Guest Post: The Coming Currency Crisis

Tyler Durden's picture

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Solid's picture

This is an old article...WTF?

X.inf.capt's picture

GEEZ, this is a SHOCKER!!!!

and ive been buying pre-65 dimes because the're SHINEY.....

I think I need to buy a gun's picture

congress called in peter schiff today......i guess it truly is almost over....complete collapse coming of anyone with savings as gold sucks up all this debt

X.inf.capt's picture


i volunteer helping vets, the're huntin', lets just get it on!

ive been a baker for 18 yrs, ill continue baking for and helping these kids out, we stick together, and will....

these guys are ready....

LowProfile's picture

all the gold holdings the central banks report still are nowhere near enough to back their currencies


IQ 145's picture

It's evidence that Ben Bernanke's statement that "no one could have foreseen this" is bullshit. I think it is intended to show us that rational analysis of available information is useful and does have predictive ability.

Mesquite's picture

Truth is timeless, and always useful...


Harry Browne was writing, and warning, in very early 80's..

IQ 145's picture

Harry Browne's (sp?, don't know), book; "How to profit from the coming Financial Crisis", is what saved my poor but. Many sober analysts thought the dollar/US scam was going to blow up right then and there; Volcker fixed it for us; but the irresponsible politicians continued to be bought off and now it's un-fixable.

mtomato2's picture

That this was an old article was clearly stated by the Durdens at the outset. I find it fascinating that someone had the prescience and clarity of mind to so fully flesh out all of this in 2006. Suck it, Trabeck ... suck it long, and suck it hard.

Solid's picture

I didn't see that. My bad.

piceridu's picture

Submitted by Bud Conrad of Casey Researchfirst published in the July 2006 International Speculator, and worth a reread for anyone who has not seen it previously...


Snidley Whipsnae's picture

At the time this article was written it was unknown which way the Fed would move on interest rates, thus...

"Of course, the Fed could fight a contraction in the economy… by lowering interest rates. But that would bring on a flight from the dollar and a more rapid end to the dollar standard. There is no way out."

Now we know.

Very good predictive article, kudos to Conrad... We have yet to see the 'flight from the dollar' because the disruption in Europe has delayed the dollar flight. The Euro currency has come under fire while the dollar awaits it's turn... but, being the best looking horse in the glue factory isn't going to save the horse forever.

IQ 145's picture

I would say there is a "little" flight from the dollar; into Gold and Silver. My image is of a small creek splitting off of a little river; a river of disposable capital, or available savings; but it seems that the little creek is growing bigger; perhaps we are watching the "flight from the dollar" but it's on a time scale that is difficult for humans to identify.

IQ 145's picture

I never know where to put these things; buying Dec. Silver this morning at $40.915 at 12:13 NYT; comex contract. Will risk $6000. I think it's demonstrated support and it's "time" for it to rally. Be interesting, anyway.

anonnn's picture

See this written 2005, that even predates Casey's article.

The piece below is from the China Daily. I thought you would be
interested to see the picture from the Chinese point of view...
[EDIT: This was printed first on SI.]

It's time to take seriously a US-led global recession by Lau Nai-keung

2005-10-06 07:37

I think it is time that we should take a serious look at the possibility
that the US is going to take us down towards a worldwide recession in one or
two year's time.

go to

and see anonnn's entry.

IMA5U's picture

yawn  yes  we domed zzzzzzzzzzzzzzzz

Solid's picture

Those were the good-ol-days.

dwdollar's picture

I don't think Ben is as stupid as we kid.  I think he will resign and they will find someone much dimmer and more printer happy.

gionetg's picture

yawn  yes  we domed

monopoly's picture

From 5 years ago. And it is so At first when I read it did not see the date. Thought it was right on.

"Horrific debt of 8.2 Trillion.. Is that not amazing, well, that was just a warm up for us, exactly double, yes sir. THIS IS AMERICA! We are so cool.

chipshot's picture

you want relavant to today.....find and read "the Illumnati" by larry burkett circa 1991

a partial list----japan quake ,tsunami ,japan calling in USTs, big event in so cal ,iran ,iraq ,FDIC ,confication of firearms , collape of the dollar,a jobs bill ,fair tax plan, the EU/EMU ,big US event occuring in...wait for it.....2001. the great deceiver, democrat in the WH, and astronauts wife. all this printing in the first 75 pages.

----just started it and got the heebs highlightering these events  in this "fiction"


circa 2011


Solid's picture

Makes one wonder how long it can go on.
They clearly said soon, and it didn't happen yet. Shit, it could last a lot longer, but something tells me it won't.

tyler's picture

Doesn't matter to me when it happens, I'm ready as best I can be.  


Bernake has a mad man look in his eyes.  He's been kind of dormant on the announced qe but he's still doing shit, that's his job.   There's nothing anyone with any power is capable of doing at this point to avoid a gigantic ass fucking of the american citizen.  The ones that could do something about it are marganalized and ignored.  The people are gonna get what they deserve.

Snidley Whipsnae's picture

"They clearly said soon, and it didn't happen yet."

It didn't happen yet because the Euro Currency and EU have been subjected to extreme pressure... Hence, a flight to dollars, Ts...

Anyone believe that China is ignoring what is happening to the Euro currency with help from multinational banks?

Economic war never sleeps.

Manthong's picture

Very good piece, likely more of a review for most here, but might I suggest that

"Spending more than you make, let alone more than you will likely ever make, leads to ruin."

in this context is more appropriately asserted "Spending more than you make, let alone more than you can possibly ever make, leads to ruin."

zorba THE GREEK's picture

As long as we don't spend more than we can print, we will be okay....


mtomato2's picture

...but as long as I still have checks...

Manthong's picture

True, but when you think that this was penned 5 years ago (?), at that time the debt might have been repayable at reasonable valuations. 

Thomas Jefferson's picture

Watching the CNN debate last night reassured me of America's fate.  Stupid in.  Stupid out.  Stench of Death is pervasive.

baby_BLYTHE's picture

A currency crisis can come about in both a deflationary collapse scenario as well as a run-away inflationary collapse scenario. The Great Depression being the example of in deflation- confiscation of gold and revaluation of the currency. Zimbabawe, Germany, Hungary, Ukraine- being the inflationary collapse examples.

It is important to remember also that dirty war has also usually either preceeded or followed such events.  

jimmyjames's picture

A currency crisis can come about in both a deflationary collapse scenario as well as a run-away inflationary collapse scenario.


Exactly-in fact it's more likely to happen in a deflationary environment than during an inflationary binge-simply because credit is used to inflate rather than wholesale printing (FRB)-

Credit acts like money in expansion-it does not act like money when asset prices fall out from under the debt level-which is genuine deflation-

If debt cannot be paid down without printing and the tax base is seen to be deteriorating-the currency can be sold down to nothing-game over-


nestle's picture

Damn!! it's 2006 again?? That's great!! I got to short the pants off SPY in 1+ year!!

S&P500 @ 666 in 2+ years guys!! you heard it first from me!

eakle's picture

This article gave some great advice back in 2006, when gold was ~$600/oz.

Segestan's picture
Relying on the Kindness of Foreigners… Who Hate Us?..... boy;  Thats a Truth. However, they also hate each other once the spigget turns off. Good luck.
SaveTheGreenback's picture

Great read, Tyler.  This guy should be Fed Chief...

fourthousand's picture

Home boy was prescient

PaJoad's picture

If you'd read this in '06 you would have thought we'd be where we are today...further along? Still waiting for the other shoe to drop? Tomorrow?
Or do we still have another 5 years in this ponzi? I think not but who the hell knows?

tekhneek's picture

This was written:

  1. Before the "financial crisis" (which it describes in detail)
  2. Before the bailouts after the crisis
  3. Before quantitive easing
  4. Before gold hit $1900/oz
  5. Before silver gained 600%+
  6. Before ... you get the gist.

Timing it is never a good idea as this article points out. Preparing for it is a much better use of your time.

I just want to point out that you'd be up 3.3x on your money in gold in that time frame. Silver? 4.5x

PaJoad's picture

Excellent illustration of quantifying preparedness.

Snidley Whipsnae's picture

...and before the Euro came under extreme pressure. Which helped the dollar/Ts because of 'flight to safety'... Dollar now running on time borrowed from Euro crisis.


Hephasteus's picture

Who would have thought this would be the collective concious of the few people who actually bothered to wake up.

jimmyjames's picture

1--The volume of dollars and dollar-denominated assets accumulated by foreigners during the reign of the dollar standard is staggering and without historical precedent. Any move away from the dollar would be… well, problematic


If the US runs a trade deficit with any country-then that country must accumulate USD-if the euros run a trade deficit with another country-that country must accumulate EUR-

btw- most of this accumulated money is not money-but money equivalents -TBT etc.

It can be turned into currency-but first the equivalents must be auctioned off and if that happened on a mass scale-they would likely be redeeming in a worthless currency-so i doubt they would try it-


2--Unlike in China, where the average savings rate is said to be 20% (some unofficial reports have it as high as 40%), or even in some European countries where it is reported at 10%, the savings rate in America is now negative


No the US savings rate is not negative-

It has broken out of a 30 year downtrend and now sits above 5% and was not long ago at 8% -

Snidley Whipsnae's picture


The US personal savings rate was 1%-3% as of June 2010 and the trajectory, as shown on Fortune's chart at link, was almost straight down...

I doubt that a great increase in savings has occured in the last year since wages are stagnant, prices are increasing, and unemployment is up.

"FORTUNE -- The long decline of the savings rate in the United States has been widely discussed, yet every revisit of the data brings new cause for alarm. Hedgeye recently provided its clients a chart showing savings as a percentage of GDP. In the 1970s and 1980s savings were in the 5 - 7% range. In the decades since, personal savings have declined to the 1 - 3% range."

sasebo's picture

What do you expect with all the stupid assholes in charge?

There is only one person with answers to all the problems mentioned in this old post. Dr. Ron Paul. I know he's pretty old but if you vote for anyone else you'll just get more stupid assholes. He's the only one with the record on these issues. He's also turned down his congressional pension. He's got more contributions from members of the military than all the others combined. Dr. Paul will replace Bernanke, Geithner, Clinton, etc with Austrians. How about Michele Bachmann as his VP? 

FeralSerf's picture

Nah -- Baby Jesus will save us.  Have faith.  You'll see!

If I vote for BJ, is He going to have the same birth certificate problem that the current TOTUS has?

adr's picture

I said stuff like this in 1996 in college. The downward spiral, debt out of control, stock bubbles, Microsoft taking over, digital cameras replacing film, computers making blueprints obsolete. I didn't have any money to invest in stocks but I knew the market was always doomed to crash due to the excess stupidity of people believing they can outsmart simple math. I guess I wasn't much fun in class. I could see the housing crisis from a mile away, again it was simple math, A+B did not come close to C. 

At some point the reality that the rules of simple math can not be broken has to be realized. 2+2=4 as much as they are trying to convince us it = 5. They are using words to complicate things like quantum mechanics just so people who claim to be smart can tell you that you just don't get it.

How are we going to reset a global currency or even a single country. If we use gold how do we set its purchasing power. Gold has actually increased far beyond its normal historical purchasing power when expressed in dollars. At $30 an ounce 100 ounces could buy you a pretty nice car in 1955. Right now that 100 ounces can buy you a pretty decent house in most of the country. That is a pretty big jump. Gold would somehow need to establish a fair value. You better be able to keep your gold safe if ten little coins is enough to buy a BMW. 

I don't see how we back a currency with gold today. There simply is not enough of it. Even at $10k an ounce there isn't enough to even make a dent in the paper needed to pay just a small portion of US workers. Gold could be valued at $1 million an ounce at which point every grave dug in the past 200 years is being dug up for fillings. 

Inflation has simply taken the gold standard off the table. To bring it back would mean a massive revaluation of every produced item.