The United States government just went from “Please, baby, don’t leave me,” to frustrated threats and whining.
After the UK announced it will join new China-led Asian Infrastructure Investment Bank (AIIB) as a founding member late last week, Germany, France and Italy decided yesterday to follow Britain’s lead and join as well.
Welcome to the beginning of the end of the US dollar’s domination. It’s happening.
For the past few decades America was the undisputed global economic and political superpower.
The entire world happily used the US dollar, and hence, the US banking system. More importantly, the world happily placed its trust in the US government.
But there’s a limit to how irresponsible, reckless, and threatening you can be. Eventually such behavior catches up to you.
That time has now come.
The US government is now drowning in debt that can never be repaid. The US government’s own numbers, in fact, estimate its level of insolvency at roughly $60 trillion.
This means that when you add up all the assets of the United States—every acre of land, every tank, every drone, every drop of oil in the strategic reserve… and subtract all the debt and liabilities, the result is MINUS $60 trillion.
That is the net worth of the United States government.
This is particularly poignant today as the USD flash-crashed after hours, exhibiting just how quickly investors can (and will) pull their money as soon as the USD is no longer the cleanest shirt in a dirty pile of laundry.
These "de-dollarization" initiatives are only going to pick up steam as time progresses.
Might weaken us for a litle but then we'd bounce back and that's that!
The smartest move for US at this point, to head the problem would be to tax the imported goods from China in order to reduce the flow of cheap, bad quality crap in US. That alone would slow down the Chinese and their dreams of World domination and such.
Even if the dollar weakens a bit we are still one of the biggest, strongest markets in the World. In the 90s, Clinton gave the World a taste with NAFTA, then was CAFTA and many others. They started pulling on a finger and now they want the whole hand. It's time we take that finger back and leave them empty handed!
But can we pass that by the WallStreet people? I doubt it!
Post by Virgil Showlion on Mar 18, 2015 19:29:31 GMT -5
Mr. oped: I'm not sure what you're basing your assessment on. The US dollar hegemony is the only reason behind a windfall of blessings--your ability to finance wars, your ability to produce and buy oil cheaply, your ability to maintain profitable business interests in foreign countries, and your financial sector's prominent position in the financial world.
I get the impression you think the US will default, you'll go through a little recession, and then everything will be back to normal on the other side. You don't seem to realize that that the entire financial infrastructure built up over the last two generations will be lying in ruins. That means your pension funds, your municipal budgets and cities' ability to borrow money, your social programs, your social security, your military, your stock market, your schools and universities, your money markets.
You're a nation running on empty. You test at the rock bottom of the OECD nations in terms of math, science, and literacy. Your social programs are a vast unfunded Ponzi scheme. You have a rapidly evaporating middle class and a level of wealth inequity that rivals third world banana republics. You have more enemies than can be reliably quantified, and your only means of subduing them comes from borrowing vast quantities of money that you'll no longer have access to.
I don't know what fantasyland you're living in where everything just neatly resets and all is peachy in a few years. There is going to be entire cities drying up, bread lines, riots, successionist movements, class warfare, race warfare, and wholesale economic collapse. The ramifications are going to make the Great Depression look like a cakewalk by comparison. I don't think most Americans realize how tremendously blessed and privileged you've been (and that goes for my fellow Canadians as well) and just how quickly those blessings can evaporate.
At any rate, this is going to happen regardless of whether or not you and I debate it on a message board. All I can ask is that you keep your eyes open and for heaven's sake don't fall back to "it's never happened before" or "we've always recovered before" as excuses to go to sleep, because we're witnessing the permanent death of an empire here.
Better to be aware of this milestones as they happen than to be caught unawares.
Maybe. I wonder how many of us are in a position to really do much about it though preparation wise.
I'm guessing not many.
I believe the one thing everybody can--and should--do in preparation is to rid themselves of materialistic desires as much as possible. Obviously food, water, shelter are always going to be core desires, but I submit to you that the individual whose daily pursuits are profitable despite being inexpensive--getting back to nature, chatting with friends, games, handicrafts, outdoor sports, meditation, prayer, charitable works, reading, writing, etc.--will tolerate the changes far better as they come.
I also believe it will be an opportunity for people--and Christians specifically--to reexamine their priorities, if they avail themselves of the chance.
Money-wise, I don't put much faith in people's plans to hoard gold, resources, and anything that isn't tied down in the hopes of beating the system. While I believe that holding physical metals and certain stocks is wise, it can only do so much. Desperate governments can and will confiscate anything they can while in their death throes, as we've seen recently in numerous European and South American nations.
My advice to Christians is: simplify your life and draw close to God. My advice to the non-religious is: simplify your life and cultivate an attitude of positivity regardless of life's circumstances.
There's not much time left, but there is still time left. Let's use it.
I am not claiming that US is infallible. I'm just stating the fact that if push comes to shove and the AIIC more or less under Chinese/German/French influence is atempting to destabilize the U.S. dollar by coming up with a new currency as a replacement for international transactions, it may not be to hard for us to pay them in kind.
I know that we are running on empty, printing money like there is no tomorrow but damn, some of our politicians need to grow a pair and stand for what is right for us first and then we'll see.
The U.S. market is the biggest customer for Chinese made goods and that is in some way supporting the massive growth that the Chinese have been having. The economical agreements that we have with them are absolutely unfair for the U.S. labor force. And if the Chinese Jack in Charge wants to play fast and loose with us we can send him packing. "You don't bite the hand that feeds you!" And that's exactly what they are trying to do.
All it takes from us to have them where we want them is to stop importing from them! Theoreticaly, easy! Politically - almost if not impossible.
As for the rest, well: Germans don't like us much, French hate us, Brits are still holding a grudge even after 250 years so "we good!?
Here in the New World, you Canadians tolerate us because you are all polite and the Mexicans because we sell them guns and buy their drugs so we're set!
A question. What exactly are you expecting to happen? Hyper-inflation, deflation, stagflation, banking collapse, collapse of the entire world economy? How and why?
I have not been on this board for a long time, so if you have been having these discussions, I am out of the loop. Dont intend to argue with you, since I am simply asking for your opinion. And, "your opinion" is "your" opinion, so not subject to argument, at least from me.
I can't rightly commit to many specifics. I expect the USDX will crash "at some point", but a hundred things could happen between now and then, including more deflation (ETA: technically, biflation), and a "crash" might instead be a protracted devaluation such as what Europe is now experiencing with the Euro.
The three predictions I will commit to are as follows:
A European union (although not necessarily comprising all the nations in the current union) will be the first world power to emerge from the global depression, led by Germany. This union is going to be extremely anti-American and have an extremely militaristic character to it, stemming from the growing Islamic threats in northern Africa and from the threat posed by Russia on the eastern border.
Whatever state of recovery the US and Canada ultimately obtain will not rival the prosperity we've enjoyed since WWII, or come close to it. In short, this isn't a "correction", it is the permanent decline of our nations' power relative to other world powers. There will be a lengthy term of economic vassalage (what will probably be called "austerity") where US assets are appropriated into the hands of powerful domestic brokers representing foreign interests. In other words, America will still be "owned by Americans", but these owners will have no sense of American nationalism and no sense of obligation to American citizens.
There will be considerable domestic upheaval, both legal and illegal (i.e. violent) in nature. The legal aspect will resemble Greece's current drama, with politicians pledging change but consistently delivering nothing. The violence will be brutally suppressed. Ironically, the violence will be one of the impediments to recovery. The chaos will build on itself. I personally suspect it may get as bad as what was witnessed in the Balkans in the 1990's, with race warfare, possible secession attempts, and a collapse of civil infrastructure. Different parts of North America will face different problems. I particularly fear for CA, AZ, NY, and TX.
I couldn't give you a timeline on all of this. If you'd asked me in 2008, I'd have said the snowball would start rolling before 2011. But then of course the Federal Reserve stepped in to purchase $5 trillion in junk assets, world governments were willing to buy $20 trillion of US public debt, economies worldwide slumped, leaving US bonds as the best shirt in a pile of dirty laundry, and here we are. At this point I've learned my lesson not to set dates. It's like a magician pulling a long string of handkerchiefs out of his sleeve. He keeps pulling yard after yard while observers are kept in a perpetual state of amazement, knowing that eventually he's going to run out, but not knowing when.
Another prediction I'll also put out--although this is far more speculative--is that things will start moving very quickly, and at a time when public sentiment is favourable and macro data coming out of the US looks half decent. In other words, I predict the decline will come very suddenly and unexpectedly.
A final note: there is no such thing as a collapse that hurts everybody. There's going to be a significant percentage of people that make out like bandits (maybe as many as 15%), and they're going to go to incredible lengths to convince North Americans that things are OK, hope is just around the corner, and the future is bright and sunny. What we'll see in the MSM will increasingly dissemble reality. It won't be false per se, but it will be increasingly focused on engendering hope, engineering distractions, and inuring people to the incremental decline in their standard of living.
Post by Virgil Showlion on Mar 19, 2015 18:52:20 GMT -5
Sum Dum Gai: I think you're going to be amazed to discover just how quickly tanks rust, jet fuel destabilizes, missiles expire, bases fall into disrepair, aircraft carriers hit the end of their useful lifespan, and trillions of dollars of military assets depreciate into nothingness.
Again, all I'm advocating is that people keep their eyes open as these milestones come creeping along.
I think you're going to be amazed to discover just how quickly tanks rust, jet fuel destabilizes, missiles expire, bases fall into disrepair, aircraft carriers hit the end of their useful lifespan, and trillions of dollars of military assets depreciate into nothingness.
Maybe. At the same time it only takes a couple weeks to mobilize them and invade China or whatever. If we decide to lash out and use our massive stockpile of military hardware, I'm sure we can manage to do so before it all rusts away.
There be war. Who knows.
I certainly can't preclude it at this point.
NATO is doing military exercises in Russia's back yard, Russia is buzzing the coast of California with armed jets, and China's military drills are getting bolder every year, for Pete's sake.
Anyone who says there definitely won't be another world war is living in Pres. Obama's "there's never been a safer time to live" fantasyland.