Right now, we export a lot of our inflation. Each year, we purchase far more in the rest of the world than they buy from us, and so the rest of the globe ends up with giant piles of U.S. dollars. This functions out fairly nicely for them, because the U.S. dollar will be the primary reserve currency of the world and is utilized in international trade far more than any other currency is. Back in 1999, the percentage of foreign exchange reserves in U.S. dollars peaked at 71 %, and since then it has slid back to 62.2 percent. But that is nonetheless an overwhelming amount. We can print, borrow and spend like crazy because the rest of the globe is there to soak up our excess dollars because they need them to trade with one another. But what will happen someday when the rest of the world decides to reject the U.S. dollar?
At that point we would see a tsunami of U.S. dollars come flooding back to this country. Just take a moment and believe of the worst super storm that you can possibly imagine, and then replace each and every drop of rain having a dollar bill. The giant currency super storm that will eventually hit this nation will be far worse than that.
Most Americans don't understand that you will find far more dollars in use in the rest of the world than in the United States itself.
The dollar is a significant form of money currency all over the world. The majority of dollar banknotes are estimated to be held outside the US. More than 70% of hundred-dollar notes and almost 60% of twenty- and fifty-dollar notes are held abroad, while two-thirds of all US banknotes have been in circulation outdoors the country since 1990. For decades we have been exporting gigantic quantities of our currency. Rare Coins, Silver Coins, Gold Coins >> http://www.silver-
So what would happen if that procedure suddenly reversed and massive piles of dollars started coming back in to the country? It's frightening to consider. Well, I guess the key would be to get the rest of the world to continue to have self-confidence in the U.S. dollar so that will never happen, right? Sadly, there are lots of signs that the rest of the globe is accelerating their move away in the U.S. dollar.
Will this movement soon turn out to be a stampede away from the U.S. dollar? That is a very essential question. But you don't hear anything about this in the U.S. media and our politicians aren't speaking about this at all. Meanwhile, our "leaders" seem to become doing every thing that they are able to destroy self-confidence in the U.S. dollar. The Federal Reserve is printing money like there is no tomorrow, and also the federal government continues to run up trillion-dollar deficits year following year. They don't appear to understand that they're systematically destroying the U.S. monetary system.
Other globe leaders get it. For example, Russian President Vladimir Putin once said the following...
"Unreasonable expansion of the spending budget deficit, accumulation of the national debt - are as destructive as an adventurous stock market game. During the time of the Soviet Union the function of the state in economic climate was made absolute, which eventually lead to the total non-competitiveness of the economic climate. That lesson cost us very dearly. I'm sure no one would want history to repeat itself.”
Why cannot the majority of our politicians see how destructive debt is? What the federal government continues to do is completely insane. The national debt increased by more than 24 billion dollars on the day following Thanksgiving this year. But utter disaster has not struck however, and most Americans are not truly that concerned about the debt. So items just keep rolling along.
And obviously our national debt of $16,309,738,056,362.44 is nothing when compared to the future liabilities that our federal government is facing. Just check out what a current article in the Wall Street Journal had to say about all this. The actual liabilities of the federal government-including Social Security, Medicare, and federal employees' future retirement benefits-already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued cost of Medicare and Social Safety was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.
Other economists paint an even gloomier picture. Based on economist Niall Ferguson, the U.S. government is facing future unfunded liabilities of 238 trillion dollars. So exactly where are we going to get all that money? Nicely, why don't we just print more money than ever prior to so that the U.S. government can borrow and spend more cash than ever before? Don't laugh. That is really what some of the top economists in the country are really recommending.
The most famous economic journalist in the entire nation, Paul Krugman of the New York Times, is boldly proclaiming that the solution to all of our problems is to print, borrow and spend a lot more cash. He insists that there is no reason to worry that the giant mountain of debt that we're accumulating will someday collapse the method.
For we have our personal currency - and almost all of our debt, both personal and public, is denominated in dollars. So our government, unlike the Greek government, literally can’t run out of money. Following all, it could print the stuff. So there’s nearly no danger that America will default on its debt - I’d say no danger at all if it weren’t for the possibility that Republicans would as soon as again try to hold the nation hostage over the debt ceiling.
But when the U.S. government prints cash to pay its bills, will not that lead to inflation? No, not if the economy continues to be depressed.
Now, it’s true that investors may start to expect greater inflation some years down the road. They may also push down the worth of the dollar. Each of these items, however, would actually help rather than hurt the U.S. economic climate right now: expected inflation would discourage corporations and families from sitting on money, while a weaker dollar would make our exports more competitive. Of course what he is prescribing is complete and utter madness.
Sooner or later this con game is going to collapse and the rest of the world is going to say a large, fat, resounding "NO" to the U.S. dollar. Why should they continue to make use of a currency that's becoming extremely unstable and that is constantly being manipulated?
In addition, if the rest of the world is not utilizing the U.S. dollar for trade any longer, other nations will cease to soak up our excess currency and massive mountains of our currency that are floating about available will start flooding back to our shores.
At that point we will be taking a look at inflation in contrast to anything we have ever seen prior to. The era of cheap imports will probably be over and we'll pay far more for everything from oil to the foreign-made plastic trinkets that we buy at Wal-Mart.
Most Americans do not even know what a "reserve currency" is, but once the U.S. dollar loses reserve currency status it is going to unleash a nightmare that most economists cannot even envision.
So appreciate this holiday season while you are able to. There are nonetheless lots and plenty of inexpensive imports filling the shelves of our stores. As soon as the coming giant currency super storm strikes, we will dearly want for the great old days of 2012.
Yes, the U.S. dollar is alive and ticking for now. But in the pace that our authorities are abusing it, I'd not say that things are looking so great for a long and healthy lifespan. How High Will Silver Go? Learn More >> http://silver-