US Dollar Devaluation is at our doorstep. We’re in a series of posts expanding on the predictions we’ve recently made for the US Economy in the coming year and beyond.
One of our predictions was that holding USD cash would be a losing proposition in 2012 in real terms. On Friday, we shared with you in detail Ben Bernanke’s plan if deflationary forces become too strong for him.
Today we’ll share this video for some second hand evidence that this is indeed the plan.
Why would the US Government and Ben Bernanke want to destroy the value of the savings of every American?
It’s because there’s no way that the US government can ever repay their debts. These debts have become far too large to ever be paid back in today’s dollars. However, if we make the $15 Trillion Plus Debt & the $50-100 Trillion promises to Social Security & Medicare small numbers because the value of each Dollar is so small, well then the debts can be paid back. (Be prepared if you’re expecting one of those government checks in the future. They are actively working to kill the value of their promise to you.)
Now, this theory above goes against what’s currently happening in the world. Europe is dominating the news. As the Euro comes under pressure, it gives new strength to the Dollar. So it’s a very bold call to predict that the Dollar will lose value. (And we’re certainly not predicting that it will lose value vis a vis the Euro because those are two falling knives and we don’t want to stick our hand under either.)
It is certainly possible that the problems in Europe, the UK, Japan, etc are so big that the USD strengthens in 2012 against most currencies and products and thus even though you’re not receiving any interest by holding it, it’s still one of the best places to be.
We definitely believe that the Dollar’s day of crash is coming. But it might not be in 2012. However, there’s a currency war going on and a giant debt to devalue and we’ve got our money on Helicopter Ben!
The other possible reason the USD could (will eventually) fall is that the rest of the world is tired of the US stewardship of its value. More and more countries every day are announcing bilateral currency swap agreements.
What this means is that when Japan & China trade, they will no longer be using US dollars for their trade, but will instead use each other’s currencies. Think about that for a moment. The second and their largest countries in the world have announced that they’ve abandoned the use of the USD in their trade with each other!
If the trillions of USD that are floating around the world as sovereign holdings become as unnecessary as they already have become undesirable…they will all come flooding home where people will still take them. How valuable do you think the USD that you hold will be if trillions of new ones show up in the USA sometime soon?
This is the fourth post in a series. You should read the initial thoughts on these forecasts here. and the Overall Prediction Page here. Here are the rest of the posts: 1) Ben Bernanke’s Dollar Devaluation Plan. You can also watch the most recent series of Economic Update videos at: 1) European Debt Crises, 2) European Debt Crises 2, 3) MF Global, 4) Gold & Silver Pt 1, 5) Gold & Silver Pt 2, 6) Gold & Silver Pt 3, 7) World Economic Update., World Economic Update 2, 9) The Chinese Economy, 10) Inflation or Deflation Concerns?, 11) Inflation Concerns Pt 2, 12) US Economic Update, & 13) US Economic Update 2.