which is caused by the collapse of the value of the currency resulting in runaway prices. Here are three examples of how quickly a currency collapse can occur when a nation’s money when its money no longer holds it value:

1. In Weimar Germany, from 1922 – 1923, prices  doubled  every three days.

2. In the modern era, in Yugoslavia from 1992-94, witnessed prices doubling every 34 hours.

3. In Zimbabwe, in the two year period from 2007 – 2008, prices doubled  every 25 hours.

History is replete with examples of currency collapses and they typically follow very predictable patterns in which a nation unravels and social chaos, and many times, widespread violence and even genocide becomes part of the national landscape.

What Does a Currency Collapse Look Like?

Generally, when the currency collapses, a stock market crash is right on its heels. Because of the repeal of Glass-Steagall, a banking collapse will immediately occur following the collapse of the stock market. Your life savings will be wiped out. From this point on, the effect cascades like a roaring tsunami racing across the open ocean.

Hurricanes Katrina and Sandy demonstrated that gas stations will be bone dry within two days following a complete collapse. Subsequently, commerce will not move. If you are on vacation like I presently am, you may not make it home. On the second day following a currency collapse, being on the road will be a risky endeavor because of other desperate motorists.

With no available fuel, the grocery and drug stores will be empty within one to three days. There will be no food to be had except for that which is decaying in your refrigerator and that in which you can beg, borrow and steal from your neighbors who will also be begging, borrowing and stealing. If you have an adequate food and water supply, you better have an adequate gun and ammo supply in order to defend your assets. And when will you sleep? The protection of your critical assets is a 24/7 proposition. Therefore, having a cooperative survival plan is critical.

Without gas, people will stop going to work. Corporations will disappear overnight. Hurricane Katrina showed America that the police cannot be expected to stay on the job more than 48-72 hours as they will be home protecting their families and foraging for food and water like everyone else. The emergence of former police gangs will become common in an effort to secure the products which will ensure survival. Therefore, when your home is under attack, there will nobody to call. Everyone will be on their own.

The elderly and the chronically ill will be the first to die. Too old to defend their assets, the elderly will find themselves overpowered as they will make easy preys of opportunity for the roving gangs. The chronically ill will have no way to procure their medication and even if they survive the looting rampage which will follow a currency collapse, these poor souls will perish without access to their life-sustaining prescriptions.

The money in your wallet will be useless. Cell phones will not work. Heating and air conditioning will not work either and depending on the time of year, the environment could prove deadly to untold numbers of people.

Water treatment plants will stop operating for the same reasons that you will not be able to find a cop during this crisis nobody will be manning the water treatment plants. Toilets will back up and diseases will spread like wildfire. Something as simple as toilet paper will become a prized commodity. There will be no trash pickup and more disease will result due to the increased rodent population.

currency-collapse3Clean drinking water and hunger will become the dominant motivator in society. Roving bands of looters, turned murderers, will sweep through neighborhoods seeking to obtain these critical elements of survival. Young women will sell themselves for a can of food for their children. Society will see the widespread loss of human dignity and self-respect.

Infanticide and euthanasia of the weak will become common events because there will be decided efforts to reduce the amount of mouths to feed. There will be the stark realization that the lights are not coming back on and the ensuing sense of hopelessness will lead to murder-suicides within families and simple incidences of suicide will be used as a means to escape the horrendous circumstances.

Humanity’s Darkest Hour

There will come a time when all the available animals will be devoured and then there will be only one place to turn to for food. History shows that cannibalism will set in by the beginning of the third week. Extreme hunger will lead to humans hunting humans as an available food supply. This will begin to occur within 15-20 days following the currency collapse.

The Government’s Version of the Final Solution

If the establishment military has properly planned, they will move into take control but they will not move quickly. The more death there is, the fewer people there will be to control. Government will typically move in with their solutions towards the end of the second week.

The reasons behind the creation of Executive Order 13603 will soon become readily apparent. You will retain ownership over nothing including food, water, guns, ammunition, your house, your car and even yourself. If you survive, you will be conscripted to work in some capacity in a specialty and location not of your choosing. On a positive note following this catastrophe, the debate over the existence of FEMA camps will be quickly determined and your NSA threat matrix score, resulting from their illegal surveillance, will have a lot to do with whether you survive or are executed as an enemy of the state. There is one ironclad thing that you can count on, food and water will be used to control the people following a currency collapse.

Who Will Help Us?

When past currency collapses occur, organizations such as the World Bank, the IMF, the UN and the US have appeared to render their predatory version of help in exchange for control of critical infrastructure and other capital considerations. Because of this aid, more people survived in the impacted areas. However, what happens when the top dog collapses? Who would be able to come and render aid in America? Even in a world disgusted by our imperialistic ways would  offer help, could they? Not under the coming circumstances could anyone offer help because they will be in a worse situation.

In short, there will be nobody riding in to rescue the United States. Despite some rebelling against the dollar, the world is still dependent upon our currency. When the currency collapses it will pull the rest of world down with us. The subsequent collapse of global currencies will indeed constitute a major depopulation event and all the elite have to do is wait it out in places like the tunnels under Denver International Airport.

During this time, Americans will truly discover if there really are FEMA camps and what they will be used for. If people want to eat, they will be enticed to go where food is promised. Although you can count on the above mentioned events transpiring in the event of a currency collapse, what lies ahead is unknown to a large extent because the top dog will not have been economically obliterated in modern history.

Conclusion

currency-collapse4Obama is willing to talk about the 17 trillion dollar deficit. However, you never hear the government nor the media discuss the real debt? Our real financial obligations total 240 trillion dollars through programs like social security, Medicare, public pensions and welfare. Subsequently, I want to make one thing abundantly clear; It is not a matter if we are going to have a currency collapse, it is when.  And the when is much sooner than later.  It could happen tomorrow, next month and even next year. We do not have two years left in the American economic engine. A currency collapse is nothing that I look forward to, and people who intend on surviving the event should be in the midst of their preparations.


Dave Hodges is an award winning psychology, statistics and research professor, a college basketball coach, a mental health counselor, a political activist and writer who has published dozens of editorials and articles in several publications such as Freedom Phoenix, News With Views, and The Arizona Republic. 

The Common Sense Show features a wide variety of important topics that range from the loss of constitutional liberties, to the subsequent implementation of a police state under world governance, to exploring the limits of human potential. The primary purpose of The Common Sense Show is to provide Americans with the tools necessary to reclaim both our individual and national sovereignty. You can follow Dave’s work at his web site, on Facebook and Twitter.


SHTF Plan – When It Hits The Fan, Don’t Say We Didn’t Warn You

WHAT HAPPENS WHEN A CURRENCY DIES: Argentina’s farmers hoarding food rather than pesos

Let’s pray this isn’t a preview of coming attractions here.

Sales of Argentine soybeans are lagging this season due to expectations for higher world prices later and to domestic financial uncertainty that has prompted farmers to save in beans rather than pesos.

With world food demand on the rise, growers in the Pampas grain belt are filling their silos with soy rather than converting their crops into pesos, a currency that hit a new all-time low in informal trade this week.

Considering Argentina’s high inflation, clocked at about 25 percent by private economists, “money in the bank” is not as secure as storing soybeans next to their fields… “We are going to hang onto our soy. One can see higher prices ahead,” said Jose Plazibat, a partner with the firm of Bandurria and Plazibat Brothers, which farms more than 3,000 hectares near the town of Chacabuco in Buenos Aires province.

…Cut off from global bond markets since its 2002 default, Argentina needs farm revenue to help finance public spending increases ahead of October legislative elections.

…Growers say they would plant more corn if the government would stop placing curbs on exports. The farm sector has long feuded with President Cristina Fernández de Kirchner, who won re-election in 2011 on promises of increasing the government’s role in Argentina’s economy.

Confidence has since softened. The peso has slumped in the informal market, opening a breach of 71 percent versus the formal exchange rate and increasing market chatter about a possible devaluation to shore up exports… The government is likely to put off a devaluation of the official peso at least until the October elections have passed.

Say, perhaps the economic geniuses Paul “Enron” Krugman and Henry “POS” Blodget could explain why massive deficits, financial repression, and currency devaluation didn’t work for the Argentinian government, which has only tried their Keynesian policy prescriptions for, oh, about the last century or so.

Related: Don’t Cry for Me, America.

Doug Ross @ Journal