The United States has been in decline for a long time and seems destined for big collapse. Nearly every indicator suggests the U.S. has gone too far in the wrong directions to undo the harm it has already incurred. The dagger was the unwillingness of the country to change its policies of tax, spend, and waste. Even as I write this President Obama requests more stimulus money and is pressuring banks to loan money to those most likely to default. Many argue this policy led to the financial crisis in 2006, so why are we going there again?
The Community Organization Act, originating from ACORN, appears to be a ploy to draw in quick money to make things look like they are improving. We have already been deceived during the Clinton years that prices were only going up, anyone could afford a house, and only good days lay ahead. The problem is that the bill ultimately comes due and everyone is maxed again. For a president that has been on record preaching fiscal responsibility, he does not show it in his actions.
For example, the national debt has nearly doubled since Obama took office, and by the end of his second term will be well past doubling. The federal government now borrows 46 cents for every dollar it spends. Every hour they spend $435,800,000. The U.S. already has more debt than every country in the European Union combined. We will spend $34.3 trillion to repay what we owe right now, if the interest rate was just 4%. At 6%, it would be $43.1 trillion. The dollar is the world’s reserve currency and has been for more than 50 years, but that is changing. Ultimately, it will lose its place as the world’s reserve currency and our economy will collapse.
Up to this point, we have been the world’s reserve currency and the only country that does not have to pay for its imports in a foreign currency. The U.S. can currently print money, as needed, to repay its debts. Just as the British Pound once was the world reserve, the dollar will also fail, largely because of our debt and overzealous printing of money.
Quantitative easing (QE3) by the Federal Treasury is allowing it to print $85 billion a month to pays its bills. This is exactly the reason the dollar is quickly falling from prominence.
The International Monetary Fund (IMF), the intergovernmental organization that oversees the global financial system, is moving right now to replace the dollar as the world’s reserve currency. The IMF has proposed creating Special Drawing Rights (SDRs), denominated bonds, which could reduce the central banks dependence on U.S. Treasury Bonds. The IMF suggests assets, such as oil and gold, now traded in U.S. dollars, be priced using SDRs. These SDRs would represent potential claims of the currencies of IMF members. These talks show the IMF’s seriousness about shifting away from the dollar and replacing it as the world’s reserve currency. The recklessness and abandonment this country has shown managing its debts is coming back to haunt it.
The IMF first created SDRs in 1969 to convert into any currency, based on a weighted basket of international currencies. When the IMF lends money, it typically does so via SDRs.
The dollar continues to lose favor even more as more countries enter into international currency agreements. Every country used to have to convert its currency into dollars before trading with another country. This is changing. China now buys gas supplies from Russia without having first to obtain dollars. The result of these agreements is that foreign countries will no longer need to maintain large holdings of dollars. This diminished need for dollars translates to fewer countries willing to loan us large amounts of money, and our endless printing of money will be fruitless.
Two of the most respected financial newspapers have already announced the writing on the wall. The Financial Times reported, “The dollars days as reserve currency are numbered” while the Wall Street Journal said, “Dollar’s Reign as World’s Main Reserve Currency is Near an End.” The significance of this dire warning failed to garnish the attention of most Americans.
Nearly 100 years of political blunders and lack of fiscal responsibility led up to this dire moment in time. There are now more than 46 million Americans on food stamps, up 65% since 2008. Another 43 million Americans are currently spending more than they make and the average credit card balance is $15,422.
The U.S. Census Bureau says the median household income is 8.9% less now than it was in 1999. The unemployment rate remains at 7.8%, barely moving, even as more and more people quit receiving unemployment benefits. The unemployment rate does not count those now ineligible for unemployment. Among those employed, a large number are underemployed and/or working more than one job. The dismal unemployment figure doesn't even include the 1.6 million American's who simply fell out of the workforce altogether since 2008.
Nearly all of the world’s major financial players are preparing for an alternative to the U.S. dollar as the world’s reserve currency. This shows by the huge gains in the commodities markets, particularly gold and silver.
Other countries are seeing what most Americans are not and should be. Many experts believe the end is inevitable, and without effective leadership, it is.