If USD collapses

[JBmurc]

discussion on how to replace the dollar as the world's primary reserve currency

http://rs6.net/tn.jsp?et=11025144728...-OhZEIliWLYo4=

[airedale]

Alexei Kudrin suggested that it could take 20 years to establish a new reserve currency. Strewth.....what is gold going to do in the meantime

[peat]

from the link posted by JB Murc

"The source said the Chinese paper envisaged the International Monetary Fund's Special Drawing Rights (SDRs) being first assigned a role of a clearing currency on some transactions and then gradually becoming the main global reserve currency. "They said that the role of reserve currency should be given to SDR," the source said"


I did a bit of reading on the SDR over the weekend. Its just redeemable to a basket of other (paper) currencies so its like an abstracted fiat. Pretty pointless exercise imo but hey if I can trade it ;+)
While i was there I looked at their books too (quite bad really) tho the IMF does have a bit of gold stashed away which it wants to sell actually.
So I cant see the point
But the point is that everyone esp the Chinese is genuninely and vocally starting to get the wind up with the good ole Yankee dollar.

Really enjoyed the Martin Armstrong read too thanks Craig - tho perhaps a tad too much ancient history. He;s incredibly bullish on gold - not necesarily in the short term but his medium - long term targets are or more like if you own gold. A break above 1200 he says would generate a Phase Transition type move to 2500, and 5000 is 'entirely possible'. Very interested in those specific dates and months he talks about this year too such as April 19th for a support level and then another high in September. Lets see!

Oh and lol at suburbium

[Aussie]

A good source of Martin Armstrong downloads . . .

http://www.scribd.com/people/documents/10432015-kris

[JBmurc]

There are several analysts who also see what's about to happen:

"The perfect storm is ahead for massive inflation to begin in the second half of 2009... hyperinflation during the next decade is becoming less the worst case scenario and more the most likely scenario."
The National Inflation Association

"I do not want to own any US dollars. Also, I would not urge you to buy US dollars. (The) dollar is going to lose its status as world reserve currency."
Legendary investor Jim Rogers

"Throwing money at the problem and propping up the greedy banks that created the speculation is like trying to put out a fire by pouring gasoline on it. The result will be an even bigger, more searing fire."
Jim Walker, Asianomics

"If the stock market recovers in the second half of 2009 - ahead of an economic recovery - the rise in share prices in a low interest-rate environment could spark hyperinflation."
Currency expert Wayne McDonell

"...the stimulus programs will only prolong and worsen the credit excesses, and that the massive deficits and reckless expansion of the money supply will unleash hyperinflation, a more painful and socially dangerous threat. Think of Germany's hyperinflation experience in the 1920s or more recently of Brazil's or Zimbabwe's."
Barton Biggs in Newsweek

And I particularly like this warning from respected economist Walter Williams...

"The US economy is in an intensifying inflationary recession that eventually will evolve into a hyperinflationary great depression. Hyperinflation could be experienced as early as 2010, if not before... The US government and Federal Reserve already have committed the system to this course through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, and gross mismanagement."

[Aussie]

Good stuff JBmurc!

Here's the latest from Bill Holter at Lemetropole Cafe . . .

Zero

To all;

Profit taking? That's what we are being told today is all about in the stock market. Technically, the MACD lines are about to crossover to the downside as a result of two weeks or more of sluggish momentum. Fundamentally, (you know, the real meat and potatoes of investing) could not be worse on a global basis for equity investing. As I mentioned last week, I smell smoke billowing from the back rooms of financial institutions. What has happened, (and been happening for at least 10 years) is that the government has meddled in the markets for so long and to such a degree that the "gears" if you will, are no longer aligned properly nor even running in the same directions.

What they have done, has been to run around putting out fires and managing perceptions without ever considering the longer term consequences. The beauty of capitalism is (was) that it is a "self correcting system", if you make a bad investment, you lose. You go out of business and learn a lesson. Capital will always seek the undervalued and exit the overcrowded, this is the most basic tenet of a free market. When you artificially entice, prod, or even (GOD FORBID!) manipulate markets, you create "mal investment" that shouldn't (wouldn't) normally exist. Investing is always "weighed" or tempered with risk in mind. RISK, is what the world forgot to factor in while "things were good".

In my opinion, risk was masked, hidden, and delayed by the Fed , Treasury, and the administrations in general since 1988 when Pres. Reagan formed the "Working Group on Financial Markets" otherwise known as the Plunge Protection Team. Since the 1987, the U.S. economy has been forbidden from having a real recession that would have cleaned out bad debt and mal investments. Instead, the bad debt was allowed to pile up like a garbage dump that finally reached its boundaries. We could have avoided the current situation had the 1991, 1997, or 2001 recessions been allowed to run a natural course, they were not and now the Piper will get paid no matter what the government wants.

Had markets been left alone to reward the smart and kill the ill informed and ignorant, 2003-2007 could never have happened. After the tech bubble blew up, the Fed HAD to have another debt bubble because they feared the current outcome (debt contraction). The current situation has been postponed for so long and to such an extent that the problem is now far, far, bigger than the Treasury, Fed, and all other world Central banks and Treasuries combined by a factor of at least 10. I know you have heard me say this before but, had the price of Gold been allowed to move freely and not been suppressed all these years, the alarms would have sounded as far back as 1996 about the over issuance of money and credit.

As stated many times before, we will have a new currency, probably very soon. This will amount to a devaluation of all fiat paper versus real goods. All the lies, manipulations, managed perceptions and expectations will be accounted for in one fell swoop. The scales will be balanced, and assets, liabilities, production, consumption, and yes, even money, will all be completely revalued to reflect "the new reality". Once the creators of fiat lose their "power" to obfuscate values, reality will return. I believe that every human being that has used fiat currency will be shocked to some extent as to where some of these new values level out at.

We have heard all sorts of projected numbers for the future "Dollar" price of Gold, Sinclair $1,650, Bill Murphy $3,000-$5,000, Alf Fields $6,000-$10,000. If we are going down the road of fiat destruction as I think we are, ANY Dollar price will make no sense whatsoever. Just look at Zimbabwe, $10 billion for a loaf of bread, what does an ounce of Gold cost, $10 trillion? The point is, the "Fiat masters" are losing the system and we are watching it first hand. If I had any cash left, I would surely invest in a "Zero factory" since 0's will be the most commonly used number in all of history (can you imagine the demand?). Think about it, multiple 0's will follow a number for the price of all sorts of common goods and a single, lonely 0 will be used for what once had been the foundation of society, PAPER. I know this sounds a little off the wall, but what value do you put on a currency when it is no longer accepted? Yes, that's right ZERO!

Regards, Bill H.

[Aussie]

And now the "REAL" Stress Test!

To all:

The much touted "stress test" of the U.S. banking system is nothing but a PR sham and in reality, completely meaningless. The "worst case scenario used is a 3+% drop in GDP, and a 10% unemployment rate. If real GDP and unemployment numbers were ever offered up, my guess is that we already have had a minimum 5% contraction in GDP and true unemployment is approaching 13-15%. The stress test only addresses "tier one capital", my question is this, what about all the "off balance sheet" crapola that surely renders these reckless banks insolvent? No, really, I WANT TO KNOW! By trying to control and manipulate ALL markets, these banks have taken $ trillions upon $ trillions worth of fraudulent transactions on (and according to their accounting, off) their books. They are walking corpses that cannot be saved.

On books, off books, what is this crap!? If you enter into a transaction, is it not still a transaction whether you "account" for it or not? Are you not responsible to perform on the contract, no matter how you account for it? I did business my entire life on a handshake, I never had "off balance sheet" business because A DEAL IS A DEAL. Period. Even if it was a bad deal, it was still a deal and I would learn a lesson but still perform.

The "originator", the biggest abuser, the teacher if you will, for off balance sheet shenanigans, IS the U.S. government. They have used fraudulent accounting for nearly 50 years. The have used a fraudulent currency for nearly 40 years, invoking the "never pay" model. And now they are providing a stress test for the banks? How quaint, how brazen of them. I believe that the biggest stress test of all time will be imposed on the U.S. Treasury and Federal Reserve very soon by Mother Nature (the markets). The Dollar has completed it's short covering rally, it has made no headway since last November. The Treasury market has retraced all of it's gains since the "quantitative easing" announced by the Fed in mid March. The 10 year has moved up from sub 2.5% to an even 3% in the span of 6 weeks, a move higher from here should accelerate this move. The equity market is at a moment of truth, in that it's momentum has also stalled but it must continue higher in order to "prove" all the talk of "green shoots" and to spur consumer spending and confidence.

Should ANY of these markets fail, the jig will be up for the other 2. Should the Dollar collapse, it will spur Treasury selling and thus higher interest rates. Should Treasuries collapse, the laughable "bottom" in real estate will be proven to be false, and thus will spur further negative sentiment and consumer retrenchment. Should stocks collapse, well, you will have pension shortfalls, even more consumer retrenchment, in short, a "depressionary environment". But here is the "big enchilada", it is the government who will be most harshly affected by this market imposed stress test. Uncle Sam cannot afford higher rates, the debt service alone will kill him. He cannot afford a lower exchange rate currency because this will spook foreigners into a "bank run", nor can he afford a lower equity market as that will expose the invalid "stimulus plans" and spook the entire world.

The current "remedies" virtually guarantee a lower Dollar and higher interest rates, the correct remedies (necessary almost 10 years ago) will result in the same, a collapsed currency and a debt market with few bids. In short, this credit contraction is now becoming a self fulfilling prophecy. Tax revenue is imploding while at the same time they decided to spend like drunken sailors. This is rapidly becoming a sovereign bankruptcy that will spread faster than swine flu. Upon further thought, the real stress test will be how we, as individuals and family units, cope with the conditions thrust upon us. The past rewarded those who were blatantly reckless, now, even those who were prudent and played by the rules will get swept away by this perfect, man made storm. Only those that understand the difference between real money and fake fiat will stand a chance to survive and thrive as the paper promises get swept away. Quite stressful to say the least.

Regards, Bill H.

[Aussie]

The "never pay" model.

To all;

6 weeks ago the Federal Reserve promised us a huge dose of monetizing Treasury debt. This was done to "pressure" interest rates downward in the hopes of helping the real estate market. It worked, for about 1 month. Now rates are starting to creep higher than they were when the Fed made this announcement. I believe they will soon skyrocket.

This plan to monetize debt was not a "pro active" move, it was reactive to the fact that the Treasury needs to borrow more capital than is, or can be, provided by the free market. I view this action as an exclamation point to the "never pay" model used by both the Fed and Treasury. You see, they never, ever, planned to pay or settle for anything they purchased. The purchases were made with pieces of paper, "promises to pay", but never settled. The Treasury promises to pay you with more pieces of paper when they borrow "with interest". The Fed promises us, they will provide more "promises", (pieces of paper) if they deem there is not enough floating around.

The bottom line is that the entire financial system worldwide has become one of "fraudulent finance" because it is based on a system that truly promises never to REALLY pay. The Dollar WAS accepted because it was redeemable in Gold, then in 1971, that tie was cut. In the early '70's, Henry Kissinger came up with the great idea to get the Arabs to price oil in, and accept for it's purchase, ONLY Dollars. This created a huge demand for Dollars that prolonged the Dollar's supremacy.

Now, the Arabs, Asians, Russians, Brazilians, etc., are all wising up at the same time, they now are wondering why they send real products and goods to the U.S. while accepting unbacked pieces of paper in return. This is the end of an era for sure. This is the end of the biggest con job ever promulgated or accepted in history. This was the plan ever since 1971, send paper for real goods and thus NEVER REALLY PAY. Because the fraud was so widely accepted on a such global basis, everyone worldwide is, and will pay dearly for the foolishness. Make no mistake, the plan was originally started with the idea, no, the goal, of never ever paying.

If you understand this concept, you have only one alternative, OPT OUT! Opt out of the failing paper system and store your wealth in metal. It is clear that Gold and Silver are horribly and completely manipulated as far as price is concerned. Anyone who believes this, or worse yet, speaks or writes of this, is branded a conspiracy nut. No matter, if you know the truth, you can protect yourselves and families once the lie is finally exposed. Gold's price has been suppressed for years and the Dollar has been supported and propped up, why you ask? Because the "ownership" of the free printing press is a very valuable asset as long as the public, the world, can be fooled into assessing value to something that has none. Something for nothing in other words, or the "never pay" model. THIS is why they want you to believe Dollar=good, Gold =bad.

Don't be fooled no matter what they do to the price of Gold, once the fiat grip is broken, those who have metal will have all the marbles. It makes no difference whether Gold goes "up" or "down" 100's or 1,000's of Dollars, in the end, as the Dollar approaches zero, Gold, coffee, oil, gas, rice, you name it, will approach infinity in Dollar terms. This is the definition of hyper inflation. We will never again in our lifetimes witness a pure unbacked fiat currency. The bad memories will take generations to go away, we will all be long gone before another fraud like this one can be hatched.

Regards, Bill H.

[JBmurc]

I think the title of the thread should be When the USD collapses ,not If

A new international commondity backed currency will be the major cause of this I believe

[Aussie]

I think the title of the thread should be When the USD collapses ,not If

A new international commondity backed currency will be the major cause of this I believe

I think you are right JB . . . It will be interesting to see how all this affects the NZD. I guess it depends if it's an orderly or disorderly decline in the USD.

Looks like it's going to be either rising interest rates or a lower dollar. Considering how many untold $ Trillions of dollars in interest rate derivatives are held by JP Morgan, Goldman etc. . . . the dollar will be thrown under the bus.

Got Gold?


The Most Dangerous Trend Today

On US markets, the most “dangerous trend” is certainly the inexorable RISE in longer-term US Treasury yields. In fact, the other three “critical markets” - the Dow, the $US Gold price and the USDX - have essentially being going sideways for the past month. If yields at the long end of the Treasury debt market continue to rise, that sideways action on the other three critical US markets cannot be maintained.

Given the amount of debt which the US government is openly planning to pile on this year and next, the upward pressure on Treasury yields must continue to grow. The more debt, the less credit worthy the debtor. The more the Fed “monetises” this debt, the less viable the currency in which the debt is denominated. Both of these factors are present in all MARKET rates of interest. The Fed cannot control the market for US Treasury debt because so much of it is held OUTSIDE the US.

Rising Treasury yields are always deadly to stock markets simply because they increase the cost of doing any type of viable business. They are also a huge threat to the US Dollar because they reflect a growing concern over the ability of the Treasury to service and repay its debt by any means other than the outright monetising of the debt by the US central bank, the Fed.

And Gold? Obviously, the greater the pressure acting to push DOWN the paper markets, the greater the pressure to push UP the “price” of the only alternative. Higher Treasury yields reflect an increasing doubt as to the solvency of the US Treasury and the viability of the US currency. It’s as simple as that.

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