The Great Dollar Crash of "07 - Forewarned is Forearmed

[Ugnmoose]

http://www.ichblog.eu/content/view/405/2/

The massive equity bubbles which arose from artificially low interest rates and the deliberate destruction of the dollar by reckless increases in the money supply have shifted trillions of dollars from working class Americans to the predatory aristocrats at the top of the economic food chain. The gulf between rich and poor has grown so wide that it now poses a direct threat to our increasingly fragile democracy.

Every time a US Dollar is traded, a check is issued on an account that is overdrawn by $8.6 trillion. (That is the present size of the national debt) It is, without question, the biggest swindle in history. Flimsy sheets of faded-green scrip are eagerly exchanged for costly goods and services without any regard for the real value of the currency.

And, the real value of the currency is absolutely nothing!

How is it that this scam persists when people appear to be aware of the massive debt and deficits which underwrite the dollar? Do they still believe in that puerile fairy tale about “the full faith and credit” of the United States backing up every greenback? Or are they pacified by the wizened graybeards, like Alan Greenspan and Hank Paulson, who soothingly bray about the “strong dollar policy”?

Please note: The real elephant in the room is all of the countries we are now pissing off with our warmongering foreign policy. We may have the guns, but they control our currency. In the end the currency trumps the military might. The greenback may not collapse this year, but there is no doubt it is on life support. The big question is when will the plug get pulled.

[JackRiddler]

1. I called it back in 2004 for 2005...

And I was off, although the dollar did begin its present descent soon after my little presentation:
http://summeroftruth.org/dollarand911.html

At the time I said the crisis might come in June 2004 (if the Iraq hand-over did not go smoothly; I was seeing too far into the future) but that it would likely come after the election.

You can see the hazards of making predictions in that piece! But the basic conditions described still obtain, and have worsened in the meantime. You can never tell what's going to trigger the inevitable avalanche: hitting Iran would do it, a housing crash could start a chain reaction leading to a dollar crash. But it's coming.

The big impediment to the foreign holders of the currency has been that they, of course, will be the very first losers, as they watch their own huge dollar assets evaporate. China totally has an interest in keeping the money-go-round going, they hold a trillion of USD and they sell their surplus to US. But in the long run they understand it as inevitable, and once it's obvious enough, there will be a run.

[Ugnmoose]

9. No one wants to start the avalanche

But once it does happen, they will all flee for the exits. I don't think it will be possible to manage the demise of the dollar in an orderly fashion. Panic will set in and no country holding large positions in greenbacks wants to be the last one left to re-arrange the deck chairs on the Titanic. The other wild card is the hedge funds who will be shorting the shit out of the dollar. That will only exacerbate the slide

[mainegreen]

2. Unfortunately, a great many countries are racing each other to the bottom for fear

of being the country left standing with a strong currency and hence unable to export goods.

Fucking crackers, isn't it?

[EV_Ares]

3. Scary article, what do you know about that website, not familiary

with it. Thanks.

[Ugnmoose]

4. It is a reputable source

eom

[Karenina]

5. I L-U-V-S me some Mike Whitney!!

Thanks for posting this!

[Uben]

6. You're exactly right!

As a gesture of good will, I am giving 50 cents on the dollar for all of your money. Take advantage now and avoid the rush! You can be half as wealthy as you weren't before!

[Manifestor_of_Light]

7. Gold standard? What gold standard?

I'm so old I remember the 1960s, when dollar bills said "Silver Certificate" on the front, right under George Washington's picture, and they stated you could take them to any Federal Reserve Bank and get a dollar's worth of silver from them in trade.

We should all invest in Euros or some other furrin currency, I guess.

[originalpckelly]

8. And why didn't it happen in '04, or '05 or '06...

like all these "experts" predicted?

[dysfunctional press]

10. for the same reason(s) that it won't happen in 2007...or 2008...0r 09...

nt

[Ugnmoose]

11. Too much at stake

See post above. By the way for those who follow the stock market, the primary reason the markets have not experience much in the way of volatility these past three years is the heavy amount of liquidity in the hands of the major Wall Street Banks who can trade the market swings and keep things in equilibrium. Folks this is one stinking scam!

[JackRiddler]

12. I was one of those...

Timing is the most difficult thing to ever predict. Unless the rules of monetary gravity have changed, however, it's going to happen. America is exceptional because it has been the center of the world economy, because its foreign debt is denominated in its own currency, as are world commodities, and because it's been the military alpha power. These all seemed like eternal qualities, well they're not. I don't think you can find a country on record with this proportion of total debt (personal, corporate and government added up) to GDP that wasn't promptly declared bankrupt by its creditors. Argentina's debt was at a much lower level when it was forced into bankrupcty and IMF plan (which it ultimately rejected, but only after going through a full economic disaster). Only in the US case - owing so much that the creditors fear your default will bring down the whole world - is this tolerated.