United States Dollar Crisis

Go back to Global Inflation Crisis - Sub-zones

1) All about a dollar. A dollar crisis.

2) The words that follow are all about the United States dollar – and its state of health.

3) The USD as we know it today began as a vastly different creature – in name and in kind.

4) The USD began in the 1780s as the Spanish silver coin named the pieces of eight, which the continental Congress chose to use as their money because the global markets were familiar with this coin.

Edwin Viera Jr. explains in the book, Pieces of Eight:

“Monetary historians generally first associate the dollar with one Count Schlick, who began striking such silver coins in 1519 in Joachim's Thal, Bavaria.

Then called 'Schlicktenthalers' or 'Joachimsthalers,' the coins became known simply as 'thalers,' which became transliterated into 'dollars.'

Interestingly, the American colonies did not adopt the dollar from England, but from Spain. Under [Spain's] monetary reform of 1497, the silver real ('ray-ahl') became the Spanish monetary unit...

A new coin consisting of eight reales ['ray-ah-lace'] also appeared. Variously known as pesos, duros, piezas de ocho (“pieces of eight”), or Spanish dollars (because of their similarity in weight and fineness to the thaler), the coins quickly achieved predominance in financial markets of the New World because of Spain's then-important commercial and political position.”

5) It has been proposed that the infamous dollar-sign - $ - was adapted from two “S” symbols on Pillars of Hercules on either side of the Spanish silver coin – the real.

6) Goldbugs - people who strongly support gold or gold-backed currency, and many global financial experts and analysts such as G. Edward Griffin and Eric King of King World News - have presented a gold-and-silver-backed currency system in the United States as a response to the dollar crisis.

7) Furthermore, Griffin and other historians claim that US dollar crisis actually began when the US changed from the silver money to the paper money and has continued in waves ever since.

8) As a currency declines, the amount of currency necessary to trade for an ounce of silver increases.

As the US dollar devaluation continues, since the dollar is connected to global currencies, global currencies being devalued as well.

9) Silver, considering its history as a trusted form of money, grows in demand as confidence collapses in the paper and electronic money. One way to measure US dollar crisis to to watch the price of silver.

US dollar crisis would typically result in a rising price of silver.

Is the price of silver rising? To what extent is there US dollar crisis?

10) Sensing US dollar crisis or simply seeing the potential for great growth in silver, the public - particularly in China - has been trading their currency for silver and the price of silver has been rising to reflect this ascending demand.

The Chinese public have not been alone in this flight to silver safety. Around the globe, people have been transmuting the assets into precious mental.

Preserving their life. Growing their wealth.

11) One prominent individual positively supporting silver investing as a response to dollar crisis is James Turk.

12) James Turk is the Founder of Goldmoney.com Many people often see Goldmoney.com’s advertisements around the web. Turk has specialized in international banking, global finance, and investments since 1969.

13) When Silver was first approaching $50 per oz in 2011, rising sharply everyday, Turk had an interview with Eric King of King World News.

14) During his interview with King World News, James Turk imparted strong words regarding a downtrend in the dollar and uptrend in silver:

“Ultimately it’s just gonna be the loss in confidence in paper currency…

The politicians’ unwillingness to cut spending or have any kind of discipline…

Cumulatively, all of these things – like…on straw on the camel’s back – eventually the camel’s back is going to break and…I think we’re really at that stage…

You know, the Scottish historian Niall Ferguson has a very good description – he says, “We live on the edge of chaos,” and what he means is – you keep putting grains of sand on top of a pile, one grain of sand at a time, and it looks really pretty until you have one grain of sand too much and the pile collapses.

And it’s the same thing here with the dollar.

The news is just continually bad.

There’s nothing being done to put the dollar on the right course and we’re just gonna have one little news item – whether it’s Greece, Portugal, a bunch of deficits in the US – who knows what – Chinese unwilling to buy US government debt securities.

[It is difficult to] forecast what that one news item’s gonna be, but that will break the confidence and then you’re gonna see that waterfall decline….

If you own gold and silver it’s not going to impact you at all.

The problem is, if you own only paper and you own only dollars, you’re going to be in real trouble, because the dollar’s gonna continue to lose purchasing power.

So, like we’ve been saying all along Eric, you’ve got to get into a safe haven…and that’s why we’re seeing such strength in both precious metals…

What would you rather own – an ounce of silver or…paper dollars supported by promises from Ben Bernanke and Timothy Geithner. I’m not sure I would want fifty bucks, I think I’d feel safer holding the silver…

It’s only later in the bull market when you get everybody jumping in and willing to hold positions for a long time that sentiment is changing…

[Now,] people are still doubting that these metals are sustainable, notwithstanding the fact that the metals are proving themselves.

You know, in my mind Eric, the most important thing is what the market price is doing at any moment in time and if you look at the trend, there’s absolutely no doubt that this is a spectacular trend in the metals and you just never know when that trend’s gonna end.

Given the fact that I see nothing happening in Washington, doesn’t suggest that this uptrend in the metals and the downtrend in the dollar is gonna be ending any time soon .

They’re not raising interest rates. They’re not cutting the deficit. They’re not doing anything that’s favorable to the dollar.

You have to assume that there’s a lot more in the precious metals…

Right now, you’ve just gotta continue to hold that position [in silver] and expect much higher prices…

We’re in the early stages still, of people – starting to question the longer-term viability of the dollar.

When you go into a hyperinflation, which as been my view all along, there are two aspects to it – it’s not just [(1)] the quantity of money…it’s also [(2)] the decline in demand for the currency [inflation (=) money supply > money demand] - because money, just like any good or service, is a function of supply and demand.

So in a hyperinflation, you see two things happening – [(1)] you see the quantity of currency increasing, and that’s clearly happening to the dollar now with all of the Fed printing, [and (2)] you also see a decline in demand, and ultimately that leads to a flight from the currency.

And you know, the way things are shaping up here in the markets…I think we’re very very close to that type of event – that’s what causes a waterfall decline in the dollar and that’s what causes the precious metals to do what they’re doing.”

15) Again, what is important to note for our purposes, is that what James Turk is describing regarding a shift in confidence from the paper money to the metallic money – particularly silver – is a reflection of global market sentiment since the advent of money itself.

16) When one form of currency seems unstable, the market moves to the most stable forms of currency. Throughout history, although there have been temporarily successful paper currencies such as the colonial scrip of the early American colonies, one of the most stable forms of money has been silver.

17) As previously mentioned, the paper dollar was actually born from the silver thaler.

A return to strong, hard silver during US dollar crisis seems analogous to a return to the roots of a tree in order to connect with the strong, hard trunk – for safety.

18) Consider the charts illustrating the shift in confidence from the dollar to silver.

Silver Confidence – 2000-2011 –

Scott McLeod began developing Only-Silver-Bullion.com to inform people of the global financial crisis and the reasons for investing in silver.

One of the most important features of Only Silver Bullion is the extensive resources it provides for actually moving step-by-step into silver investing.

If you are ready to purchase your silver, click this link to buy your 10 oz Silver Bars from the top selling silver distributor - APMEX.

As James Turk mentioned, although silver is growing and dollar crisis is advancing, most people are not investing in it.

Further, even people such as yourself, who savvy in global finance, are not actually investing in silver.

Only Silver Bullion can be a save you time by providing resources for actual investing in silver and doing so in affordable ways.

20) How is the dollar feeling these days?

21) Well, if one were to ask the typical representative of the financial or political sector about the dollar crisis, they are likely to receive answers glossed with optimism and decorated with diversions.

To what extent would such optimistic, official, establishment proclamations about dollar crisis be aligned with accuracy?

22) Interestingly to some, there appear to be hoards of analysts – from American media personalities such as Glenn Beck to African-American academics such as Thomas Sowell – who have hardly given any agreement to dollar optimism in between their broadcasts of dollar demise.

21) Dollar demise? Dollar crisis?

22) It presently appears a primary issue with the dollar is inflation, and a primary cause of drastic dollar crisis would be inflation.

23) As previously mentioned in Global Inflation Crisis, inflation can be defined in simple terms as – when the value of a currency falls, prompting purchasing power to fall, and prices to rise.

24) We remember a few fundamentals from our reading into Global Inflation Crisis.

It seems a nation can cause inflation by doing one thing – in simple terms, causing the amount of money in circulation to exceed the amount of goods and services available to purchase with that money, ie. causing money-supply to exceed money-demand.

25) A nation can achieve a condition of money-supply exceeding money-demand a number of ways, such as, (1) deindustrialisation – lowering production level and therefore, lowering levels of money-demand to purchase products and (2) currency creation – increasing the money supply by creating currency and therefore, raising levels of money supply – in excess of money-demand.

26) Why would there be inflation in the United States?

27) To a significant extent, US money-supply is exceeding US money-demand

This excess US money supply is due to a toxic, yet seductive combination of both, (1) deindustrialisation and (2) currency creation.

28) Deindustrialisation can be considered seductive because where 'industrialization' can mean working while others relax, 'deindustrialisation' can mean relaxing while others work.

Relaxation, perhaps, can be more seductive than work, as sleep could, perhaps, be more seductive than waking activity.

29) To what extent is US industrialization becoming relaxation, relaxation becoming sleep, and sleep becoming extended rest?

30) Currency creation can be seductive, as one may well imagine, because where 'earning money' can mean working to accumulate currency, 'currency creation' can mean simply creating the currency.

31) Now that we have briefly looked into how deindustrialisation and currency creation can be seductive, we may add that they can also be toxic because they can detrimentally affect a nation's health with unforgiving-swiftness.

32) Perhaps coincidentally, though probably directly related to a large degree, ever since the Federal Reserve System (the US currency creation machine) was established in 1913, US inflation has consistently grown as if following a diet of protein and anaesthesia.

A dollar in 1913 was worth less than seven cents in 2010.

Since the US established the Federal Reserve, the US dollar has dropped in value and purchasing power by over 93%.

Would ninety-three percent US dollar devaluation necessarily indicate US dollar crisis?

What is a significant effect of US dollar devaluation?

33) Drawing on our knowledge of inflation crisis – (1) currency value drops, (2) purchasing power drops, and what else? - (3) prices rise.

Reflecting our knowledge of the formula, prices in the United States have risen by leaps and bounds since 1913 and are continuing to rise.

34) As one may expect, many US government officials optimistically claim price-levels are not a cause for concern.

35) According to the US government, the consumer price index (CPI), which is used for measuring price levels, has risen by over 20 times from 1913 - 2010, yet according to other analysts such as Tom Barrett and Mike Maloney, the US government CPI is vastly understated.

John Williams, founder of Shadow Stats, reports a more accurate CPI to have risen by over 60 times from 1913 – 2010.

36) If you have been doing any business with the involving US products, have you been noticing any concerning price-level increases within the past years or decades – considering gas prices or real estate prices, for example?

37) It has been report that, when adjusted for inflation, US minimum wages would have technically been illegally-low since the at least early 2000s.

38) What could be the causes of this apparent US inflation crisis?

39) As previously mentioned, seeing the dollar devaluation since 1913 – the Fed's birth-year - can be an indication that the Fed has been a significant source of US inflation since that time.

The Fed, along with central banks around the globe, is legally able to create vast sums of money and according to the Federal Reserve Act, commercial banks that are members of the system (over 1700 as of 2010) are also legally able to create currency – up to 10 times the dollar amount of they have on reserve.

40) The central bank and commercial banks of the United States, through currency creation – for the purpose of lending, purchasing, and investing (gambling) at will, and thereby adding to the money supply generally well-beyond its due proportion to money-demand – can be contributing to US inflation thus, lowering US dollar purchasing power and raising US prices.

41) As many are aware of, the US has been borrowing heavily from China in order to continue spending, servicing other debts, and purchasing Chinese goods.

42) We mentioned earlier that deindustrialisation can be analogous to relaxing while others are working.

In this case, to a significant extent, the United States is relaxing while China is working.

It seems the US is borrowing and inflating (currency creating) in order to buy goods and services from China, other emerging markets such as Brazil, and commodity-rich nations such as Mexico – goods and services the US could be producing for itself.

43) This toxic, yet seductive combination of inflation and deindustrialisation could be causing serious issues for the United States, one of which is US dollar crisis.

44) Nations such as China, that are holding large sums of US debt may be pondering the option of no longer lending to the US and dropping their debt.

Why?

45) If a nation's currency is dropping and the nation is also lessening its ability to produce goods, sell services, and pay debts with income, is there any threat of the nation defaulting on its loans?

Suppose the nation does pay its debts, is there not a threat of the nation paying with inflated currency?

46) The United States – largely due to factors related to currency creation and deindustrialisation – certainly appears to be declining in financial success and nations such as China are noticing and considering the risk involved with conducting business with a nation in such a weakened condition.

47) John Perkins was an economic hitman for the United States government - he was responsible for administrating major financial deals with other nations.

Perkins discusses his former responsibilities during the documentary Let's Make Money by Erwin Wagenhofer.

Perkins presents a common issue for the United States.

He points out that the US dollar is a strong currency largely while it is the reserve currency of the world.

48) While the dollar is the reserve currency, nations hold significant percentages of their assets in dollars and many of the most fundamental goods, such as oil, are only traded in dollars.

49) Perkins recounts how he was a influential in the deal between the US and Saudi Arabia to make it so that oil could only be traded in dollars and that if the dollar lost this position, the United States would be faced with life-threatening effects:

"I was a large part of that deal that we struck with Saudi Arabia insisting that OPEC only sell oil in dollars.

And so suddenly the dollar moves...to the oil standard...and so suddenly the world can only by oil [with] dollars and the dollar is a very very important currency.

Today the United States...is a bankrupt country.

We have huge amounts of debt - more debt than any country has ever had in the history of the world before.

And, if, some of the countries call that debt in, in a currency other than the dollar we'd be in very very serious trouble.

Right now they're only calling it in in dollars because oil is a big commodity and you can only buy oil in dollars."

50) To add to John Perkins's words, the pressure of the US debt on the US dollar could crush the currency's power, whose power largely exists due to the fact that the dollar is attached to goods that have high demand.

51) If the US debt becomes too significant an issue and the global market loses enough confidence in US currency, then major dollar crisis could ensure and the dollar could fall correspondingly.

Considering, again, the global financial market is flush with dollars, a fallen dollar would be serious trouble for the United States and the global financial market as a whole.

52) To illustrate the significance of the dollar as reserve currency of the world, we may look into the International Monetary Fund, for example – if one were to visit imf.org they would see towards the center of its homepage a valuation of the IMF currency – the SDR – and see that it is valued in terms of dollars.

53) What we may be finding is that global markets, particularly those commodity-rich nations, those nations that depend on importing their commodities, and those OPEC nations (Organization of the Petroleum Exporting Countries) – the oil-rich nations – could at one point be refusing to continue their commodity transactions in dollars and to support the dollar as reserve currency of the world.

54) Receding confidence in the USD from the commodity-rich and oil-rich nations can be an indication of a major increase in US dollar crisis, a dollar crisis that would be fundamentally transforming the global financial system and personal throughout the world.

55) International organizations such as the UN, national leaders such as President Mahmoud Ahmadinejad of Iran, and finance leaders such as Governor Zhou Xiaochuan of China, have expressed desires to either relinquish commodity trading in dollars or replace the dollar as the global reserve currency.

56) What may we be seeing?

57) We may be seeing sincere concern over US dollar crisis, a concern which, supported by stacks of stats and a deluge of data as well as current trends, presently appears to have a reasonable foundation.

58) We may be seeing a global decline of confidence in the US dollar and - reflecting the perceived terminal illness of the US dollar – death of the dollar as the power-currency of global commerce.

Dollar devaluation. Dollar crisis.

59) Here are two of the greatest sources of weakness in the USD – (1) inflation and (2) deindustrialisation.

Is the US dollar heading into a phase of darkness?

To what extent do we experience a global currency crisis, borne from US dollar crisis?

65) Is the dollar virtually immortal?

What could dollar crisis mean for me and my financial stability - during the GFC, and beyond?

I Click here to go into United States Hyperinflation Crisis.

On behalf of The Global FC Zone,

Crisis to Profit.

Roth

1) http://news.bbc.co.uk/2/hi/7101050.stm

2) http://tinyurl.com/4ldhkw9

3) http://www.conservativetruth.org/article.php?id=1392

4) http://www.shadowstats.com/

5) Griffin, G. Edward. The Creature from Jekyll Island.

6) Wagenhofer, Erwin. Let's Make Money.

7) Barrons, Roth E. Born to Die: Rising from the Explosion of the Global Financial Time Bomb.

8) James Turk and Eric King. http://kingworldnews.com/kingworldnews/Broadcast/Entries/2011/4/20_James_Turk.html

I Click here to go Back to the Beginning

The GFC Zone Home | Free! GFC Goods


Most Popular Pages
Crisis to Profit | Summary Inside Job | Global Inflation Crisis | GFC Game
GFC Chart | Dollar Crisis | US Financial Crisis

© Copyright TheGlobalFCzone.com

Privacy Policy|Terms of Use

SBI!