When The Dollar Is No Longer A Reserve Currency

when-the-dollar-is-no-longer-the-world-reserve-currency

I believe the U.S. is in the midst of a major currency collapse, and a huge change in our normal way of life.

The following is a list of startling notes that I wrote, as well as statements credited to Stansberry Research while I watched a video related to their newsletter back in 2011.

The scary thing is… nothing has changed since I wrote this, and it has actually gotten much worse!

Please take the time to read this and comprehend what will happen when the dollar is no longer the world’s reserve currency…


 
One MSB reader recently commented…

“There are a number of financial counselors predicting the demise of the dollar as the world’s basis of currency exchange. It seems that a number of people are aware that China, Japan, Russia, France are making definite moves in that direction. Brazil and Argentina as well a Cuba are all in the same camp. When will Washington and Wall Street wake up?”

He is absolutely correct. It is well known to those who follow what is happening, that the dollar is on the way out of world reserve status. To answer his question… Washington and Wall Street will not wake up. They will ride this horse until it drops dead…

 

 
The government has been borrowing so much money, that soon, we will not be able to afford even the interest on the loans.

Income tax receipts are roughly $900 billion a year.
Corporate taxes are roughly $200 billion annually.
Our current annual deficits are nearly $1.3 trillion, meaning we’re spending $900 billion + $200 billion + $1.3 trillion = $2.4 trillion.

Even if you doubled tax revenue, we would still be running a deficit!

Even if all U.S. citizens were taxed 100% of their income, it would still not be enough to balance the Federal budget! Tax increases will not even make the smallest dent on the true size of our debt.

There is not a single credible plan, by any political party, to merely end our annual deficits, never mind actually paying back our debts.

 

 
Here’s the kicker… the costs of maintaining our debts are about to skyrocket.

For years, the Federal Reserve has been keeping interest rates very low, to almost zero, and as a result, the interest rate at which the U.S. government borrows money from the Federal Reserve is an incredibly low level. This won’t last forever.

How much interest? Right now we’re paying about 15% of federal tax receipts (about $200 billion a year). If the government had to spend a ‘real’ market-based rate of interest, say 6%, it would cost $840 billion a year on interest (76% of tax receipts), just for what we owe right now, today.

We are trapped. The main-stream-media does not want you to know how precarious our government’s finances really are.

 

 
A debt default would be inevitable if not for one anomaly, the thing that has saved the U.S. so far, that is, the country’s ability to simply print more money. The U.S. is the only debtor in the world who can legally print U.S. dollars, and the dollar is the world’s reserve currency.

So, that sounds pretty good, just print more money, what is there to worry about?

The U.S. is the only country in the world that doesn’t have to pay for its imports or its debts in a foreign currency.
Example: A German wants to buy oil from Saudi Arabia – the German cannot pay for the oil in German marks (or Euro’s) because the oil is priced in dollars. You have to buy dollars first, then buy your oil.

The U.S. has been able to consume as much as we want without worrying about acquiring the money to pay for it, because U.S. dollars are accepted everywhere around the world.

As our creditors continue to figure out what’s happening (printing more and more dollars), we’re going to have very BIG problems. The creditors will either begin to refuse payment in dollars, or they will greatly discount the value of these new dollars. It’s already happening.

 

 
Most Americans have no clue what the repercussions are of losing the status of world currency.

Yes it can happen here. In fact, the exchange value of the U.S. dollar has fallen about 13% since June 2010. Its rate of decline is accelerating.

As the U.S. dollar continues to lose it’s position as the world’s currency, gas, oil, and other commodities will continue to skyrocket. Almost everything we consume will immediately get more expensive. It’s happening right now. Everything is getting more expensive.

The government says that there is no inflation. How is that even possible? They actually believe that the American public is going to believe them?

It’s only going to get worse, because we can NOT stop printing because we can’t actually afford our existing debts. No one wants you to know this. No one. That’s why, despite the obvious inflation going on all around the world, the Fed continues to say there’s no inflation at all. The government is radically devaluing the dollar and totally lying to everyone about what is really happening.

 

 
The Chinese are getting out of the dollar as fast as they can via strategic commodities.

With less demand for the dollar around the globe, interest rates will skyrocket.

Instead of getting a mortgage at today’s low rates of 5%, it may soon cost you 8% or 10% or 15%.

Stock prices will likely plummet by at least 40% in a matter of weeks as a result of this event in the currency markets.

When the U.S. dollar loses its spot as the world’s reserve currency, the brutal downturn will be about 10-times worse than the mortgage crisis of 2008.

 

 
When everyone is trying to get rid of their dollars, the government is printing more and more to pay debts, the crisis will reach epic proportions.

In the past 100 years this type of debt crisis has reared its ugly head in Germany, Russia, Austria, Poland, Argentina, Brazil, Chile, the Ukraine, Japan, and China.

Here’s the thing that most people don’t realize… The U.S. government can only continue printing dollars as long as the dollar remains the world’s reserve currency.

Reported by Robert Fisk (veteran Middle East reporter), last fall, China, Japan, Russia, and France got together for a secret meeting… without the U.S. being present or even knowing about the meeting. It was reported that Gulf Arabs are plotting to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese Yen, Chinese yuan, the euro, gold, and a new unified currency planned for nations in the Gulf including Saudi Arabia, Abu Dhabi, Kuwait, and Qatar.

In February (2011), the IMF has proposed replacing the U.S. dollar with something called ‘Special Drawing Rights’, or SDRs. SDRs will be able to be converted into any currency, based on a weighted basket of international currencies.

The IMF also proposed creating SDR-denominated bonds, which could reduce central banks’ dependence on U.S. Treasuries. They also suggested that certain assets, such as oil and gold, which are traded in U.S. dollars, could be priced using SDRs. (This is a HUGE step to replace the U.S. dollar as the world’s reserve currency)

Russian and China have made an agreement to settle all debts between them in each others currencies without first transferring to dollars.

 

 
The U.S. dollar has remained the world’s reserve currency for more than 50 years. It seems as though its days are numbered. Don’t remain in denial.

 

 
Be Prepared:

Start to consider what will happen around you when this currency crisis unfolds.

Plan to have six months of food, medical supplies, and access to water.

Have a place you can go to if you need to get out due to rioting or unrest.

Do not count on the government to save you if all he$$ breaks loose. The government will be too concerned about saving itself.

Examine where your current assets or investments are.

Consider investing or purchasing hard assets, or food , private land.

Learn how to garden some of your own food.

Examine your security and add where it needs adding.

The more self sufficient that you can become, the better you will get through the crisis.

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38 Comments

  1. And the Prez keeps on taking vacations while he still can.Too much government giveaways,too much government waste,The Prez wanting to tear this country apart and make it a third world leftist socialist state so the NWO,and the UN can take us over.When this happens the citizens will bring about the 2nd Revolution,many will be killed on both sides but the citizens will not give in to Boobama’s plans.Be prepared and ready.Keep your powder dry.

    1. it’s not just the prez and it’s not just the dems brother. it’s all the carpetbeggers in Washington who are bought by the corporations.they’re just concerned about themselves. and we’re the foo;s who vote them in!

  2. I BECAME A PREPPER AFTER WATCHING THE SAME STANSBERRY VIDEO! That is what convinced me that we are on the verge of economic collapse. That is when I began buying “beans, bullets & band-aids”. Well, I am glad that I am not alone!

  3. wow
    Read “One Second After” or watch “Jerico”. Look at what is going on around you. People will kill for food. Those without it as well as those with it.

    1. Is funny to read comments about a 2nd revolution… Like the American people are somehow going to take on the US military and expect to win… LOL! I hate whats going on but there isnt going to be a revolt against our military… if there is it will be one short war. LMAO. our military is highly trained and equipped far beyond even 100 million americans with AR 15’s

      so You might wanna rethink any plans to take on the US military… I cant help but laugh when I read that sh@t! Sorry but it is a cold hard fact. Save your ammo for looters!

      1. You forget that many in the public are Veterans and have family in the US Military. I seriously doubt they will full blown attack American civilians. There will be incidents but trust me the US Military isnt a robot and they are starting to talk among them selves about these issues.

      2. laugh you a$$ off if you want, but how many of those military men and their families will fight against their own people if they aren’t getting paid either.
        I don’t disagree with any particular point in the article, but timing is everything, and most people can’t get the timing right. They know it will happen, they just have no idea when. too many nuts on these forums who think they know it all.
        When it happens, it’ll likely be a slow, painful decay.

      3. A person who has been in the military for over 12 years and have fought for the liberties of all citizens of America many times overseas. Can reply with the truth of saying you are not right on that subject. Also, talking of a economic shutdown with peers in the military. We all agree that no government is going to make “US” the soldiers or personnel to revolt against the very thing we give our lives to protect. All who watch too much TV have this idea that we would do such a thing.

    2. John, thanks I’ll look at it. Its a work of fiction thou. I understand the issues that may happen if we lose a supply chain, get hit by and EMP or other SHTF incident. Problem is, we prep for all reasons.

      I however am not going to be a participant (unless it comes to my door, city or other close thing) in any armed insurrection. I unlike many of the clowns around here have seen that and what it leads too. Its not pretty and you don’t just stop and say…oh things are all better now.

      1. to reco… I am aware that many US citizens are vets. But Andy made a call to start the 2nd revolution. If Americans started a war the US military certainly would use full force to stop it. You might wanna re read his post. If you think for one second all the vets in the US can stand up to a much better equipped US military with fighter planes you are crazy. and to the person who says we change things with our votes… well that might be funnier than saying we should revolt. haven’t you heard… Presidents are selected… not elected. Our votes don’t count for sh@t. In my town we voted to remodel a local grade school rather than tear it down and build new. well the county didn’t like us voting down the building of a new school so they said screw you voters and built the new school any way. and this is how it works with federal state and local government. they dont care what we want. we are being taxed without representation. and you can argue all you want that we elected these bumbs but as long as we have a two party system we are not electing anyone. these people are selected. and on the biggest most important issues they are the same part. on some issues they differ and thats what they want you to focus on. not the important issues that are destroying the freedoms and future of the United Sates of America.

        People Wake up!

        1. Our “highly equipped” military with their armor, air power, and drones have been fighting less than 50,000 in Afghanistan for 12+ years and are in control of how much of that small country? And most of that area is desert and most of the fighters have pre WWI bolt action rifles and no armor or air power. Even if 1% of americans (3 million+) took up arms to fight they could fight the whole of the military,national guard,TSA,all Leo and girl scouts for decades. But if you are so sure you would lose in a fight…why don’t you give up now and avoid the rush, And quit trying to convince the rest of us how hopeless it would be and is to go against the government.

        2. @sandshreder Sure the US military is a force to be reckoned with. No one said it would be a stand up fight. Not all US Mil personal are robots there will be many Commanders and Enlisted that will question the mission, they aren’t stupid.

          Dark times ahead guys ….sigh

          1. comparing the US citizens with the Afghanistan so called military is a joke. you think American citizens are going to run and hide in caves in some desert. its not at all the same thing. Most of us able to fight have children. most of us wont want to watch them get blasted by tanks. and shot up with armor piercing bullets. but go ahead with your 2nd revolution. Good luck. your gonna need it! apparently you forgot how quickly the US dismantled the Iraqi Army the 4th largest military in the world at the time.

            there is no war in Afghanistan. its an occupation. we are not fighting a war there. if we were we would have won already. So dont act like im the Idiot when you dont even know whats going on around the world… calling what were doing in Afghanistan a war is laughable!

          2. you are an idiot. to much sand in your head. arm forces will not take on the people, they will join the people.

          3. You can not assume one way or another. Yes there will be some following the orders they are given. Our military is no longer the home to mostly prestigious and proud people where service is apart of the family. Our army serves as more of a catchall nowadays. There are still some that see it is noble to join and defend our rights, these people will probably join us because that is why they joined, they have family they want to protect. But there is also the other side, where it is people who aren’t going to college, or don’t have a career path. Or might of been forced to join, and people who have a glorified vision of war displayed by games like CoD and battlefield. These are more likely to stay with the gov’t for money and rank.

  4. This Is a tricky situation because so many governments outside the US have so much American currency already AND U.S. debt… On the one hand they want out of dollars and want a different reserve currency, but they also dont want to take a bath on what they have… but the end is coming… just how long will it be? this is one of those things to keep an eye on… as well as the derivative situation…

  5. I guess that some people have there heads in the sand and cannot see what is going on around us here in this used to be USA,look at the scandals that are coming out of DC almost constantly,NSA listening to phone calls,recording our e-mails,DHS providing military hardware to local police departments,the list goes on.Ya’ll can laugh all you want but better to be prepared than not have anything to save your sorry ass.As for fighting against repression by our government,we do have fore fathers that told us what we should do when what is happening by our government starts to happen,tyranny will just keep going until we stand up against it.As for the military if the economy goes belly up,most of them will head home to take care of their own families.Plus over the course of history guerrilla warfare has brought down standing governments,I believe that it happened to us a few years ago while we were helping another country.Back before the gun bill came up before the Senate a Sheriff from Milwaukee,Wisconsin,Sheriff Clarke stated that if the gun bill happened to pass that it would probably start a 2nd revolution,I take what this professional lawman has to say with a lot more credence than some of you folks that just want to roll over and let the government shove it to you.Wise up and research what is going on before you embarrass yourself by talking out of turn about what you seem to know nothing about!Be prepared and ready.Keep your powder dry.

    1. to Andy.. Just because I don’t believe Americans can succeed in a 2nd revolution doesn’t mean my head is buried in the sand. I just think you personally will be one of the first to be arrested and put in a fema camp… Im sure they already know who you are after your posts. Along with any one else who thinks they are going to revolt. as for military leaving to take care of their families?… why would they leave a job that still pays them when every one else is unemployed. BUT you got it all figured out… keep your powder dry… LOL

  6. What used to be the USA? Words of a true patriot. One of the greatest things about this country, is you are free to leave any time you want. <—notice space after punctuation.

    Typical ad hominum inferences based on nothing substantial to say. Since the "scandals" have been happening for about 13 years were you so worked up when a R was doing them? Were you so worked up when Habeas Corpus was suspended or on the implementation of the patriot act?

    Stand up for what? Do you seriously think a few shots are fired, love songs are sang and everything is fine once you get your way? Look I'm all in favor of protection of OUR(maybe not yours you don't like it here) constitution. Problem is you are picking and choosing what to "stand up for".

    The embarrassing part is you telling others to wise up because a LEO stated a 2nd Rev. was going to start. Plenty of other PROFESSIONAL LEO's have said the opposite, too bad WMD, Dredge and Jones don't give their base the full story, they are more interested in funding their rhetoric and getting the ignorant bases all fired up.

    Do I think everything is fine? Hell NO! I think we are teetering on the edge, things are scary. Why would I be reading a survival blog if I did? However, people like you Andy scare me more than anything, you seem to think you need to take "the will of the people" into your own hands. Last I checked we are a constitutional republic and more than guns, you change things with votes. Keep that in mind why you are sitting on your dry power to hatch like an Easter egg.

  7. Sorry for the spam. I won’t post on this issue or argue any longer after this post even for the Blog’s author:

    Our economy will last longer than most realize; its backed by 2 things unmentioned (or maybe they were and I don’t remember)America’s military might and the oil dollar.

    Looking at interest rates coming due, CPI changes,FED’s QE and money printing and many other factor, you are looking at 10 to 15 years.

    1. It really is sad that your head is soo deep in a sand and that you still believe that guvernment will come in and save you. They are not there to protect you, they are pushing to destroy all the beliefs that go along with what your Founding Fathers had created together for the sake of the people. Your government is no longer government of the people and hasn’t been since John F. Kennedy. Instead of assuming that things will work out, question and re search everything and see if the guvernment propaganda reflects the truth, not by watchig news, news is paid for by them. Until you get your head out of the sand, you will have a very hard time dealing with the situation of dollar collapse which is inevitable and if you researched you would know that its the way of the world. Wake up, the world has changed, there is no going back. And believe me where there is shortage of food and water, and the money you have has no value, nothing is right in the world and people do things they would never do otherwise. They are proposing Martial Law in U.S. and already started enforcing it. Do you seriously think that will lead to peace? There is no turning back… Get through denial and acceptance as soon as you can, time is running out.. Wish you all the best

    2. Hey Ron, I believe there is a lot of testing of the waters going on here. Feeling divided as a nation is not a very secure feeling. There seem to be some folks that are testing out their opinions to see where everyone else stands.
      Cool heads always prevail, if they survive the initial chaos.

  8. My two cents: I tend to agree with WOW. I’m also certain most readers here agree that economic collapse is only one of several reasons I prep. I also will not take part in armed conflict against our own people unless some far out, on my doorstep type of event.

  9. Hmmmmmm…….lots of emotion on this one….

    What I see going on is unmistakable, it is the militarization of the police, a government that is so paranoid of her citizens that it finds a need to collect every single piece of communication it possibly can on every single citizen, it then buys BILLIONS upon BILLIONS of rounds of ammunition, much of which is banned for warfare by the Geneva Convention, and puts the finishing touches on the largest domestic security forces on the planet [DHS].

    This is not fantasy or conspiracy, it is absolutely real time. We are sliding down the icy slope of relevance in to obscurity right now, and when we near the bottom, when our money has become the joke they seem hell bent upon making it, and when we can no longer afford to be the policeman to the world, it will come apart at the seams. What happens then will determine our direction, but history has shown in similar situations that it likely will not be pretty, and will most likely involve complete loss of liberty and a devolution in to a dictatorship of some sort or a police state.

    There are many who refuse to believe that can happen here; I am not such a person. You may agree or disagree with me, but we are still going to experience a dark and terrible time, whether we want to or not. We may indeed [for the time being] have the largest and most formidable army on the planet, but that army is dependent upon oil, which while currently priced in dollars, may not be so for long.

    All the government doublespeak in the world cannot hide the uncomfortable fact that we are broke, with no hope of ever repaying the money we bave beggared from our friends.

    1. I agree with you,this is a lot of what I believe also along with other statements I have made.Be prepared and ready.Keep your powder dry.

  10. @wow,
    “Those who hammer their guns into plows will plow for those who do not”.
    (Thomas Jefferson)

  11. What good will dry powder do when your Butt is in a fema camp? Andy? why dont you do a little more advertising to the gov about your 2nd revolution… I bet you are top of their list to be arrested when they declare marshal law… you’re a genius!

  12. Ignoring you is the best I can do.At least I still voice my truthful opinion and be damned the consequences,as you stand back and piss your pants,over what the government might do to you if you exercise your First Amendment Right,which I recall is still in effect.Be prepared and ready.Keep your powder dry.

    1. Also someone explain to me why The Prez had all of the higher up folks in the banking sector to a meeting,on Thursday.Is something about to break lose?Anybody got any info?Be prepared and ready.Keep your powder dry.

  13. I think this is taking things a little too far to the extreme for a couple of reasons, all of which are based on very simple macroeconomic principles.

    1) If the Chinese et al want to do this they are going to have to kiss their exports to the world’s largest market goodbye. Exports in most of these countries are significant components of their GDP. China in specific fuels their growth with them.

    2) Lets just assume the dollar weakens substantially as a result. Yes, prices on imports will go up, but that also means that American manufacturing will begin to appear cheaper to the rest of the world. Production firms will begin moving back to the United States with their employment. This will exert upward pressure on GDP. Small business is the group that really suffers from cheap competition from China.

    3) You say that the US dollar has been the reserve currency for 50 years. The US experienced roughly equivalent decadal GDP per capita growth rates since the 1870s. If the dollar as the reserve currency of the world is so essential, why did this happen? http://socialdemocracy21stcentury.blogspot.com/2012/09/us-real-per-capita-gdp-from-18702001.html

    4) and lastly, the trade imbalance with China is GROWING, not slowing down. Which means the Chinese are importing more dollars than ever before. If the Chinese really thought that the US was no longer worth trading with, this would not be the case. The US dollar wasn’t like declared to be the world reserve currency. It was made that way by other countries all wanting to sell more goods in the US than they imported from it.

  14. I have been looking over the comments and on both sides I see merit. I served as a commisioned officer for 13 years and my trust for the government is nil to none. I am preparing for the worst and hoping for the best but I do know that the same people that fought the bloodiest war we have yet to eclipse our own civil war could happen again. A basic tenet of modern warfare that we continue through our elected leaders to try to avoid is that ” An organized, uniformed military will not be able to defeat a determined insurgent force that is willing to die for its cause no matter what the cost”. I knew we would leave the middle east with our tail tucked. So, back to the US, if tyranny continues to heat up an uprising will ensue how successful will depend on how harshly the government forces respond. If scorched earth kill it if it moves then the civilian insurgents will be exterminated. If not and the Patriots fight guerilla style, an ugly war of attrition will be the order of the day. I pray not, I spoke to a special ops young soldier recently and there are studies going on to see how many soldiers would follow orders on an insurrection on the mainland. His response was that 60 percent would refuse to fire on civilians, 40 percent would follow orders. For what it is worth, the main point that was brought up was the fact that our family would be jeopardized and that is the biggest worry with old farts like me to stand down if our basic rights are aggressively threatened. Please do not respond hatefully, we are all on this blog because of concern and we are trying to get answers.

  15. I was born 1964. Ever since then the sky has been falling. I’m not saying that something really bad won’t or can’t happen. But after reaching 50 years of age my financial well being has exceeded that of my parents when they were 50.So until the sky hits the ground it will be the cry wolf syndrome for me.

  16. Come on people really. We the people are in control. We make the goods to sell plus we consume the goods are, an foreign. We made the government so we control the government. They wear suit an ties an never had dirt under their nails. So if every working man an woman in the US would stay home an not go to our jobs for two weeks an didn’t go buy no goods total shut down for two weeks the nation would go under. 2 weeks total shut down. Who has the balls? I do. Learn to grow your own crops for a change. Ha city slickers become buzzard food. Trade with PM or goods you made or grown yourself or hand labor. Conduct Cowboy Business. Shake of an hand or the catch of a bullet. Your choice. US military is no threat to us its NATO that will come kill your ass. The dollar is steadly loosing world faith. China excepts USD then trades it for gold or other materials from other countries in the world. China is now buying debt in the Euro Zone not the US. I’m sorry none of you people apparently never studied the monetary system nor economics. Just hang in their the Bush’s administration has a plan an its still in play for the US to become debt free. Now if it don’t work oh well the weak will die like the Jews and the tough will die slinging lead an fighting for what they built. Your Choice… An don’t worry about it to much we will spray an extra thick chemtrail over your area if you people act foolish.

  17. Oh yea an don’t forget “Don’t shoot till you see the whites of their eyes.” Ha Ha Ha I’m a hell of a better shot than that!!

  18. If we default on the debt and simply pay our other obligations, the US can survive without imports. Few other nations have that ability.

  19. The United States has been at war almost continually since 1776. In the past 236 years we have been fighting some type of conflict for 214 years or about 90% of the time…and the deficit is..??????????????????

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