It has always been said that what goes up must come down, and it has equally been said that the bigger they are, the harder they fall.
The currency bubble we now face is not only dangerous, it is ironic and poised for a crash.
Don’t be fooled by the calm before the storm.
The U.S. petrodollar – which has been the de facto global reserve currency for more than 40 years – is truly in decline, even as the financial terminology labels it as “strong.” A deceptive term to be sure.
The dollar is trading at a higher rate than anytime in the previous decade, hurting U.S. export business and impinging upon the repayment of debts from foreign entities. With the bottom threatening to come unglued, it is this “strong” high from which America is poised to fall.
And it is largely due to historically unprecedented intervention by the Federal Reserve. Its policy of buying bonds and issuing interest-free money via QE3 has immediate implications that not only determine the domestic economy, but shape global markets, too. Newsmax’s Ashish Advani writes:
That name would be appropriate for the U.S. dollar these days. It can do nothing wrong. No matter what any says, or does not say, the U.S. dollar heads higher.
U.S. corporations have already announced weak earnings due to the strong dollar and have issued earnings warnings. Second-quarter results will be worse than first-quarter results are. The stock market surge upward seems to have halted with large swings, and after three months, the stocks are nearly flat compared with start of the year. Yet the dollar shows no signs of abetment.
But the appearance of stability and normalcy is only going to make the inevitable crash worse… with all signs pointing to a harsh correction coming.
Former Congressman and presidential candidate Ron Paul recently warned that a strong dollar “is not a reason for optimism,” chiding that historic highs in dollar exchange is a sign of foreboding things to come:
The United States is teetering on the brink of a disastrous financial crisis, the former congressman pointed out. The dollar’s “rally” is not a sign that the US economy is strengthening, but just a byproduct of a world’s surfeit of easy money.
According to Dr. Paul, the Federal Reserve’s policies facilitated the unprecedented growth of the dollar against other major currencies, not real economic growth.
The International Man writes that a dollar crash is coming, and that it would likely follow a euro crash, which would only increase the magnitude of the currency calamity (planned, as the site argues, for the rise of a purely digital currency, controlled and monitored electronically):
It’s safe to say that the EU, the US, and quite a few other jurisdictions are nearing currency crashes, and in all likelihood, the euro will go before the dollar. So, unless the EU has already prearranged a new euro, the US dollar might well be chosen as an immediate solution to the problem, as the US dollar is presently recognised and traded throughout Europe. Therefore, a relatively painless transfer could be made.
However, the dollar, which is presently praised as being a sound currency, is really only sound in relation to the euro (and some other lesser currencies). Once its less stable brother, the euro, collapses, the dollar will be exposed.
The London Guardian warned that a perfect storm of economic factors are driving the world to the brink once again – giving legitimacy to fears that a new global crash is coming, bigger than the one in 2009.
With debt rates among many of the world’s nations soaring, it is chilling to note that “absolutely nothing has changed since the crisis.”
In all practicality, no lessons have been learned:
As Janet Yellen’s Federal Reserve prepares to raise interest rates, boosting the value of the dollar, while the plunging price of crude puts intense pressure on the finances of oil-exporting countries, there are growing fears of a new debt crisis in the making.
Ann Pettifor of Prime Economics, who foreshadowed the credit crunch in her 2003 book The Coming First World Debt Crisis, says:
“We’re going to have another financial crisis. Brazil’s already in great trouble with the strength of the dollar; I dread to think what’s happening in South Africa; then there’s Malaysia. We’re back to where we were, and that for me is really frightening.”
Through this now-quiet but deeply-rumbling currency pageant, the world order is being remade – and the average American will likely not be shielded from its effects.
Though the demise of the dollar and the rise of a truly global reserve currency has been planned for some time, the entrance of the China-led Asian Infrastructure Investment Bank is making some serious waves and rocking the dollar-boat in ways that may only remain subtle for a short time longer. Advani writes:
From a geopolitical standpoint, the U.S. has shot itself in the foot and is now seeing increased hostility to the U.S. dollar. Last July, I wrote to you about the new challenge to the World Bank and the International Monetary Fund (IMF). Asian countries, after being ignored by the IMF and World Bank for decades, decided to challenge the Western hemisphere dominance by announcing their own world financing body, the Asia Infrastructure Investment Bank (AIIB).
The AIIB is now the biggest disruption to the global monetary system since the end of World War II.
Is it time to sell the U.S. dollar now before there is a mad rush and the dollar goes into free fall? Or will the Teflon coating continue to protect the dollar for some time?
The moves in the game are now controlled only by the largest of pieces – with the Federal Reserve the driving current behind everything in the U.S. market sphere.
The average person must be prepared to do with less, to batten down the hatches should this crisis come, and likely be ready for trade and exchange by means outside the official system.
The official currency of the aftermath will likely be digital – controlled by the big banks, monitored by the authorities, and presenting significant restrictions over individual accounts. The International Man discusses a number of these scenarios.
The unofficial black and grey markets will likely see the value of silver and other precious metals, and deal heavily in barter items and secondary currencies to meet the everyday needs of people on the ground level.
Here is a discussion of some of most important barter items you will want to have on hand for emergency trading, including both necessities and coveted comfort items like: cigarettes, soap, bullets, alcohol, laundry detergent, silver coins, water bottles, water filters, water purifiers, matches & lighters, toilet paper, candles, batteries and more.
Stockpiling these items, or having the ability to produce them will increase your positions in times of crisis, and enhance your ability to survive.
Gold will remain valuable, too, but silver is denominated better for everyday exchanges and is thus more liquid, and perhaps less subject to theft and confiscation.