Will The US Dollar Collapse?

baymule

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I read a lot. I study a lot. I don't believe the crap on TV, singing "Everything is Awesome!!" Politicians are liars. Period. If they ever told the truth about what they really do, we all would rise up against them. For the last 4 or 5 years, I have watched world events moving away from the USA dominion of the world. The US dollar is the main world reserve currency, meaning that if Country A wants to buy something from Country B, Country A must first buy US dollars to make their purchase with. Needless to say, this creates great demand for the US dollar. We Americans have enjoyed the benefits of a strong dollar for as long as most of us have been alive.

So what happens if other countries get sick and tired of the onerous USA laws and bullying tactics and just want to trade with each other without the US dollar in the middle of it? The BRICS countries have already opened their own world bank, the New Development Bank. (Brazil, Russia, India, China and South Africa) Many other countries have signed on with the BRICS countries. The Chinese renmimbi (money) has been accepted as a World Reserve Currency and will go into operation in October of this year. Indeed, China has opened their own Asian Infrastructure Investment Bank and they are working on the Silk Road Program. This will put less of a demand on the US dollar. There are trillions of US dollars floating around the world. If they all came back home, it would trigger a crash like the world has never seen. The good news is, if we suffered such a crash, we would take many other economies down with us, and other countries know this and in their own self interest, don't want the USA to hit rock bottom. For now.

The IRS now requires ALL banks to report all American bank accounts, in order to catch tax cheats. This has angered many countries, as it puts onerous extra work, costing a great deal of money, on the banks. Singapore told the IRS to mind their own business, and they refuse to participate in the IRS reporting. The USA/IRS finally broke the Swiss banks and forced them to report American accounts. Swiss banks, the bastion of secrecy, rolled over on their depositors.

What does this have to do with me you ask? "I don't have money in banks over seas." My senator/congress man/woman is taking good care of our state. All this "world stuff" is over my head, I just don't care, I have enough problems worrying about things here at home, much less half way around the world.

Donald Trump is campaigning "Make America Great Again" promising to bring jobs back to this country. He knows what is coming. The dollar will devalue 30% to 50% and imports will become so high in price, that we will be forced to start making our own products again, thus hiring people to work in the factories again. Hillary is promising more free stuff, which ever candidate wins, we are on a fast track for some extremely hard times. The storm is brewing. Now would be a good time to stock up on not just food stuffs, but on things you consume or use that are imported. Think on it.

August 24, 2016
Santiago, Chile

That was fast.
Yesterday I told you how a consortium of 15 Japanese banks had just signed up to implement new financial technology to clear and settle international financial transactions.

This is a huge step.

Right now, most international financial transactions must pass through the US banking system’s network of correspondent accounts.

This gives the US government an incredible amount of power... power they haven’t been shy about using over the last several years.

2014 was one of the first major watershed moments when the Obama administration fined French bank BNP Paribas $9 billion for doing business with countries that the US doesn’t like-- namely Cuba and Iran.

It didn’t matter that this French bank wasn’t violating any French laws.

Nor did it matter that only months later the President of the United States inked a sweetheart nuclear deal with Iran and flew down to Cuba to attend a baseball game with his new BFFs.

BNP had to pay up. A French bank paid $9 billion because they violated US law.

And if they didn’t pay, the US government threatened to kick them out of the US banking system.

$9 billion hurt. But being kicked out of the US banking system would have been totally crippling.

Big international banks in particular cannot function if they don’t have access to the US banking system.

As long as the US dollar remains the world’s dominant reserve currency, major banks must able to clear and settle US dollar transactions if they expect to remain in business.

This means having access to the US banking system… the gatekeeper of the US dollar.

But having watched BNP Paribas get blackmailed into paying an absurd $9 billion fine to the US government, the rest of the world’s mega-banks knew instantly that their heads could be next ones on the chopping block.

So they started working on contingency plans.

Blockchain technology provided an elegant solution.

Instead of passing funds through the US banking system’s costly and inefficient network of correspondent accounts, blockchain technology provides an easy way for banks to send payments directly to one another.

I cannot understate how important this technology is.

Blockchain may very well be what neutralizes the US government’s domination of the global financial system.

And while there’s been a lot of momentum in this direction (hence yesterday’s letter to you), even I’m surprised at how fast it’s moving.

Today, four of the world’s largest banks announced a brand new joint venture to create a new financial settlement protocol built on blockchain technology.

Deutsche Bank from Germany, UBS from Switzerland, Santander from Spain, and Bank of New York Mellon have joined together to launch what they’re naming the very un-sexy “utility settlement coin”

Like Ripple, Setl, Monetas, and several other competing technologies, Utility Settlement Coin has the potential to end the reliance on the US banking system for cross-border payments and financial transactions.

Banks will be able to send payments to one another directly without having to transit through the Wall Street financial toll plaza.

(Global consulting firm Oliver Wyman estimates that the cost of clearing and settling international financial transactions at up to $80 billion annually.)

This has enormous implications, especially for US banks.

The Federal Reserve, for example, has already warned that financial technology could pose stability risks to the US financial system.

And they’re right.

If foreign banks are able to transact directly with one another without having to go through the US banking system, then why would they need to park trillions of dollars in the United States?

They wouldn’t.

Adoption of this technology could cause a gigantic vacuum of deposits out of the US banking system.

US banks would take a big hit. And the US government would have far fewer foreign buyers to sell its ever-expanding piles of debt.

Make no mistake, the adoption of this technology is a game-changing development with far-reaching implications. And it’s happening very quickly.

If these mega-banks can hit their milestones, they’ll launch commercially in eighteen months.

Mark it on your calendar-- that may be the end of peak US financial dominance.

Until tomorrow,

iman-eemlsfgeykvdtptlusjvkrvuyrdpoazh-v2


Simon Black

Founder, SovereignMan.com
 

baymule

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Should have posted this one first. Oh well. Being self sufficient is more than buying a dehydrator or pressure canner. Sure, these things help and are important. But I believe being educated in world events are just as important. You may think that these events and upcoming events don't pertain to you, and they may not. But how will a dollar devaluation affect your children and grand children? Will we go over the edge into poverty and slide so deep in the abyss that our children or grand children never know the good life, such that we had?


August 23, 2016

Santiago, Chile

In July 1944, just weeks after the successful Allied invasion of Normandy, hundreds of delegates from around the world gathered in Bretton Woods, New Hampshire to determine the future of the global financial system.

The vision was simple: America would be the center of the universe, and every other nation would revolve around the US.

This arrangement ultimately led to the US dollar being the world’s dominant reserve currency which still remains today.

Whenever a Brazilian merchant pays a Korean supplier, that deal is negotiated and settled in US dollars.

Oil. Coffee. Steel. Aircraft. Countless commodities and products across the planet change hands in US dollars, so nearly every major commercial bank, central bank, multi-national corporation, and sovereign government must hold and be able to transact in US dollars.

This system provides a huge incentive for the rest of the world to hold trillions of dollars worth of US assets-- typically deposits in the US banking system, or US government bonds.

It’s what makes US government debt the most popular “investment” in the world, why US government bonds are considered extremely liquid “cash equivalents”.

As long as this system continues, the US government can continue to go deeper into debt without suffering serious consequences.

Just imagine being totally broke... yet every time you want to borrow money there’s a crowd of delighted lenders eager to replenish your wallet with fresh funds.

This may be the US government’s #1 advantage right now.

You’d think that they would be eternally grateful and take care to never abuse this incredible privilege.

But no… not these guys.

In fact, they’ve done the exact opposite. Over the last eight years the US government has gone out of its way to eliminate as much of this benefit and alienate as many allies as possible.

They’ve abused the trust and confidence that the rest of the world placed in them by racking up record amounts of debt, waging indiscriminate wars in foreign lands, and dropping bombs on children’s hospitals by remote control.

They’ve created absurd amounts of regulations and had the audacity to expect foreign banks to comply.

Plus they’ve levied billions of dollars worth of fines against foreign banks who haven’t complied with their ridiculous regulations.

(Last week, for example, New York state financial regulators fined a Taiwanese bank $180 million for not complying with NY state law.)

And they’ve threatened to banish any foreign banks from the US financial system who don’t pay their steep fines.

Abuse. Deceit. Extortion. Not exactly great ways to win friends and influence people.

It’s as if Barack Obama pulled together the smartest guys he could find to make a list of all the ways the US government would have to screw up in order to lose its enormous financial privilege… and then he went out and did ALL of them.

The US government is practically begging the rest of the world to find an alternative to the US dollar and US banking system.

Even the government of France, a key US ally, called into question continued US dominance of the global financial system after the US government slammed French bank BNP Paribas with a $9 billion fine.

There have already been some attempts to displace the United States in the financial system.

China has been aggressively setting up its own competing financial infrastructure, something called the China International Payment System.

It’s been a slow start for the Chinese, but they’re building momentum. Though I’m not sure China is the answer in the long run.

While banks around the world may not care for the long and strong arm of the US government, the Chinese government doesn’t exactly inspire trust either.

But now there really is an alternative. Technology.

Ripple, a blockchain-style protocol that’s funded by Google Ventures (among others), is now being utilized by international banks to send and receive transactions directly.

The way international bank transfers work now relies exclusively on the US financial system.

Large foreign banks have what’s called a “correspondent account”, typically at a major US bank like JP Morgan, Citibank, etc.

A correspondent account is essentially a bank account for other banks. Our
company holds funds at a bank in Singapore, for example, whose US dollar correspondent account is at Bank of New York Mellon.

Foreign banks’ US dollar correspondent accounts are typically at major Wall Street banks because that’s the epicenter of US dollar transactions.

So when a bank in Australia sends US dollars to a bank in South Africa, that payment actually flows from the Australian bank’s correspondent account in the US to the South African bank’s correspondent account in the US.

The entire transaction effectively takes place using the US banking system.

Again, this gives the US government enormous power over foreign banks. Any foreign bank that doesn’t do what Uncle Sam commands can be excommunicated from the US banking system.

And without access to the US banking system, a foreign bank will be unable to transact in US dollars, and hence unable to conduct any global business.

This is a death sentence for a bank. The US government knows this and has been blackmailing global banks for years.

But now technology is providing another option.

Banks don’t have to use the US banking system anymore; they can send real-time payments internationally using the Ripple protocol. [Video]

Two months ago a Canadian financial services company sent the first-ever institutional cross-border payment to a German bank.

This isn’t some wild theory or conjecture. It’s actually happening.

Just this morning a group of 15 banks in Japan signed up to start using Ripple, and dozens of banks plan to use the protocol within the next six months.

The technology is cheaper. Faster. Superior. And it doesn’t come with any US government strings attached.

So it seems Uncle Sam may have finally shot himself in the foot for the last time.

Until tomorrow,

iman-eemlsfgeykvdtptlusjvkrvuyrdpoazh-v2


Simon Black

Founder, SovereignMan.com
 

MoonShadows

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I can't see how it won't collapse, but it might be with a whimper and not a bang. You can't keep running up debt the way this country is doing and just keep printing money that has no real value behind it. That coupled with the many other countries turning away from dealing in US dollars, and our gov't unable to force it like they used to, puts us on a real slippery slope.
 

baymule

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I believe in being as self sufficient as possible, but we as individuals cannot manufacture everything we use. We have to buy things we need. If we can prepare ourselves as best we can before the storm hits, then we might have a better chance of coping with it. If we have ourselves set up with a garden, livestock, chickens, fruit/nut trees, then at least we can feed our families. We are working to improve our sand soil so that maybe we can grow enough grass to feed our sheep. Thus, our sheep can feed us.

Our dollar will devalue and buy half of what it used to. So if there are things that you consume on a regular basis and will store well, shouldn't you be stocking up on them? Let's start a list of items, maybe it will help someone else realize that they too need to buy extras. Please list things that you would stock up on to help you get through hard times.

Canning lids and rings
Canning jars
Coffee
Tea
Toilet paper
Diesel for tractor (have tank)
Screws and nails
 

frustratedearthmother

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Ditto the canning jars, lids and rings. I need more...always need more.
Diesel! I need a tank - is it rude to ask how much you can store? Or how much you'd be comfortable with?
Gasoline - but doesn't store well...
Seeds - I think I need to replenish my stock. I was keeping them in the milk/egg fridge, but ran out of room.
Meds - DH needs 'em... we get three months at a time. He has a good stockpile of insulin because he doesn't always need as much as is prescribed so it does build up.
Animal antibiotics and wormers.
Money! (or the precious metal equivalent) What's ya'lls ideas on investing in silver coins?
Yes - screws, nails, maybe some extra fencig and/or stock panels.
Tarps! I use tarps a lot and they are good for extra shelter if you put them over a stock panel.
Yes - toilet paper. But, I could probably be convinced to use rags if necessary. (gag!) I'd hate to spend a butt load of money on paper products and not have the money to use on more important things....
Bleach! (because of those rags) Liquid bleach is ok, but takes a lot of space and loses strength after awhile. (read that somewhere but have no personal experience with it) I also read that pool shock is basically dry bleach so it's easier to store. Just add water!

Brain fog setting in - probably think of more later!
 
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Mini Horses

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Personally, I like to keep a few "how to" books on hand. I have some that deal with fundamental things which can be done without all of our nice equipment -- some are homesteading from digging wells to whatever. Along that line, just knowing how to make things from scratch &/or with unusual resources is a benefit to be able to maintain what you have, grow, use, & make things many take for granted -- vinegar, sugar, flour, butter, oils, soaps, etc. Most of what we all do to some extent. Bartering will become more popular in a crash. And knowing what animals can provide & be more easily kept at least cost, i.e rabbits, chickens, ducks, goats, pigs.

I can say that such crash/collapse issues give great value to a rooster. :lol: I have no use for one EXCEPT to fertilize eggs so that new chicks could be hatched for more hens, eggs, extras to butcher & trade. The girls & I have happily handled eggs for a long time without any crowing. But I have a few now. It was simply for a production project I'm working on and then they would be "phased" out. Guess they now have a purpose. Ahhhh....love my broody hens!!
 

baymule

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How to make wine book!

Spices-all come from overseas!

FEM-look on Craigslist for fuel tanks. We got a 500 gallon tank on a stand for $400.

Chocolate-dry cocoa stores forever.

Medications-almost all are made overseas. What do you think the plummeting dollar will do to the price of pharmaceuticals? Stocking up is a good idea.

Antibiotics. Fish antibiotics are identical to human antibiotics. And much cheaper, no prescription-stock up 'cause we got some sick fishies!

FEM-good point about buying silver. When our dollar bites the dust, it would be a good thing to have some REAL money in hand.

This is good! We are making up a good list of things to have on hand. Buy it now or pay more later, if you can even get it! Ya'll keep it coming!
 

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