Once we lose the Reserve Currency Status, quantitative easing for our and the world’s debt will no longer be a valid option without hyper inflation ensuing.
This is an earlier post explaining what Reserve Currency status means for US.
Let me be clear, I am not an economist. However, I have tried to do as much research as possible on one specific topic that I believe is the key factor that is allowing the USA’s economical “house of cards” to remain standing…(which you will NEVER hear reported about on your local news station) is that the US Dollar still holds the status as the World’s Reserve Currency. However, many experts think it is only hanging on to that status by a thread! And the World Bank issuing bonds in Chinese Yuan’s for the first time is clear evidence of that.
What does Reserve Currency status mean? Wiki says this about Reserve currency:
”[the world reserve currency]… also tends to be the international pricing currency for products traded on a global market, and commodities such as oil, gold, etc. This permits the issuing country [currently the USA, so therefore US Dollars] to purchase the commodities at a marginally lower rate than other nations, which must exchange their currencies with each purchase and pay a transaction cost. For major currencies, this transaction cost is negligible with respect to the price of the commodity. It also permits the government issuing the currency [the USA] to borrow money at a better rate, as there will always be a larger market for that currency than others.”
“The top reserve currency [currently the US Dollar] is generally selected by the banking community for the strength and stability of the economy in which it is used. Thus, as a currency becomes less stable, or its economy becomes less dominant, bankers may over time abandon it for a currency issued by a larger or more stable economy.”
“The World Bank issued its first bonds denominated in China’s currency, the yuan, in a further indication last week that the dollar is slipping in status among international bankers. The move also provides yet another indication that international bankers are concerned that mounting U.S. debt and the move of the Federal Reserve to continuing to buy Treasury debt signal an unannounced devaluation of the dollar that the Fed may be engineering behind closed doors.”
The predictions of what will happen in the USA if the Dollar loses the Reserve Currency status is varied. Some predict that the USA will simply see price modest price increases on most commodities, but not much more, to others predicting the onset of Hyper-Inflation and chaos the likes of which many countries in the past 100 years that have tried to “print” their way out of crushing national debt have seen:
One thing is for certain: IF hyperinflation comes, food will NECESSARILY become scarce. Please take some time, do your own research [because your local TV station will not prepare you] and get yourself prepared for the worst.
Investors in U.S. debt around the world are worryingly near a “psychological breaking point” that could force a “run on the bank” against Treasury’s.
If that happens, hyperinflation quickly follows and gold will soar much, much higher from its now record-setting levels, argues author and longtime trader Victor Sperandeo in the latest issue of Barron’s. Sperandeo has traded for many top investors including George Soros.
What does a basic year of long-term storable food look like? I have looked extensively on the internet and this is honestly one of the best blog posts I have been able to find. Trying to figure out how to get started storing a year’s worth of viable food for an emergency situation can be daunting.
Now I will be honest this is an ultra basic year’s worth of food that would allow someone to survive. Most “preppers” will recommend having a much better variety of foods on hand and I could not agree more. But if you are on a limited budget like my family is, what you see in this picture and this link to a post from the American Preppers Network is viable to begin on practically any budget.
Basic 1 person, 1 year supply of food
The bottom shelves appear to be half 50lb bags of wheat, and rice.
From what is seen in this picture, with a membership to Costo or Sam’s Club, you could put this in your house for less than $200. IF YOU DO IT NOW. If you wait for an emergency to happen your local store shelves can be completely barren in the span of hours. See the deplorable way Americans treated one another in the video below when a major water main broke. If that is the way we behave over a water main can you imagine what it would be like in a true emergency?
In spite of what the experts say, the US is already seeing inflationary prices with certain key commodities that are used as ingredients in 1000′s of everyday products. Over the past year the price of: Corn is up 48%, Soybeans 24%, Wheat 45%, Cotton 84%, Sugar 23%, and Unleaded Gas 25%. If we move into a period of hyperinflation you will either not be able to find food on the shelves, or you will not be able to afford to purchase it. Prepare for the worst, and hope for the best!
In your household when the checking account is low, is that typically when you go have an expensive dinner, and a night out on the town? No of coarse not. You choose to stop spending money. You and I do not have a legal means of creating money to place in our checking account. The US Federal government does, in a round about way. A hybid creation that is a part private, part government entity called the Ferderal Reserve.
“Its duties today, according to official Federal Reserve documentation, are to conduct the nation’s monetary policy, supervise and regulate banking institutions, maintain the stability of the financial system and provide financial services to depository institutions, the U.S. government, and foreign official institutions.[6]Wikipedia
The Fed ”maintains the stability of the financial system” by expanding and contracting the amount of money in circulation, and setting interest rates.
“Some economic theories have been developed that support the idea of expanding or shrinking a money supply as economic conditions warrant. Elastic currency is defined by the Federal Reserve as:[33]
Currency that can, by the actions of the central monetary authority (The Ferderal Reserve), expand or contract in amount warranted by economic conditions.”WikiPedia
A fancy title for it is Quantitative Easing. Watch the above video for a brief but good explanation of “quantitative easing”. And bottom line whether it creates money digitally, or by having the US Treasury department print it, the Ferderal Reserve does have the ability to create money. Our country moved away from “the Gold Standard” where the amount of paper and coinage in the system had to be equal to the amount of gold on hand, to basing the worth or value of our money, on the Gross Domestic Product or GDP of the United States.
GDP
“is the market value of all final goods and services made within the borders of a country in a year” WikiPedia
Anyone that has purchased a home should have had a discussion at some point with their lender about their debt to income ratio. It is a comparison of one’s debt’s, to one’s income. Your credit score can be very negativly impacted if your debts outweigh your income. (This is budget/finance 101 for everyone outside of Washington D.C., all those inside D.C still do not understand this concept)
The concept of a debt to income ratio applies to countries as well. Our country has reached a point where our national outstanding debt is virtually the same as our GDP, $13-14 Trillion. We are litterally producing in a year as a whole, exactly as much as we owe. Our country is “living paycheck to paycheck”
Then in November 2010 the Federal Reserve announced QE2, a $600 billion buy up of long-term U.S. Treasury bonds. That is equivalent to me paying my mortage payment with a high interest credit card. It is a short term fix, that exponentially increases the amount of debt you have. And Bernanke indicated on 60 Minutes that he is not ruling out QE3 either. Which now makes Bernanke guilty of perjury, because in June of 2009 when Bernanke was asked by Rep. Hensarling if the Federal Reserve would monetize the debt, Bernanke unquivically answered no. You can view the 2 hr testimony here as well as see a transcript. http://www.c-spanvideo.org/program/StateoftheUSEconomy15
The US also announced in November it will substantially increase its contribution the International Monetary Fund for the European bailout.
”Paul Donovan, Deputy Head of Global Economics at UBS, wrote “In May 2010, the IMF and the EU announced the creation of the European Stabilization Mechanism (ESM), a 750 billion euro ($980 billion) lending facility to provide lines of credit to insolvent European countries. On December 1, 2010, Reuters reported that “The United States would be ready to support the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund”
So since February of 2008: President Bush spent $152 billion on the Economic Stimulus Act of 2008 which was designed to “avert an economic resesssion”.
October 2008: President Bush spent $700 billion on TARP bill (Troubled Assest Relief Program) ”to purchase distressed assets, especially mortgage-backed securities, and make capital injections into banks.” WikePedia
February 2009: President Obama spends $800 billion on The American Recovery and Reinvestment Act (aka the Stimulus, or QE1, Quantitative Easing Part 1). This was a 1500 page bill which was intended to create jobs and promote investment and consumer spending during the recession.
In November The Federal Reserve spends $600 billion on QE2 and says QE3 is coming.
And the US continues to pour money into the IMF to bail out Europe.
We are continuing to pile up debt against a GDP that shrinks everytime unemployment increases.
I do not even think Einstein could make this math work. And IT WILL NOT END WELL. The continual printing of currencey in response to an increase in spending is the essence of unsustainability. It cannot last, and many experts are now of the opinion we have passed the point of no return to hyperinflation. A state where money loses its value very quickly, and cause the prices of everyday items to skyrocket.
It happened in Germany after World War I.
It happened in Argentina in 2001:
It happened in Zimbabwe in 2008:
It is beginning now in Greece and other European countries.
Please use the links you find on this site to get you and your family prepared.
Do not rely on information from the Federal Reserve. It is time to start relying on yourself, and it is time to begin preparing for the worst, while hoping for the best.
Bloomberg: Paul Abelsky and Maria Levitov – Dec 9, 2010
Over one year, several commodities that are used in the manufacturing process of 1000′s of the items you buy on a monthly basis have increased in price percentage by double digits:
Anything you purchase that is made in, or packed in plastic; that requires oil. And if you think the corn price just means you will have to cut back on popcorn think again. According to the National Corn Growers Association approximately 80% of all corn grown in the US is consumed by domestic and foreign cattle. I would also challenge you to examine the ingredients of most of the items in your pantry. See anything with high fructose corn syrup in it? Please visit the following site to see how you can protect your family from these inflationary prices.
Walid Shoebat, formerly a radicalized Muslim and the author of “The Case FOR Islamophobia: Jihad by the Word; America’s Final Warning,” joins the show with his son Theodore to discuss Glen Beck’s conversion to ‘Chrislam’ and the strong ties between Mormonism and Islam.
Monday,June 17, 2013 June 17, 2013
Adam Lebor, syndicated-columnist and author of “The Tower of Basel: The Shadowy History of the Secret Bank that Runs the World,” discusses the Nazi-affiliation and secrecy behind the Bank of International Settlements. In the Second half of the program, Joe Wolverton, correspondent for The New American, joins the show to talk about the invasive domestic spyin […]
Michael Howe does . . . especially when it relates to our Second Amendment rights. Beginning this weekend, Michael Howe will be Dr Dan’s guest on Freedom Forum Radio. Michael is a North Carolina Legislature “watchdog” with a special interest in reporting on legislation that protects, augments, or infringes on your right to keep and [...]
ALERT: HB 937 (see details of bill below) remains in the Senate Rules Committee and it is getting very late in the legislative session. Since the bill passed the House it meets the crossover deadline which means it can be brought back up in the Senate in the short session next year. Unfortunately, this is [...]
Dr. Dan and Matt Bracken , author of Enemies Foreign and Domestic, will discuss the current efforts in D.C. to illegally restrict the constitutional rights of gun owners. Read more about Matt HERE.
Dr. Dan and Bill Kennedy, the State Director of the North Carolina Tenth Amendment Center discuss state sovereignty. The Tenth Amendment Center is a national think tank that works to preserve and protect the principles of strictly limited government through information, education, and activism. The center serves as a forum for the study and exploration [...]
Dr. Dan and Paul Valone, Founder and President of Grass Roots North Carolina (GRNC.org) discuss our natural law right of self-protection, guaranteed to us by the Second Amendment, and attempts through legislative action to further regulate, limit, and control our right to keep and bear arms. Grass Roots North Carolina is an all-volunteer organization dedicat […]
Today the man who oversees more than $150 billion warned King World News about the high likelihood of a coming great inflation, or worse yet the possibility of a hyperinflationary collapse. Rob Arnott, who has won an unprecedented six Graham & Dodd Awards and is also Chairman of Research Affiliates, also warned KWN about the dangers of what the Fed and o […]
With the Fed kicking off its two-day meeting, today James Turk warned King World News that investors need to be prepared for global markets and the banking system to “literally collapse.” Turk also spoke about what Western central planners face going forward and the accompanying market risks and dangers.
With the two day Fed meeting beginning, the Godfather of newsletter writers, Richard Russell, writes about what he calls, “The Great Gold Rip-off.” This is a fantastic piece where Russell also discussed the impact on the silver market, whether or not the US has all of the gold it claims, and what Russia and China are up to at this time.
Today one of the wealthiest people in the financial world spoke with King World News about the war on gold and institutional investors who are “absolutely terrified.” Rick Rule, who is business partners with billionaire Eric Sprott and the CEO of Sprott USA, also discussed his trip to Europe and what he observed there from both “old money” and institutional […]
Ahead of the two-day Fed meeting, today acclaimed money manager Stephen Leeb told King World News that massive demand will send silver soaring above $330 an ounce. Leeb also said the Chinese have just taken another major step to increase demand for gold in their country. Below is what Leeb had to say in his interview.
This article was written by Mark Crovelli and originally published at LewRockwell.com A couple of weeks ago I traveled to New York and New Jersey to spend some time with a good friend and the family of my fiancée. The trip turned out to be truly edifying because I have not been to the East Coast [...]
This article was written by Michael Snyder and originally published at The Economic Collapse Eventually the money runs out. Much of America was shocked when the city of Detroit defaulted on a $39.7 million debt payment and announced that it was suspending payments on $2.5 billion of unsecured debt, but those who visit my site on [...]
It was at this point when I had a remarkable impression; I turned to see our driver Jeffrey Earnhardt wearing his military inspired fire suit standing next to the Oath Keepers car.
Oath Keepers Founder, Stewart Rhodes, shines nicely in this movie. Stewart’s footage was filmed on a very snowy day in the Swan Mountain range in northwest Montana, at a charming high-country retreat, and Stewart was relaxed and comfortable. His dialogue comes across the screen in as good a showing as I’ve seen. Our members will love his hard-hittlng matter- […]
The Beginning of the Second Term FLEE!!! SEVEN COMPELLING REASONS TO MOVE FROM AMERICA Introduction Introduction If you’re looking for reasons to be hopeful that America will turn around and things will get better, this is not the right article to read. If you’re looking for happy-clappy talk about a better election result in 2014 or 2016, stop now. This i […]
WHY DID HE WIN? It’s inevitable after an election loss. Blame and fault are widely cast. The pundits blame Romney’s message. Some say Americans were fooled into casting their votes for the incumbent. Republicans didn’t appeal to women, Hispanics or the young, they say. But, really, why did the President get re-elected? Regarding who selects our leaders, God […]
In September we looked at the THE PERFECT PRESIDENT. The thesis of the post was that we currently have a President who is Marxist, Muslim and anti-colonial (a/k/a Anti-American) by background, training and family relations. Only God could have brought to the most important office in the world such a man with such a dangerous background. As the “Perfect Sto […]
“The Most High is sovereign over all kingdoms on earth and gives them to anyone he wishes and sets over them the lowliest of people.” (Daniel 4:17) Over the last three plus years many Christians, this writer included, have expressed increasing levels of frustration, even anger, over the actions of the incumbent President of the United States. ‘Why does he […]
In a lengthy interview on a radio show last night the host Pastor shared with me his firm conviction, which he received as he was delivering a recent sermon, that America has been found guilty in the Court of Heaven. He shared with listeners that two other Watchmen who attended the April Vero Beach conference recently told him that they had come to the same […]
Neal Thomas
