Thursday, February 18, 2010

The American Dream A Nightmare 2

The Future of the Dollar
by article link
Global Research, February 18, 2010 - 2010-02-17

The World is concerned that the dollar cannot play the role of the main reserve currency any longer after the financial crisis sparked by the collapse of the U.S. mortgage market led to the worst global recession since the 1930s. The Government’s stimulus packages, financial bailouts, the need to support liquidity in Treasuries, keeping interest rates at the lowest level under the circumstances of low economic growth, high unemployment and low tax collection make it print more dollars. This leads to a high risk of substantial inflation, or hyperinflation in a long-run.

With a $12.3 trillion national debt and $55 trillion in unfunded obligations for programs such as Social Security, Medicare and Medicaid, with total Federal Reserve and Treasury bailout commitments now at $11.8 trillion, of which $3.6 trillion has already been spent the U.S. need to take steps immediately to protect themselves from the potential loss of the purchasing power of their U.S. Dollars, warns.

Although there is still no significant inflation data in the United States international stock and commodity markets grew abnormally within the last eleven months. Analysts called it the “flight from the dollar” or “diversifying risks.”

There are many factors evidencing against the future of the dollar as a global reserve currency. In the present article pays attention to the crucial points of analysis after conducting an extensive research on the topic.

Part I
Weak Fundamentals of the U.S. Economy ...

1. National Debt ...
2. Unemployment ...
3. Budget deficit ...
4. Financial sector ...
5. Home Sales ...
6. Economic impact of U.S. international military operations ...
7. China’s peg to the dollar ...

Part II
Lack of Coincidence ...

Part III
Diversification Out of the Dollar ...

Part IV
Way Out

Peterson-Pew Commission on Budget Reform suggests that “the United States must show its creditors that it is serious about stabilizing the federal debt over a reasonable time frame. Both spending cuts and tax increases will be necessary.”

Most of the economists would suggest that the anti-inflation strategy of the United States should include:

* suppression of inflation expectations and stimulation of savings;
* reaching balance between budget receipts and expenditures;
* increasing the mass of commodities; and
* strengthening national currency by establishing an unconditional priority of inflation targeting over other government programs (such as military expenses, unemployment rate regulation, influencing the national currency market, etc.).

Will the U.S. assume such a pain by reducing spending and fighting the deficits? Probably not, taking into consideration the words of Sir John Templeton, the John Templeton Foundation, who said in 2005: “The psychology all over the world is that people will not re-elect leaders who want them to be thrifty. The voters will elect the government that spends more money.” (53)

Many analysts are pretty sure that the weak dollar policy is beneficial to the U.S. Therefore, whatever the authorities say, there will be no resistance to dollar depreciation on their part.

Most experts already doubt that the solution of the problem depends much on the U.S. and call for global measures. “We must reform the international monetary system,” Yu Yongding, a former Chinese central bank adviser, stated in mid-November 2009. “A good monetary system should make us confident. But we don’t have confidence in the U.S. dollar now,” he added. (54)

George Soros, a global financier, is convinced that we “need a new currency system and actually the Special Drawing Rights do give you the makings of a system," he told the Financial Times.

The Future of the Dollar

The future of the dollar is in jeopardy now as it is evident from the article.

This subject is the primary focus of We follow latest developments in this area and provide our readers information from reliable sources.

This analysis is prepared by
Global Research home page

The Daily Bell
How Global Fiat Money Dies
by Staff Report article link
Thursday, February 18, 2010

... This is not an "emergency" that the power-elite can overcome through the kind of crisis-management at which they are adept. They cannot bring their think tanks to bear or defuse the growing rage through orchestrated mainstream media campaigns. It is truly a mass movement partaking of Hayek's spontaneous order. There are no leaders to arrest, no agitators to shoot, no ideological arguments to debunk. The reason for this state of affairs is because the Internet - which is fueling all the above - is a PROCESS not an event. And the process is ongoing. From the power elite point of view, it will only GET WORSE. Free-market thinking will only become more acute, and at the same time more generalized. And this is a terrible nightmare for them. ...

We have certainly written some of the above before, but we are sure our regular readers will indulge our repetition. We - and you - have a ringside seat to the biggest show on earth. This is the biggest story that will ever be written in our lifetimes. We are seeing what may be the end of a hundred-year-old attempt to subvert the freedoms of the entire Western world. Oh, certainly things will not go smoothly! The power elite in our estimation controls most of what can be controlled, and can start wars to boot. But it is already too late to control the dissemination of the Internet's free-market information. It is already too late to erase a generalized understanding of how the elite's fear-based promotions work, or how they take advantage of such promotions to rob the average person of wealth and hope.

Will we see a gold and silver standard in our lifetime? Or free banking? Don't know. Will we see a reduction of war, a pull-back on domestic spying and repression? Perhaps. We tend to think so. We base our assumptions on what happened after the Gutenberg press made books generally available, a state of affairs that eventually swept away the entire old order and remade Western civilization - for the better in many ways. Ideas are far more powerful than swords, or even tanks. Even tactical nuclear weapons. When a people in aggregate find out they have been lied to, watch out.

It is for this reason, then, that we write of the death of fiat money. If the great fiat-money economies of the world stagger under the twin weights of price-inflation and failing, jobless economies, there will be massive socio-political difficulties in our opinion. But this time, the manipulations available to a power elite that wishes to keep the current damnable system in place will not be available because of the Internet. People will understand, in our opinion, and will not tolerate the machinations. The same thing that is happening to global warming will eventually happen to the entire central-banking scheme. It will begin to fall apart. People, tortured by their sudden poverty and the rapine of hopelessness, will read the truth and act. It will not be pleasant for the power elite that has invested so much time and money in the current intergenerational scheme, but it is simply human nature. It is life.

Conclusion: Smell that? There is a sudden but discernable whiff of panic in the air. We think the elite has miscalculated. Instead of global regulatory regime and controllable global populism, they are increasingly faced with the informed rage of millions and eventually, perhaps, tens or hundreds of millions. Add in China and Japan and you're talking billions. We know there are plenty of savvy readers who will disagree with us. It is all in the plan, they will write, as they have before. The elite is in control every step of the way, they will inform us with understandable cynicism or barely disguised despair. But, please consider ... what if they are not?

The Daily Bell home page

Is the Web Making Us Passive?
by Washington's Blog blog link

... All of us - even political writers and filmmakers- need to guard against settling for virtual victories. We have to get out there and engage in real action in the "real world" as well, and to guard against a dystopian Matrix-like future where the virtual reality is wonderful but the real world is a nightmare. ...

Washington's Blog blog home


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