Debts and Deficits lead to Currency Downfall


The common denominator that led to the downfall of past currencies was Debts and Deficits.

Most Americans don’t believe the U.S. dollar will collapse.

With that in mind, here are a few thoughts from a recent article from the Market Oracle,

Morgan Stanley reported in 2009 that there’s “no historical precedent” for an economy that exceeds a 250% debt-to-GDP ratio without experiencing some sort of financial crisis or high inflation.
The U.S. total debt now exceeds GDP by roughly 400%.

Investment legend Marc Faber reports that once a country’s payments on debt exceed 30% of tax revenue, the currency is “done for.” On the current path, analyst Michael Murphy projects that
the U.S. will hit that figure by October.

Peter Bernholz, the leading expert on hyperinflation, states unequivocally that “hyperinflation is caused by government budget deficits.”
This year’s U.S. budget deficit will end up being $1.5 trillion, an amount never before seen in history.

Since the Federal Reserve’s creation in 1913, the dollar has lost 95% of its purchasing power.
The U.S. government leaders clearly don’t know how – or don’t wish – to keep the currency strong.

Whether the dollar goes to zero or merely becomes a second-class currency in the global arena, the possibility of the greenback being added to the list of currencies devaluing to zero, increases every day. And this will lead to serious and painful consequences in our standard of living.

Think about it.

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One Response

  1. Beano 08/06/2011

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