DOLLAR DOOM
The dollar will fail…. This is not a question of if but rather when. We believe that when the dollar does fail, it will create a period of economic and geopolitical chaos the likes of which this country has not seen before.
Fiat currencies such as the dollar are fundamentally flawed. To the average investor, discussions on the dollar’s loss of value-or any other fiat currency for that matter- seem complicated and difficult to comprehend.
In reality, there are very simple reasons why fiat or paper currencies lose value over time. Here we will break it down into the simplest of terms so even those not “in the know” can understand just what is happening to the dollar right now and how it will affect them.
Governments are simply unable to maintain the value of their currency. Period…
To understand why this is so, let’s consider for a moment how a government functions at its basic level:
Leaders are always trying to appease two distinct parties-the taxpayers and those who rely on government spending.
Needless to say, most tax payers do not want to pay more in taxes, while those who rely on government spending always want the government spending more.
If a leader is unable to please either group, that leader may not remain in power very long.
Leadership is left, therefore, with few options. Leadership could simply take a hard line, explaining to those that are governed that taxes must be raised in order to maintain budgets and a surplus. Consider this:
When was the last time you heard a leader from any government running on the proposition of higher taxes?
Because the notion of raising taxes is not necessarily appealing, leadership may look for an alternative way to satisfy both the tax payers and those who rely on government spending.
The solution commonly used is to borrow money to fund government spending without raising taxes, and then print enough currency to cover it. This way, both parties are getting what they want. No tax increases even as government spending accelerates…
On the most basic level, what has just occurred is an increase in supply with no matching increase in demand.
The basic supply/demand equation tells us that during rising demand and falling supply, prices will rise. In this case, during stable or declining demand, and rising supply, prices will fall.
Unbeknownst to many, each unit of currency used by that government has just lost value…Fiat currency depreciation at work right before your very eyes…
What happens next is inflation. As each unit of currency loses value over time, prices for everyday goods and services become relatively more expensive.
But then it gets worse…
As government expenditures continue to grow without a corresponding increase in tax revenues, governments have only one option: Borrow more money to fund spending and then create more currency to cover the difference. It is a vicious cycle that can have dire consequences…
As the currency value continues to drop, prices continue to rise until people are left with no choice but to abandon the currency. Welcome to the world of debasement…
This process has already begun in the U.S.
Today, the U.S. is the largest debtor nation in the world, and is carrying an unsustainable debt load. As a matter of fact, today’s United States is the most indebted nation in the history of the world!
While the dollar has enjoyed its status as a safe haven and world reserve currency for some time, that status is now being openly challenged…
When other countries receive dollars in trade, they use those dollars to buy U.S. bonds. They are, in effect, financing the country’s debt.
What happens once those countries no longer want dollars? What if they were instead to trade dollars for Euros, Yuan, or other currencies?
At that point, the party’s over…
In a nutshell, once demand for U.S. bonds declines, the country will no longer be able to finance the debt burden.
As bond prices plummet, interest rates could skyrocket. A sharp increase in interest rates could cause, among other things, a massive increase in mortgage defaults, credit card defaults, business failures and other problems.
Essentially the U.S. economic wheels would cease turning, and the country could quickly fall into recession…
As this occurs, government will attempt to fight it with the only weapon they have at their disposal-more money printing. And the cycle continues…
As the government unleashes more quantitative easing or other stimulus measures, the dollar’s value in real terms will continue to plummet.
A plummeting dollar will lead to massive investment and economic loss. Businesses will fail. Jobs will be lost.
Dollar denominated savings will be wiped out…
The time to take action is now, before it’s too late. The dollar has already begun its decline in value and as its status as the global reserve currency hangs in the balance, now is the time to be looking for alternatives. Alternative assets that can hold their value or increase in value, regardless of government spending.
Now is the time to consider adding gold or other precious metals to your portfolio…
One of the simplest ways to gain exposure to these critical precious metals is through a precious metals IRA. Getting started with a gold IRA is easy. Our experienced executives are here to guide you, step by step, through the entire process. Call us today at 1-800-341-8584