Well, perhaps it’s not the beginning – but some news came out today that should cause each and every one of you to sit up and pay attention.
The US dollar slumped to an all-time low today – never before has the US dollar been worth less since it’s been independently tracked against foreign currencies in 1973. This could be the tipping point for our inevitable economic downward slide…with potential for a much larger magnitude than the economic crisis of the 1930’s.
If you’re not aware, the United States currently spends more than it makes and has to borrow money from foreign nations just to keep the lights on. Our government does this so they can print more money and spend that money into existence. Problem is, each time we create money, we devalue the currency that is all ready in circulation – it’s called inflation. This inflation has been occurring at an unprecedented rate over the last five years due to untempered spending in Washington.
Why the crisis? Well, two reasons. First, this devaluation impacts the desirabilty for investors to back the US dollar as better performing currencies will be a more likely choice for better returns. This means less people will invest in the US dollar, thereby decreasing the money we can create without out-of-control inflation, furthering our inability to pay our bills. Second, with the foreign investment dependence we currently suffer, foreign nations will favor stronger currencies than our faltering dollar. Countries like China have significant reserves of US currency – dumping these in favor of stronger currencies means our debt comes back to bite us like a rabid dog. These two things combined mean that people will start to transition their wealth into other currencies or precious metals, if they’re aware enough to do so. If this sustains and goes supernova, the US economy could come crashing down like a house of cards because of our reliance on these investors.
All I’m waiting for now is the first major bank to crash – at that point, we will have entered an irreversible trend that will catapult the economy towards the floor. If you don’t think that can happen – you should be learning about the growing number of mortgage defaults, the worldwide housing market crash, imploding hedge funds and systemic risk.
I’ve written about the investing into precious metals and I still advise it as the most sure bet of sustaining the hard times that could be ahead. Gold has rocketed past $800 per ounce, up hundreds of dollars from where it was even months ago. Silver, albeit a more volatile market than gold, has seen recent spikes upwards of 30% from where it was just few short months ago. These precious metals are also inclining at a faster pace against the US dollar than other currencies that are performing better, such as the Canadian dollar.
Speaking of the Canadian dollar, I wrote awhile ago about the Canadian dollar overtaking the US dollar in value. In just a few weeks, we’re now seeing that it’s nearly 8 cents over the dollar, or 8% higher. (Read another, US currency is worth 8% less) Further evidence of our rapid downward spiral. I did a comparison of the Canadian dollar and the US dollar against the Swiss Franc recently in order to prove the anomaly wasn’t just the Canadian dollar performing better than average. The Swiss Franc is widely regarded as one of the most stable, unwavering currencies in the world and is therefore a good choice for comparison of inflationary effects. The graphs showed that, yes, the Canadian dollar was doing better…but by far, the US dollar was declining at a much more rapid pace.
Anyhow…that’s what I have to say for now. Pretty serious stuff, I know…but you need to pay attention to it because it WILL ultimately affect you. If you want to know what you can do, look at who I support – Ron Paul.
