“None are more hopelessly enslaved than those who falsely believe they are free”

Friday, February 12, 2010

The War on the US Dollar

I had to provide some levity in my last post before delving into the cataclysmic gravity of our current economic condition which, until recently is something I never gave a rat’s about.

I’ve always been content (mildly) going to work to meet financial obligations, raising my family, indulging in recreational activities to stay entertained, and casually making attempts to get ahead –trying to exercise some entrepreneurial spirit.

Recently though, I’ve felt the burden of providing for my family like never before. If you’re like me, your “investments” (401k, IRA) have tanked, your home’s value has also dropped and your confidence in our recently elected President’s ability or willingness to do anything about it is waning, if not completely vanished.

All of this has led to some serious amount of soul searching and I’ve actually started paying very close attention to what’s happening around us, looking at things through a very critical, objective lens – my own eyes. I don’t profess to have all the answers but I’ve had some recent moments of clarity and my way of giving back to my fellow Ogre is to share these illuminating thoughts here.

The shocking conclusion I’ve come to is this: Our buying power, quality of life and our family’s future – indeed, The American Way - is being quietly and callously SACRIFICED on the altar of political convenience.

See if you can follow me here and really THINK about the FACTS.

Our government recently flooded the economy with millions of dollars to bail out Big Business with itsTroubled Assets Relief Program (TARP). Every time we (the government) do this (create money out of thin air that’s backed by nothing), we’re borrowing money from a private company known as the Federal Reserve. In doing so we go even deeper into debt – a debt that you many not even realize you’re paying for (in more ways than one).

Our government’s current debt is at an all-time high of $11 trillion, I think. Every year, Washington has to make a whopping $335 billion in interest payments just to avoid default on that debt to The Man. Maybe more terrifying (to you) is that unfunded government IOUs are coming due on Social Security, Medicare/Medicaid, and Federal pension payments — and those obligations are an estimated $104 TRILLION. Simply put, we are now the single most indebted nation in the history of the planet.

Now follow this: Overseas investors fund 50% of our borrowing addiction, holding $6.2 trillion in U.S. securities — including almost $4.6 trillion in bonds. Think they’re not scared or downright pissed right now? They invested in worthless paper!

But even as investors worldwide begin (or in many cases continue) to doubt America’s ability to bear its debts, yet alone pay them off, the U.S. government keeps spending — trying its best to hawk even more Treasuries (and I use the word loosely) to foreign lenders. The curtain will soon rise on this number because the inevitable result (and I’m no financial analyst) is that more foreign central banks and overseas investors will run away, as they should, leaving the U.S. government with no choice but to pump out more and more unbacked paper dollars and dump them into the economy — further debasing the value of the dollar.

If you think I’m wrong, think again. And this is nothing new. I just happen to be waking up to it now (hopefully in time to do something about it) and I’m doing my best to wake others up too, before it’s too late.

Facts are facts, indisputable. You can make numbers up (just like you can print money) but if it’s not backed by anything substantive, then what do you have? Look then at the facts.

The dollar’s fallen 36% — in real trade-weighted terms — since its high of $120.2 in 2002.

This means every dollar in your wallet is really worth only 64 cents compared to a few short years ago … and that’s not even accounting for the rising price of goods and services!

And at every step along the way, the Fed chief has sworn (actually given testimony before congress, more crooks) that he supports a strong dollar but in reality, Bernanke has done absolutely nothing to halt the dollar’s fall. To the contrary, The Fed has been printing new money like crazy. And this move, obviously, can only cause the dollar’s value to vanish faster (scarcity creates high demand – basic rule – so when you flood the market with product, the demand, and thus the value of the product tanks).

Here you have it from Ben’s own mouth: “By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services.”

The truth is that Big Ben and Obama don’t want a strong dollar. Their plan is to intentionally devalue our currency. It’s an insidious trick and it’s been used countless times before by rulers/central bankers in other countries, not just here, when skyrocketing government deficits threatened the collapse of their economies. Why gut the dollar? The ONLY way Washington can cover the massive debt from this “bailout crisis" and avoid deadly economic deflation is to debase the dollar’s value and then repay those debts with cheaper dollars. It’s really just a last desperate attempt before everything crumbles.

Due to the explosion of 1) continued and unprecedented deficits under this Presidential administration, 2) the U.S. Treasury’s dumping of record numbers of debt instruments on the market, and 3) The Fed’s eagerness to continue printing money, foreign investors are recoiling in horror — even demanding that the US dollar be abandoned as the world’s reserve currency.

Not if but when that happens, demand for dollars will fall off a cliff. The steady but gradual decline in the dollar’s value will outright disintegrate. You see, once you examine this crisis through the eyes of Bernanke and his secret cronies, you can begin to realize how things are going to go (studying your history helps too).

The central bankers toy with the value of money, debasing the currency at whim. The ensuing debt this creates is eventually too much to bear and the entire thing collapses. Then, wholesale monetary reform begins. New fiat money is issued to replace old money (no one remembers Lincoln’s Greenback or even that Kennedy tried to institute fundamental and prudent changes with regard to our currency). Debts are inflated away by currency devaluation and asset “reflation” begins anew.

As we’ve already seen, this final phase of the global financial crisis — the destruction of our money’s value — has already begun.

The deliberate sacking of the U.S. economy - led by the banks, Wall Street shysters and Washington itself – is upon us. And its survival rests in the hands of a private cartel of bankers?

Can you say DEPRESSION? It’s coming and it scares the crap out of me because I’m not ready for it! My home isn’t mine, for one, and I recently got into a BMW that’ll most certainly be going back to the dealer soon (on my terms, of course). My investments aren’t even my own; this whole time I’ve relied on other people – people I don’t know and don’t trust – to handle my money! But what’s probably more upsetting than all of that is how our government is doing this. Really, they’re keeping all Americans in the dark, with no chance to protect themselves from the inevitable financial fallout. This, I find particularly reprehensive and utterly unconscionable.

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