I just finished reading a new white paper about US debt held by foreign banks and governments. Hair-raising, eye-opening, piss yourself shit. I dread delivering this news to my clients.
Here's the short version-
For the last 60+ years, since the US$ has been the only currency that can be used to buy oil, and thus has been the de facto reserve currency of the world, the US has been able to export domestic inflation to developing countries. They send us oil, copper, iPhones, clothing, TVs, and Barbie dolls, and we send them pieces of paper with dead presidents on them.
Now, with economic weakness, inflation, and uncertainty dominating the news, these countries are beginning to wonder if those pieces of paper are actually a good trade. No country (since the majority of these dollars are held in the form of US Treasuries by foreign governments) wants to see their investment lose value, but many of them are starting to think that divesting themselves of these assets might be wise. No currency- the yen and euro have their own major issues, the pound, Canadian dollar, Swiss franc and Aussie dollar are too small, and the yuan isn't "ready for primetime"- can be seen as a safe haven.
It has become a game of economic and political chicken. Biden was in China this week to reassure them the US was still A-OK, but reports leaking out are that it was not a pleasant visit. Since China is the biggest player, they have the most to lose, but they have their finger on the trigger to dump hard and heavy if Japan or the UK (the #2&3 US debt holders) blink, and may pre-empt them if they sense a change. The Jackson Hole meeting this weekend was apparently the most tense in history.
Okay, final analysis- slow, backdoor divestment is taking place by all foreign holders (do you think Apple and Google stock has been rising because they're great companies?) and all of them are starting to get itchy and twitchy about being left "holding the bag" and a massive liquidation of debt could happen any day. They know it will be harmful to their own economies, but have to balance that with knowing that continuing to hold the debt when other countries are selling will be worse.
What does this mean? The US$ is in deep shit, and a massive debt dump would paralyze the US economy- imported goods would rise in price 3-10x overnight, mass shortages of tech goods, imported cars, and non-domestic foods...fuck, I don't even want to think about it anymore.
I'm taking a Valium (or 3) and going to bed. If I don't then I'll never sleep and I've got to catch a plane at noon.
Wonder if it''s too late to just move to Costa Rica?
How about Americans learn to live within their means, and lower the %C2%A8lifestyle%C2%A8 expectations like the rest of the World?
It''s time to start killing chickens.
Wonder why my post didn''t show up?\
I said, how about the Americans learn to live within their means, and lower the %C2%A8lifestyle%C2%A8 expectations?
If Americans didn''t spend a trillion dollars a year on defense and security, they wouldn''t be in such debt.%0D
R1 = landlord (who employs illegal aliens to service his properties)
May you live in an interesting time.
Gee, maybe letting another country manufacture all the goods we buy wasn''t such a good idea.
As soon as someone shows me what''s going to replace the dollar, I''ll start to worry.
What an amazing amount of stupidity, OP.\
Seriously, you make it sound like they own us and you bring up this tired bullshit every three months.
"I dread delivering this news to my clients."\
It''s the little touches that make some troll posts better than others. See above.
The Yuan is going to have to pick up the title as world currency soon.\
There is going to be a huge drop in the value of the US Dollar, likely in the spring of 2013.
If you look at the "Axis of Evil" those were all countries who wanted to buy and sell oil with euros instead of dollars.
The yuan will never be the world''s go-to currency because no one trusts the PRC and they won''t let it float. \
China has TONS of problems. They NEED us to keep borrowing money from them. A drop in the dollar would be a DISASTER for China because it would make manufacturing there less attractive economically. \
OP is a troll and has no idea what he''s talking about.
R16 is right. The real "threat" of Iran is that is has its own oil-backed currency that is not tied to global banking oligarchy.
One big, big, BIG problem with the dollar-going-to-hell hypothesis: What will replace it?
The combined fragility or the Euro and the US Dollar could be a setup for a Global Currency - Intentionally, as in planned years ago by the World Bank, scenario to get the masses to accept a global currency.
The video in R10 is at once hilarious (it is a stand-up routine after all), and very scary (it''s sadly accurate and informative).%0D\
ACKKKKK!! Isn''t one world currency one of the signs of the apocalypse or the New World Order or the Freemasons or the Aztecs or....
I love anonymous summaries of unspecified white papers.
Actually it is the Euro which is primed to fall. They don''t like the advantage it is giving American manufactures.
The Euro will be fine until Germany flees. The day Germany announces it is going back to the Deutch Mark, it is all over for Spain, Italy and France.
R10, that''s one of my favorite videos. What''s Rob Newman doing now?
No idea, R26. Sorry.%0D\
But yeah, it''s an awesome video.%0D\
R20 is right- the elite want a global fiat currency they can control. \
R19, gold is already replacing the dollar. Why do you think it''s gone up 700% in the last 10 years. \
R17, China is in deep trouble. Decades of central planning (google China ghost cities) have created massive malinvestment and central bank money printing has created super high inflation- the citizens of China are getting screwed, and a massive depression is already starting. That will cripple the world economy.\
R24 and R25 -the euro is dead. Germans want out, and the PIIGS are already spending over their "austerity" limits. The "tribal" conflicts are boiling, and will soon explode. Merkel is going to lose in September and the new government will be unable to push through any more rescue packages. \
Finally, what was the fuss about Irene and NYC? It''s fine, and people are just pissed the way Bloomberg handled it. He''s such an asshole.
R28, you sound like kind of a tinhat nutjob. Are you a Repug or a libertarian?
China will not be in deep trouble. China is still a communist country and when they have built up their Ghost cities to a sufficient level, the Chinese government will seize corporate assets and turn the cities over to the masses. Everyone knows that this has always been a risk in China and it is cashing out before it happens, that is the real risk in China.
[quote]I dread delivering this news to my clients. \
I''m sure, OP. Little old ladies who just come in for a perm don''t want to hear this shit.
Costa Rica''s a safe bet. I survived off of 200 for 2 months in central america. (granted I did have a host family) even without them, rent is dirt cheap.
China's Shifting Economic Sands
[quote]Is China's economic miracle built on sand or cement? It won't exactly make world headlines, but in the Chinese port city of Dalian there was another accident today in the city's sprawling petrochemicals development zone. This time a fuel tank caught fire in an oil refinery belonging to state major PetroChina. This is the same city, you'll remember, that was hit by serious protests a fortnight back after a paraxylene chemical plant was nearly breached by a storm surge caused by a passing typhoon. In that case, the local government caved in and agreed to shut down the plant. What's amazing %E2%80%93 and disconcerting for many living in Dalian %E2%80%93 is that this is the FOURTH major safety alert in the petrochemicals complex in the last 12 months or so. %E2%80%93 UK Telegraph
This excerpt from the article in the%C2%A0Telegraph%C2%A0about China is an interesting one because unlike many mainstream articles it dares to ask the question whether the "Chinese Miracle" is nothing but hype and the proverbial madness of crowds.
Every night when he goes home to his Beijing apartment, the author writes, he catalogues the way that the apartment is "quietly crumbling." Look carefully, he writes, "and you'll see the flagstones in the public areas are subsiding drunkenly, the access road to the rear is shot to pieces, the bathroom fittings are corroding and the fa%C3%A7ades are starting to peel. With an apartment that hardly matters, but when it comes to railways, bridges, petrochemical complexes, 40,000 dams (as my colleague Malcolm Moore reported this week) and even nuclear power stations, we'll have to pray higher standards have been enforced."
Actually, the article's feedback comments are even more alarming, speculating that the same sort of sloppy construction may doom modern Chinese dams to catastrophic failure within the next ten years. As for domestic harmony, we find the article has generated the following feedback from Scott Jensen: "In 2005, China stopped publicly reporting how many riots occur each year in its country because the rate of increase was rapidly increasing year after year. Some now speculate there are at least 120,000 riots in China a year. That's over 10,000 a month."
We've been writing about the demise of the Chinese Miracle for several years now. And articles like this one only reinforce our conclusions. China's old%C2%A0communist%C2%A0leaders simply don't know what to do. They've thrust China into the modern era, but in a manipulative and controlled way (see Sino-Forest Corp.) that is merely storing up problems for the future. Eventually, the dam is likely going to break %E2%80%93 metaphorically and in reality. The catastrophic results may shake the world.
China worshippers are going to have a rude awakening within the next decade. This century does not belong to China. It belongs to South America. China will get the first 20 years before the collapse and then the rest will be for South America.
OP is shilling for the pound.
The dollr is literally on its last legs, given the general profligacy of the American people and government. Wise investors shoould look elsewhere, perhaps to stronger economic models. That is, until something bad or scary happens.
China is a nation built on intellectual theft and cheap, plentiful and desperate labor.\
I will have to agree with the poster hyping the future of South America. South Americans have the ability to think in new ways, unlike the Chinese. They can come up with original and new products, plus they know how to and have a history of building quality products, which the Chinese just have no ability to or history of.
[quote]The dollr is literally on its last legs\
The dollar doesn''t have legs so it can only be on its last legs figuratively not literally.\
The End of the Dollar and the End of Grammar seem to be walking hand in hand - figuratively.
I kinda ♥ R41 :-P
Pointless Bitchery is Alive and Well!
"Hair-raising, eye-opening, piss yourself shit. I dread delivering this news to my clients"%0D\
It may have been a surprise to you op, but it is not a surprise to anyone who has had their eyes and ears open. %0D\
That being said, absolutely nothing you wrote is hair-raising, eye-opening or piss yourself shit. %0D\
Your eloquence is most likley your best characteristic, isn''t it op?
R41 Quite right. I am corrected. (The dollar will still be fine, a little roughed-up maybe.)
The $ is dead
It's been money for thousands of years in every country on the planet.
....and they can't print it.
Blah, blah, blah, bring it on. A nice collapse would do the planet good in the long run.
R47, Bernanke announced today that no QE3 was forthcoming, and the "growth of the money supply" has virtually stopped, so it looks like you might get your wish...at least until Bernanke decides to print a few trillion more dollars to prop up the big banks and corporations.
I don't care what happens with this country as long as the CEOs and greedy corporations go UNDER. And then you say "but that's bad for everyone!" And I say, I don't care as long as the greedy rich get punished...because about 50% of the country already has it really tough. Not one politician gives a damn about anyone but the RICH CORPORATIONS. This is suppose to be a democracy and we are all suppose to be represented.
the 1% use our unneeded defense budget as a money delivering system from the government coffers to their bank accounts. If our defense budget were in line with our needs, we could pay off the national debt in about 6 years. We need to get rid of the weapons manufacturers.
The fuckers won't hire. Without a middle class, we are nothing. Spread the wealth? We are fine...the 1% is killing us.
However, it's not the 1% that is the problem- it is the parasitical .01% that run the banks and big corps that are destroying the country.
End the wars, drastically cut the military and stop "nation building" and our deficits disappear.
The guillotines need to be constructed ASAP.
[quote]Got gold? It's been money for thousands of years in every country on the planet. ....and they can't print it.
In related news, you can't eat it either. Next stupid Libertarian assertion?
[quote]One big, big, BIG problem with the dollar-going-to-hell hypothesis: What will replace it?
You can eat a dollar bill, but no one wants to.
Your idiotic comparison fails, R54. Are you really that stupid?
[quote]This is suppose to be a democracy and we are all suppose to be represented.
The very fact that we are to be REPRESENTED shows that we are in fact a Representative Republic, not a Democracy.
[quote]Your idiotic comparison fails, [R54]. Are you really that stupid?
Have fun trying to buy Poptarts with gold nuggets if the banking system collapses. Are YOU really that stupid?
Saddam Hussein was going to stop trading in U.S dollars. But then we invaded his country and that problem was solved
..land is the only thing in the world worth workin' for, worth fightin' for, worth dyin' for, because it's the only thing that lasts.
R58, when (not if) the banking system collapses from all the unfunded liabilities and the dollar (and euro, and yen, etc.) drop in value then people will still see gold as valuable, and payment systems using gold (or fractions of pigs, or a house, whatever they value) will be devised. Gold is only money because people perceive that it has value due to rarity, durability, density, divisiblity, etc. Or because it is shiny. Who cares- people value it, and will always value it even if a big meteor shower deposited 5 tons in every city on earth.
Do you think that even if the dollar went to zero that Facebook, or Google, or McDs would suddenly become worthless? Is your mental capacity that limited?
Facebook already is worthless.
The sky is falling!
The sky is falling!
If the Dollar collapses the US government will again (like they did in the Great Depression) seize all private gold by congressional declaration. So those hoping Gold will save you, ignore history.
Which is why you don't keep your gold in a bank safe deposit box, r64.
The government "seizing gold" proves it's worth.
If it were just another stupid metal, they wouldn't bother.
They don't seize paper money, they just print new stuff.
[quote]Don't worry, the rich will still come out of this with their wealth intact.
Rail and gnash your teeth, but what do you do to counter the current system? Would you even inconvenience yourself for your oh-so-righteous beliefs.
[quote]Don't worry, the rich will still come out of this with their wealth intact.
The smart ones will. The dumb ones will lose everything.
Has OP noticed the dollar is RISING?
Have a look at Bob Crowe in the UK. Smart, scheming fake.
That's why I'm turning all my gold into anal beads so I can store them safely in my ass
Don't move to Costa Rica. Move to Ecuador. The cost of living is cheaper and the climate is cool and perfect year-round in the mountains.
[quote]Has OP noticed the dollar is RISING?
The dollar is rising because the world is dumping the Euro. The dollar will be the last fiat currency... until it fails too.
People are trying to find somewhere in the world to park their money.
Very soon you will the U.S. in a panic about it's high dollar (cheap imports, expensive exports) just like the Swiss and Japanese and they will devalue it to stay competitive.
It's a race to the bottom as countries try to inflate their way out of debt deflation.
Every currency on the planet will be gone in 10 years. The new ones will be backed by gold.
R72 I was going to say (essentially) exactly the same.
The dollar is rising against WHAT? Gold? Oil? Copper? Farm land?
All fiat- euro, dollar, yen, yuan, franc, real, etc. are being printed day and night and ALL of these commodities will eventually rise (Ceteris Paribus) in cost due to that inflation.
[quote]Every currency on the planet will be gone in 10 years. The new ones will be backed by gold.
People who say shit like this only prove their economic ignorance.
Just as Eisenhower warned 60 years ago R50.
The US Government seized gold assets to prevent people from buying Gold, not because Gold was valuable or secure.
If Americans started to buy Euros, Yens or diamonds in massive qualities, sufficient enough to replace the dollar as standard currency, the US government would stop that too.
It was the replacement of the US Dollar that they wanted to stop, it had nothing to do with the value of Gold.
"The US Government seized gold assets to prevent people from buying Gold, not because Gold was valuable or secure."
Do you realize how insane that is? If it is worthless (and all value is subjective- one man's junk...) then why seize it?
Until you can answer that question you are just spreading ignorance and propaganda.
R76, I was harsh with you. I just came back to read this, and see that you were attacking the policy, to an extent.
So, here's a more reasoned take on your last two statements.
"If Americans started to buy Euros, Yens or diamonds in massive qualities, sufficient enough to replace the dollar as standard currency, the US government would stop that too."
Yes, and that's why it is insane to hold fiat currency. Why do you think Greeks (and Spaniards, and Italians, etc.) have been moving billions each day (and at an exponential pace) out of the F'PIIGS and into the US, UK, Australia, etc. and do you think any policy- short of outright martial law or totalitarian socialism- will stop it? Do you think that the dollar (the most over-indebted empire in history) will be any different once people realize that Bernanke and his bankster buddies will print any amount they want in order to bail them out? That is why gold is valuable- politicians and banksters can't just print it.
"It was the replacement of the US Dollar that they wanted to stop, it had nothing to do with the value of Gold."
Too bad they are incompetent mortals, and cannot fathom the seeds of destruction they have sewn, nor the consequences. Like I said, short of totalitarian control of the populace (where you work, live, travel, trade) it is a doomed effort. That is why people value gold- no matter what, billions of people will still value it (even if it becomes a Schedule IV drug and possession is punished with death) and will trade goods and services for it.
Sure, The Elites think they can "control" the destruction of the yen, dollar, euro, etc. and introduce some alternative, but the Internet has made it impossible for them to do it secretly. When they find that people are no longer hostages of the media and reject their plans, they will try to set the world on fire.
The Elites are running scared.
Libertarians are mentally ill.
How many people here think they don't pay enough in taxes, or do not have enough regulations at every level of society, or think we do not spend enough on foreign wars and domestic spying, or that inflation is too low, or that the big banks need more support?
All of those things are intimately related, and you can't eliminate one without the others.
Facebook was kinda of a sucker punch. Only the newbies thought otherwise R62. The Facebook IPO really shows you how naive, much of the market still is.
The Idiot Libertarian Troll(TM) keeps bumping these threads up, spouting the same bullshit talking points that have been knocked down over and over, like nothing has happened.
Can't fix crazy and stupid, I guess.
Credit expansion is the governments foremost tool in their struggle against the market economy. In their hands it is the magic wand designed to conjure away the scarcity of capital goods, to lower the rate of interest or to abolish it altogether, to finance lavish government spending, to expropriate the capitalists, to contrive everlasting booms, and to make everybody prosperous.
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.
But then, finally, the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against 'real' goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.
It was this that happened with the Continental currency in America in 1781, with the French mandats territoriaux in 1796, and with the German mark in 1923. It will happen again whenever the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of this thing will increase beyond all bounds. Inflation is a policy that cannot last.
Just a bump to keep this alive until the dollar dies.