Saturday, October 13, 2012

America’s Financial Collapse Part 4-Dollar Rejected

In Part 1 of this series we discussed the devastating consequences to our economy of turning on the printing presses and printing money out of thin air.  You may be shocked to know that in a few months, trillions of dollars are going to be flooding back into the U.S.  Where is the money coming from?  Countries that had agreed in the past to purchase commodities with the dollar are now rejecting the use of the dollar as a reserve currency.  The world is turning against the dollar.  The dollar has been the reserve currency of the world for quite some time, and we’ve depended on that.  Unfortunately, things are changing at a rapid pace.  Here are just a few examples:

China and Brazil in $30 Billion currency swap agreement

Japan, China to launch direct yen-yuan trade on June 1, 2012 a-yuan-idUSBRE84R0RP20120528

Dollar no longer primary oil currency as China begins to sell oil using Yuan y-oil-currency-as-china-begins-to-sell-oil-using-yuan

China signs currency swap deal with UAE

Other articles:

The Five Financial Shockwaves to Expect When China's Yuan Swaps Places with the U.S. Dollar lar/

All these unwanted and unused dollars that are floating around out there will be heading back to the US. within the next 6 months or so.  That will devestate us economically.

The dollar is on life support right now.  When trillions upon trillions of dollars flood back into the U.S., the dollar will gasp and take it’s last breath before it dies.  Some still believe that it can make a full recovery, but I wouldn’t bet on it… especially if you’re using U.S. currency.

Acknowledgement:  Graphic - Money Roll:

America’s Financial Collapse Part 3 – Zombies

In the first two parts of this series, we found that if you continue to print money, it loses it’s value. The last thing we want to do is flood the economy with money by turning the printing presses on. We also learned that the Federal Reserve will be selling your mortgages worldwide to make a profit. Does that get you riled up? Ready to hit the streets in massive protests? I didn't think so. That leads me to my next topic. Zombies!!!

Yes, zombies!!! I don’t mean the kind in the movies or on television. I’m referring to individuals who have been zombified through television, video games, medication, pursuit of hobbies, illegal drugs, booze, etc… Zombies don’t want to discuss politics, economic issues, world conflicts, etc... They would rather watch Dancing with the Stars or discuss what’s going on with the Kardashians. They would rather become engrossed in their hobbies or get high. They would rather plan on ways to satisfy their desires rather than plan on how to survive the approaching storm. Zombies!!!

Many zombies feed from the teats of the government. Recently, it’s been stated that one third of the country is receiving some sort of government assistance. Social security, disability, workman’s compensation, unemployment, food stamps, welfare, housing, child care, Medicare, Medicaid, etc… What’s going to happen when the economic implosion occurs? One day we will wake up to find out that a “bank holiday” has been declared. Sounds like a wonderful thing, right? Unfortunately, a bank holiday is not a good thing. A bank holiday is when the banks shut and lock their doors and freeze all accounts. You won’t be able to get money through the local ATM or be able to purchase anything with your debit card. Will the citizenry panic? Of course! The government is aware of that and has a plan in place to deal with the financial collapse. You don’t think that the collapse has come as a surprise to those in Washington, D.C. do you?

Fear can prevent most people from thinking clearly. The minute people are informed that a bank holiday has been declared, fear will strike. What will they do without their monthly check? What will they do without their food stamps? How are people going to pay their rent and mortgage? How will they be able to feed their children! Their uncashed paychecks are worthless! In the midst of this panic, when most are frozen with fear, the government will access the form of communication that zombies prefer… the television. A nationwide announcement will hit the airwaves as the president addresses the nation, promising continued financial support (the checks will keep coming) and the zombies will be relieved. He will promise food on the shelves in stores, and the zombies will be thankful. He will promise to provide medical care through the government run healthcare system, and the zombies will cry with joy. Unfortunately, the zombies are being led into a New World Order and they don’t even know it. Along with these promises come strings… many, many strings.

They government will institute a new form of currency, the SDR (Special Drawing Rights). These SDR’s will be drawn on the International Monetary Fund (IMF). That’s right… say goodbye to the dollar and hello to SDR’s, the New World Order form of cash. Those of us who are awake will know what’s happening. Those who are asleep (zombies) will gladly make the transition to the new form of currency and actually thank the government for helping them. The Zombies will clutch their new SDR cards to their chest and say a prayer of thanks to the president, their new “savior.” Of course, now that the government has control of the purse strings, the rest will be easy.

America’s Financial Collapse Part 2 – Your Mortgage

What are the banks going to do with the $40 Billion that the Federal Reserve is printing from thin air and buying mortgage backed securities with?

-Will the banks use this money they receive from the Federal Reserve to help the real estate market? No. -Will it be used to help the economy? No.
-Will it help bring us out of this recession? No.

The banks have already made a back room deal to use the money to purchase treasuries, which pays the interest on the national debt. So that money will be given to China and whatever other country we owe money to. None of it will be reinvested into our economy. It’s all going overseas. It gets better...
Now that the Federal Reserve owns all these mortgages (maybe even yours), what will they do with them? They’re going to invest them in the derivatives market. Hold on. This sounds confusing, but I’m going to explain it in a way that makes it easy to understand. 

As I understand it (and to put it simply), it means the Federal Reserve is going to sell your mortgage to other entities all over the world in order to make money. So they buy the mortgages from the banks and then sell them for a profit. Remember, the Federal Reserve is not part of our federal government. It’s a private organization made up of several large banks, so the money they make doesn't come to the US government, it goes to them! Again, the money is not being reinvested into our economy. 

If you think it’s difficult to deal with your bank now, wait until you have to deal with a bank in China or India or wherever your mortgage ends up. And remember, the money the Federal Reserve is printing to purchase these mortgage backed securities is weakening the dollar, so every month, as the printing presses are turned on to print up another $40 Billion, our currency gets weaker and prices go up, but don’t worry, the Federal Reserve is getting richer by the day and smiling all the way to the bank… that they own.

The real kicker is that most people don’t know that QE3 Unlimited actually costs $85 Billion per month. $40 Billion goes to the banks and another $45 Billion is spent in other ways. So in actuality, $85 Billion is being printed out of thin air every month. How much is that per year? Just over $1 Trillion. Will we see any of that money? LOL!

So the next time someone from the White House praises QE3 Unlimited, remember… it’s doing nothing to bring this country any economic relief. The only one making any money off of this horrendous situation is the Federal Reserve. All QE3 Unlimited is doing is buying us a little extra time before we economically implode. 

America's Financial Collapse Part 1

Question: Where will the Federal Reserve get $40 Billion to pay for mortgage backed securities every month with no time limit?

Answer: From thin air. They’re printing money without anything to back it up. What does that mean? For every month that they print up $40 Billion, prices will rise. Food, utilities, gas, etc… The more money they print, the less it’s worth.

Here's an example of what I'm talking about: Say you find a valuable baseball card. It’s one of only ten of these cards known to exist. It would be worth a fortune to a serious collector! You put it up for auction and it sells for $1 Million because of it’s rarity. Or say you don’t really want to sell it. Say you want to trade it for something else at the auction that’s worth a million dollars. You hand over the card and you get the other item in an equal trade.

Now, let’s look at it from a different perspective. You list the card for auction as you did in the previous example. Baseball card collectors from all over the country are practically tripping over themselves to get that card. The day before the auction, someone discovers boxes upon boxes of the very same card stored in a warehouse. Suddenly, the card you own isn't so rare. How much do you think you’ll make at the auction if the buyers find out that there are 800 duplicate cards out there on the market? Not much. In fact, you might as well take the card and schlep home because no one's going to bid on it. But you have another option. You decide to trade that card for an item you want at the auction that cost $1 Million. You have a problem. Your card isn't worth that much, so you need to aquire multiple copies until you've collected enough to pay for that million dollar item.

That, my friend, is what it’s like when you print money. The more you print, the less it’s worth. The less it’s worth, the more it takes to buy the items you need. When the economy is awash in money, it practically becomes worthless.

This is one of the reasons why our financial system is heading for disaster. The dollar will still be around; it just won’t buy what it used to. If you buy an apples for $1.75 per pound now, a few months from now it could cost you $4.00 a pound. The less our money is worth, the more it takes to buy what we need.