Is 2016 The Year Of The Dollar Collapse?
Submitted by Simon Black via SovereignMan.com,
On September 4, 1993, President Bill Clinton spoke about the American Dream in a weekly radio address.
He told his audience that “in America, the idea is that if you work hard and play by the rules, you’ll be rewarded with a good life for yourself and a better chance for your children.”
That’s what America used to stand for, and indeed much of the Western world. Freedom. Truth. Hard work and fair play. Building a better life.
But those ideals have all but faded now, displaced by a new normal of war, debt, government surveillance, freedom-killing bureaucracy, and a monetary policy that decimates responsible, hard-working people for the benefit of a tiny elite.
In his end-of-year commentary in the Washington Post, writer George Will summed up 2015 citing example after example of government overreach and excess–
- The value of property seized by the US federal government through Civil Asset Forfeiture exceeded the value of property stolen by burglars and thieves
- Florida police raided a Mahjong game played by four women aged 87 through 95 because they were *gasp* betting with their own money
- New Jersey police arrested a 72-year old retired schoolteacher for illegally carrying a firearm– a 300-year old flintlock pistol he had purchased from an antique dealer
- A 9-year old in Florida was threatened with sexual harassment charges for writing love notes to a girl saying that her eyes sparkled like diamonds
George Will’s list, of course, barely scratched the surface of the tip of the iceberg.
2015 was the year that the middle class was officially vanquished in the Land of the Free, with its share of the population falling to just 50%.
US federal debt reached nearly $19 trillion in 2015, an increase of almost $750 billion during the calendar year.
The US government published over 80,000 pages of new regulations, making it nearly impossible to understand ‘the rules’, let alone play by them.
2015 also saw the passing of incomprehensibly terrible laws, including the USA Freedom Act, which restored many of the worst parts of the PATRIOT Act that were set to expire.
Then there was the Cybersecurity Information Sharing Act, passed at the end of the year, which officially turns the Land of the Free into a gigantic information-sharing surveillance state.
And of course the 2015 spending bill, which as of 3 days ago, allows the US government to strip you of your passport if they believe in their sole discretion that you owe them money.
These are hardly the actions of a solvent, trustworthy government, or a nation that’s on the right track.
It doesn’t take a rocket scientist to figure out that this story doesn’t have a happy ending.
We can pretend that this time is different, that this country is different, that there is some special sauce that allows this government to run massive imbalances forever.
But deep down we all know the truth… and where this is headed.
I’ve read no shortage of apocalyptic predictions suggesting that 2016 is the year of the dollar collapse. Or the global economic collapse.
Or something else that invariably ends in the word ‘collapse.’
I don’t believe that. First, no one can credibly answer the question “when?”
Governments have surprised us all with their uncanny ability to kick the can down the road and delay the repercussions of their folly.
But I don’t really think the question of ‘when’ is relevant.
Nearly every major western government is insolvent. Entire monetary and financial systems are insolvent.
Governments have destroyed their own middle classes, giving rise to the greatest wealth gap that has existed since the Great Depression.
The risks are obvious. And you either stick your head in the sand and ignore them, or you take steps to reduce their impact on your life.
It’s like anything else - if you live in a wildfire zone, you get fire insurance. And you’ll never be worse off for having good coverage on your home to protect your family.
Having a Plan B just makes sense, regardless of whether a major disaster occurs in 2016, next year, or never.
We can’t see the future, we can only see the risks today. Develop a Plan B that addresses those risks, and you’ll never have to worry about the future again.
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The dollar ain't what it used to be, that's for damn sure.
Agreed...But then again what curreny is?
Is this a trick question?
"A nickle ain't worth a dime anymore"
- Yogi Berra
Is 2016 The Year Of The Dollar Collapse?
No.
To whomever down-arrowed me:
Mark the above-comment and look at it again in a year.
Will you admit after you are proven wrong?
The US Dollar will not collapse in 2016, or in 2017 or even 2018 for that matter.
Anyone who thinks the US Dollar will "collapse" in the next few years doesn't understand basic math or global finance.
Japan has been 'printing money' for 30 years. They perfected the art of QE long before the Federal Reserve even thought about trying it. Japan's debt/gdp ratio is more than double ours.
Has the Yen "collapsed"?
Answer: No.
In terms of other world currencies (including the US Dollar) the Yen's value is right where it was a decade ago:
http://www.kitco.com/gold_currency/index.html?currency=jpy&timePeriod=10y&flag=exchangeRate&otherChart=no
A slow, constant devaluation due to inflationary printing is not a "collapse"
Indeed, when the market crash of 2016 occurs, the resulting deflationary downdraft will actually make US Dollars more valuable.
Deal with it...
FWIW: I don't believe the dollar will collapse, but I think we'll see other currencies collapse. Leading the way is Brazil & Argentina (repeat offender!).
I also think these events will happen in 2016:
1. Major devaluation of the Chinese Yuan. China is going to have to do full blown QE to avoid a severe depression
2. 10% to 30% devaluation of the Euro. Refugees, Higher unemployment, Banking problems, continue degration in PIIGS (manying Portagual, Italy and Spain)
3, Higher Gold & Silver prices. Devaluation in Asia currencies and lack of intrest in Stocks will likely drive consumers to buy PMs.
Dollar will far above as problems soar in the emerging market economies and in Europe. Dollar will simply be the cleanest shirt in the laundry pile.
<--- Collapse
<-- Controlled demolition
Of other currencies in this case
Insolvency on all levels of the government – schools, municipal, state, and federal. Same is in Europe, but they do not have the federal debt, which makes the Euro much preferable currency. Moreover, their pension and health systems are well capitalized, unlike here in the US.
And the last fiat standing before they all disappear is...???
"Moreover, their pension and health systems are well capitalized, unlike here in the US."
Oh really?
Lets see.....look at the UK for example.
National Insuarance system (national pension) is effectively broke.
NHS comes out of general revenues from taxes.
The UK is 1.5Trillion pounds in debt.
There is ZERO plan to balance the budget,
There is ZERO-ZERO plan to ever pay down that 1.5Trillion.
What was it you were mentioning about well calitalized?
We could go through the same excercise for Canada, Australia, Germany....
The numbers vary but the results are the same.
There is no country on earth with any plan to pay down these bonds. When the realization happens that this is the case, everything will reprice itself relative to gold.
What is a bond that cannot have its principle redeemed worth? Currently, its a game of musical chairs or the 'greater fool theory' of investing to roll these bonds over. They're never paid down, always resold to another shmuck. There is always another fool to roll the priciple off to. One day, there will be no other fool standing there with cash. How with the state then redeem the bond to the current holder?
When will this happen? Don't know, but it will.
Squid
"There is no country on earth with any plan to pay down these bonds. When the realization happens that this is the case, everything will reprice itself relative to gold."
Two Thoughts on this matter.
1. The Public is incredibly stupid and can possible understand this
2. Those that have a interest in keeping the system running (ie because their income, wealth) depends upon it will continue to play along. its like playing poker with a week hand. You might as well stay in the game if you think your can con the rest of the players (bluff) that you have a very strong hand.
I think the West will continue to shun PMs, but Asians continue to hoard, especially as currency devaluationg are rolled out in Asia. Asian gov't will like continue to support/help prop up the dollar since their economies are dependant on exports. With out the dollar and th US consumer they have few options to export goods to. I am sure they [Asian gov't] know this is the biggest con game in history, but if the want to stay in power, they need to prop up their exports, otherwise the people will revolt.
There are more US$ held outside the US than inside the US where it is legal tender. Very little Japanese Yen are held by outsiders when compared to the Yen held by Japanese. Same case as the Yen for the other Western currencies.
If there emerges a currency that is more attractive than the US$ for settling international payments in and holding their savings in, but just as convenient as the US$ in being electronically transferrable, it will instantly replace the US$ in international payment settlements. When that happens, all the US$ held outside will make their way back to the US and value of US$ will plummet. However, until that happens, the US$ will hold its value.
No existing national/regional currency satisfies the conditions I described to replace the US$. Only a gold backed international currency is capable of doing that. Such a currency will be issued by the New Development Bank (the BRICS Bank) sometime this year and US$ will reach parity with the Zimbabwe $ before the end of 2017.
Welcome to what wsa Fight Club.
Down Arrows are a badge of Honor. Do not become sensitive to them.
Hope so....
well, I hope you understand all the consequences of a (possible) Dollar Collapse in 2016. frankly, I think I understand only some of them
"Governments have destroyed their own middle classes, giving rise to the greatest wealth gap that has existed since the Great Depression."
well, yes, governments were involved. but companies led by their CEOs... too. there is this widespread tendency by some of blaming government... only
and this "governments", plural, is a bit like the "central banks", plural. A stereotype of "if Americans are being..., then the whole world must be worse off"
that's not so. yes, the American middle classes are being decimated. yes, government policy is involved... as written into law by lobbyists
the same lobbyists that are busy packaging trade treaties like the TTIP and call european policies "socialist", and want to dismantle them... and the still existing and not yet dwindling european middle classes with them
How about consumers who chose to buy cheaper foreign manufactured items rather than more expensive locally manufactured items? Weren't they involved?
Global Observer, in principle yes. but is that the true American experience?
take small towns and how they cope with companies like WalMart. they even pay for the whole store with public local taxpayer money, WalMart enters the scene, and the other shops close down
yes, the consumer is involved in all this. but has the consumer really a say about what he gets offered? when his salary is stagnating while his costs are rising?
the way I see it it's a game of megacompanies with various subsidies from various public hands and lawgiving
individualism points to individual malfeasance... while averting the gaze from the combination of collective malfeasances, from both authorities and megacompanies
individualism points to only a part of the problem, and distracts from the rest. add in anti-statism, and you still don't get the whole picture of (institutionalized) corruption
I'd have a Plan C too.....
No
The real problem is that working hard used to generate "profits" for those who did the labor. Today those "profits" are stolen from the laborer and accrued to those who commit "control fraud." In other words, those who labor no longer have "profits" to trade with other laborers. This is not far from the shrimp slaves of the Far East that was reported here at ZH.
That isn't "The real problem".
You make a great point though and the people who live in this place called America are definitely worse off today than they were say seven years ago? Obviously however we can extend that out to ten years? Even Fifteen?
It goes further back of course. I have my own views as far as the genesis of this crap. My views don't really matter though. What does matter is BILLIONS of people around this planet know damn good and well that governments suck. The 'governments' we presently are enslaved by are based on fraud. These sick fucks like to employ the phrase "science deniers" in their bizarre plot to further degrade humanity (and the planet) by means of these absurd lies and deceptions they provably beyond any reasonable shadow of doubt have and continue to perpetuate against humanity.
It's obviously not just idiots or lunatics like me (relatively speaking). Very serious, credible, thoughtful, healthy and undeniably intelligent, ethical, rational human beings have become extremely concerned.
This shit ain't right.
Basically the state of indebtedness of the Western Social Welfare Democracies, and the limits of human opportunity those debts impose upon their citizens, is a marker of the destructiveness and uselessness of those 20th century legacy governments.
Their gradual morphing into worldwide fascism is their only hope to continue a semblence of their current structure, and yet that serves merely to propagate the deficiencies of 19th-20th century burocratic heirerarchy well into the 21st century.
Artificially created and encouraged conflict is staged around the world to attempt to justify the status quo, which remains the greatest anchor around the neck of 21st century humanity.
Well lets see, the White Pope and the Black Pope both said there would be no Christmas this year... so there's that.
A 1964 quarter is still worth a gallon of gas.
I hope so but ZH says this every year and nothing ever happens. Wishful thinking does not produce reality.
Are you sure that "nothing" ever happens?
Come on... It's happening.
In fact, it's 'happened' so many times now that you seem to have not noticed lately?
Might be some previously undiscovered anomaly in the quantum matrix eh?
What does "produce reality"?
Not sure who/why a red came your way on this. As an ESPN commentator would would say about your statement:"ain't right or wrong, it just is"
Collapse against what exactly?
Dollar collapse is pretty much the same thing as hyperinflation.
It means that anyone and everyone who holds a dollar wants to swap it into something else of value. In short order this becomes anything else of value.
I have been hearing about this for at least 20 years...
And here at the Hedge for at 6...
Dollar is up ~50% against other fiat and basically flat against gold since bottoming out in early '08...
I kick myself for not cashing out my PM holdings 4 years ago...
You are going to see a deflationary collapse with a fiat reserve currency as there is no mechanism to transfer the CBs balance sheet to the consumer...
There will be no hyperinflation a la Weimer...
Moreover and somewhat ironically physical dollars are likely to hold a level of buying power in the event of a collapse of the economic system. (Of course gold will do very well in such a scenario assuming that you can find anything worth buying that is actually for sale in such an event)
The Yuan is likelier to collapse in the next 5 years...
Personally, I do not have a clue as to what is supporting the GBP....
All that being said, gold does have a good entry point here for a trade but I think that in buying power it topped out in '11 for many years (at least 20)...
> I have been hearing about this for at least 20 years...
Indeed, inevitable does not imply imminent.
I have no good idea when it will crash, only that it will one day. And it will come substantially out of the blue, with almost no warning.
All the signs are there for soon, but that does not mean that the game cannot be spun out for years and years yet.
A bit like being on the Titanic on the fateful night. It's going down for sure, but there may still be time to finish the hard of whist and have a cup of tea before heading for the lifeboat.
One other variable not discussed in the article is how middle/upper folks in other countries are going to respond when their nation collapses. The Chinese, for example, are moving obscene amounts of money from their country to here in order to escape their crisis. In the Saudi/Iran post earlier today a few folks mentioned that some Saudis are getting out while there is still time, and buying up property here.
This sort of controlled demolition might just stave off our crisis a bit longer, if enough money runs here for safety. It doesn't solve anything, but it delays the inevitable until after the next election.
It's worth logging in to down vote utter propagandizing, lying sacks of shit like yourself if for no other reason than integrity, something you will never understand. Back to sucking dick at the IPCC you beligerant, loathsome fraud.
Let me guess, you are a Trump supporter as you appear to have the same beliefs and debating style, full of hate and with zero factual content or relevance to the topic...
In other words the classic Hedgetard...
Can you surprise me with some relevant commentary or insight on anything? I seriously doubt it...
Let me guess, you're a fraud trying to cover for the fact using diversionary BS and rhetoric, wonder where you learned that shit from? /s
You naturally assume I'm a yank/Trump supporter which makes a cocked-up, perverse kind of sense. As was preordained when you left the confines of your dad's nuts... Wrong.
You're really not about "relevant" anyway, unless it gels with some incidious, globalist agenda though, are you?
Thank-you, next?
Just like yanking the string on the back of a doll...
Content free spew on demand..
Just as expected...
Yawn...
Sorry Flake, your responses are much more predictable
Still waiting for a post with something resembling relevent commentary from either of you...
Quite sad, really...
I can almost guarantee you that he's a government employee. They are at war with all independent thinking and the Huffington Post is their Bible. Spews anti- Trump venom. They just don't get it and never will.
Perfect...
Simply a perfect Poe...
\hattip
It would be nice if working hard were sufficient, but truth is one has to have a skill, or several.
Stop using the word "collapse". It's dishonest.
"But deep down we all know the truth… and where this is headed."
COLLAPSE.
A very good essay, but we need to know what might be the ingredients of a plan B.
I've been a Simon subscriber for years; Plan B boils down to "offshore business; alternative residency".
I just saved you $900!
Seriously, I think SB is quite good at his niche - promoting plan B.
Thanks. I have already implemented alternative residency, but have not been able to cut the umbilical cord of US Social Security.
The dalla flawed as it is , is the only thing big enough to park for sometime to come.. Everything is worse and not big enough
Just incorporate offshore, and sell porn online. Easy-peasey, Japanesey.
Another ad to sell me fire insurance. When will it stop?