Guest Post: Has The Perfect Moment To Kill The Dollar Arrived?

Tyler Durden's picture

Submitted by Brandon Smith from Alt-Market

Has The Perfect Moment To Kill The Dollar Arrived?

The idea of “collapse”, social and financial, comes with an incredible array of hypothetical consequences ranging from public dissent and martial law, to the complete disintegration of infrastructure and the devolution of mankind into a swarm of mindless arm chewing cannibals.  In an age of television nirvana and cinema overload, I have found that the collective unconscious of our culture has now defined what collapse is based only on the most narrow of extremes.  If they aren’t being hunted down by machete wielding looters or swastika wearing jackboots, then the average American dupe figures that the country is not in much danger.  Hollywood fantasy has blinded us to the tangible crises at our doorstep.

The reality is that collapse is not a singular event, but a process.  It is a symphony of doom, composed of a series of exponentially more powerful crescendos.  If the past four years since the implosion of the derivatives bubble have proven anything, it is that catastrophe has the ability to drown a nation slowly like a river of molasses, rather than sweep it away like a flash flood.  That said, almost every recorded collapse of modern societies in the past century has been preceded by a primary trigger event; a moment in which the mathematical certainty of failure becomes clear, even if the psychological certainty is muddled. 

In 2012, we still await that trigger event, which I believe will be the announcement of QE3 (or any unlimited stimulus program regardless of title), and the final debasement of the dollar.  At the beginning of this year, I pointed out that we were likely to see such an announcement before 2012 was out, and it would seem that the private Federal Reserve is right on track.

Last month, the Fed announced that it was formulating a plan to “expand its tool kit”.  This includes an openly admitted possibility of a third round of quantitative easing starting as early as September:

This timeline appears to coincide perfectly with the breakdown of the EU, which may also see a climax event in September.  In that month, EU policymakers will return from summer holiday.  German courts will make a ruling which could put an end to any chance that the country will support a eurozone rescue fund.  The Dutch, which are anti-bailout, will vote in elections.  Greece will be attempting to renegotiate its financial lifeline.  And, the ECB will have to assess the impending chaos in Spain and Italy:

As far as the Fed’s ability to remedy the fiscal situation goes, let’s clear something up right here; the Fed has NO TOOLKIT.  Sorry, but central banks have only two options when attempting to shift the tide of the economy:  They can lower interest rates to zero, and, they can print-print-print.  That is it.  We’ve had TARP, numerous bailouts, QE1 and QE2, Operation Twist, and interests rates have been kept near zero for years!  These so called solutions have been strapped like millstones around our necks and absolutely nothing has been accomplished since 2008. 

Real unemployment still stands at over 20%.  The housing crisis remains an unstoppable juggernaut.  Europe is on the verge of meltdown (despite the trillions in American taxpayer dollars handed to EU banks).  The national debt continues to grow at a pace far beyond what the Obama Administration and mainstream economists (who should have been fired long ago) predicted in 2010.  There are no secret magic tricks up the sleeve of Ben Bernanke.  Even if the Fed actually wanted to save our financial system, and our currency (which they don’t), there is nothing they can do except make the situation worse.  Central banks are perhaps the most useless institutions ever devised, unless, of course, their true purpose is to diminish the financial health of a country and siphon away its economic sovereignty…

Enter the death of the dollar.

The IMF has been consistently calling for the end of the dollar as the world’s reserve currency, and for its replacement by the SDR (Special Drawing Rights):

The new president of France, Francois Hollande, has recommended the expulsion of the dollar as the go-to reserve, a deeper relationship between France and the BRIC nations:

China has been demanding an end to dollar primacy for years:

And so has Russia…

And so has the UN…

It’s not as if it’s a big secret that the dollar is on everyone’s hit list.  Until recently, alternative economists could only point out circumstantial evidence that this sentiment was a product of collusion between the world’s central banks and elements of various governments.  Suggesting that China, Russia, the UN, the IMF, and the Federal Reserve were working in tandem to devalue the dollar and replace it with a global currency has always elicited at least a few jeers and the ever present standby catch-all accusation of “conspiracy theory”.  However, the times they are a’ changen’…

With the exposure of the Libor Scandal, we now have definitive proof and even open confessions from international banks, the Federal Reserve, and the Treasury, admitting that the true debt problems of major institutions have been hidden, deliberately, in tandem with multiple agencies in multiple countries, from the general public, with the full knowledge of numerous governments.  The most vital and shocking element of the Libor Scandal is that it shows, beyond a shadow of a doubt, that there is indeed a conspiracy which has melded the corporate world and the political world into a single ominous creature.

The collusion has become so brazen, central banks around the globe now institute policy initiatives within the same hour of each other:

Years back, I wrote an article about the most important signs to watch for when facing a heightened state of collapse.  One of those signs was the advent of openly admitted corruption on the part of the banks.  When criminals become absolutely transparent and nonchalant about their criminality, it is usually because they no longer fear the threat of justice or reprisal.  This is exactly the atmosphere we have in 2012.  But, what could possibly have made the banksters so confident that they are willing to flaunt their racket to the world?  I can only surmise that an event is on the horizon.  One so distracting that the hucksters believe we will forget all about them. 

Looking at it from another perspective; if I was a globalist hell bent on undercutting the dollar as the world reserve and replacing it with a centralized standard while turning the U.S. into a third world pit in the process, I would probably pull the plug soon.  Here are some reasons why:

Drought Crisis Provides Inflationary Cover

The drought which has struck half of the U.S. agricultural centers and which has also hit Russian production is the perfect cover event for dollar devaluation.  The full view of crop production and yields will be revealed this autumn, and according to the mainstream, the numbers will be dismal.  Maybe they will be, maybe they won’t, but the likelihood of inflation in food prices all over the planet is high.  If the Fed announces QE3 and sets an implosion of the dollar in motion, the price spikes this will cause in commodities, especially grains and other foodstuffs, can be easily blamed on drought, rather than the destruction of the greenback.  At least for a time.

Syria And Iran Theater

If the UN pulls observers from Syria, expect an attack by either the U.S., Israel, or both is on the way.  Expect Russia to be quite unhappy.  Expect China to respond with financial warfare.  Expect Iran to fulfill its mutual defense pact with Syria and come to their aid.  Expect hard core catastrophe.  I have been warning about Syria as a catalyst for global crisis for quite some time.  Long before anyone ever heard the name “Assad”:

Every time I catch a glimpse of the MSM, whether it be MSNBC, CNN, or FOX, they are all spewing the same rhetoric:  The U.S. should have invaded Syria months ago.  It would seem that the American people are being psychologically prepped for a new war, but in reality, they are being prepped to be distracted from the banking sector’s primacy in the economic calamity that is about to unfold.     

European Seesaw Of Destruction

With the EU in shambles, and only getting worse, the ECB has been attempting to work around the rules of its own charter which forbid the infusion of capital directly into governments.  The latest weapon in the fight against the financial stupidity of EU member countries?  European stimulus!  That’s right folks, the U.S. is not the only country that will be raping its own currency this year!  Be sure to catch the euro-sized version of QE:

I believe, in keeping with the collusion central banks have already shown, that the Federal Reserve and the ECB will announce new stimulus measures very close to each other, if not in tandem.  The continued devaluation of the Euro will help to hide the effect of the falling dollar as the two currencies seesaw back and forth, allowing for a delayed reaction from the public as well as investment markets.  Investors looking for a safe haven currency will be scrambling in confusion.

Stocks Ready To Bust

Finally, it is very likely that the Fed will wait for markets to dive in the wake of faltering demand for goods and raw materials in all major economies, as well as declines in manufacturing.  As I have said in the past, the Fed wants us to beg for QE3.  The only reason this decline has not occurred yet is because investors that are still participating are salivating for new stimulus and expect it shower them with riches soon.  So, to put this in perspective, the Dow is above 13,000 right now because investors have already priced in a QE package not just in the U.S., but in the EU as well.  If they do not get it fast, they will pull out, and stocks will plummet.  The market addiction to fiat injection is so pervasive now, I cannot imagine how they would react if the pipeline was cut off.  It would probably induce a fiscal bloodbath.

What Will Collapse Really Be Like?

I expect the event will be spectacular in some ways, but subdued and subversive in many other ways.  Triggers may be swift and startling, but the reactions of the populace slow, uncertain, and presumptive.  There will be fissures in our foundation, but the complete extent of the danger may take a few more years to become evident.  While the public continues to maintain its fixation on some Mad Max nightmare scenario, the real collapse will be taking place right under their noses in the form of 25%-50% increases in food and fuel, tightened job availability with pensions swallowed by austerity, food lines hidden by food stamps until the government finally defaults and pulls the rug out from under entitlement programs, etc.  For a time, it will look and feel like a slightly darker version of today, and not the cinematic melodrama that we have come to envision.  The worst of times that we often find extolled in the pages of history books come at the cost of years of almost equal disparity, and usually, the lead up is far more difficult to handle than the finale…

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vinu02's picture

Dow hit multi year high on easing hope.

ECB fine tuning operation cause spike again on Tuesday.

MillionDollarBonus_'s picture

I sense an overbearing negativity on this forum that I find incredibly disturbing and sad. I worry that the Zerohedge readership may be compromising their ability to make objective judgements by always seeking negative conclusions, regardless of the issue. Zerohedge readers need to focus on positive thinking. To get started I recommend the book "learned optimism" by Martin Seligman as an introduction to this new liberating way of thinking.

MillionDollarBonus_'s picture

Well, no surprises here - I fully expect uneducated libertarians rednecks to reject the suggestion. But let give you an example so you can see what it's all about.

Consider the emergency financing of AIG: You could take a negative attitude when inferring the outcome of this event by saying things like:

  1. Hank Paulson worked for Goldman Sachs, so he must be up to something evil
  2. These spineless AIG executives made poor choices, so why should we bail them out?
  3. Politicians are just acting according to the preferences of special interests, and not with the goal of saving the economy

OR, you could take a more POSITIVE approach:

  1. Sure, Hank Paulson may have been CEO of the largest beneficiary of the emergency financing, but isn’t that a bit conspiratorial? Isn’t the fact that he was appointed by our ELECTED congress proof enough of his good intentions?
  2. True, AIG executives made poor choices, but doesn’t the bible teach us to forgive? I quote: “Seek the LORD while he may be found; call upon him while he is near; let the wicked forsake his way, and the unrighteous man his thoughts; let him return to the LORD, that he may have compassion on him, and to our God, for he will abundantly pardon.
  3. In order to get elected, politicians need to withstand the objective scrutiny of a thoroughly moral and knowledgeable American public. Although criticizing the morality of politicians may be widespread, it is far from reasonable. 
redpill's picture

Some good Tuesday trolling from MDB and economic doomage to go with your toast and bloody mary.

I pity people that don't drink these days. At least I know when I wake up in the morning, that's the worst I'll feel all day.

pazmaker's picture

Isn't that a Frank Sinatra qoute or a paraphrase of it?   Give the guy the credit!!!

engineertheeconomy's picture

Department of

Extortion &



Dollar Damocles's picture

I think realism leads to a negative outlook on the economic/political future.  I'm still optimistic.  My anti-government, anti-bank, anti-dollar investments are something I am quite optimistic about.  But the brand of optimism you are preaching doesn't sound like optimism at all.  It sounds more like blind, koolaid-drinking, head in the sand, trust.  Actually, it doesn't sound very original at all.  No thanks.

FrankDrakman's picture

You, sir, suffer from ISR. Ineffective Satire Recognition.

LowProfile's picture

On the bright side, what is to come will result in the forcible super-sonic removal of billions of heads from their respective rectums.


Here is what will happen:

The EUR will devalue.  But it won't disappear, or lose utility. 

Ghordius so far has said it best (link to the comment below )

"it is well known that the bulk of Europe's sovereign gold is also contained deep under downtown Manhattan: we wish them all the best when they attempt to repatriate the physical when they need it, such as the day after the EUR finally collapses".

This is the other way round. First Nixon forbade repatriation on August 1971. Then europe had think through where all this was heading and concocted the EUR as a response to the situation, present and future.

This included expectations of future currency wars and great rounds of "competitive devaluations" in an environment that would make small currencies very, very fragile in view of huge waves of hot, speculative fiat looking for something to break for a quick profit. The CHF is already hiding under the EUR skirt, if this goes on we'll soon see other small currencies in some kind of trouble (the GBP's fate will also be very interesting). No financial pundit is currently ever thinking through (in the way of Bastiat) how this mess since 2008 would have looked like with 17 eu currencies all biting each other...

Ironically, the best way to get rid of the EUR would be the repatriation of the european gold, same as in 1971.

Fat chance. As long as the US Treasury/FED goes the fiat way and the USD is the global reserve currency (the two facts reinforce each other), I don't see how this "EUR collapse" could happen with an eurozone that is a net exporter, an ECB that values it's gold at market value and the European Fiscal Compact that is going to at least try to institutionalize nearly-balanced-budgets in the eurozone's future.

For all near-blind hate against all central banks that some here have, anybody looking seriously at the current situation should realize a few of those facts, that make btw the search for "understanding where the EURUSD is going" quite irrelevant, a mere short-term distraction. By now, we all have some proof that the ECB is really guided by the compromise between 17 national interests (yeah, call them mercantile, if you wish).

Parts of the gold markets are "getting it", eventually we'll talk here about "eurogold vs. usdgold", and more about "central banks FX reserves", etc.

And for all those that are expecting a "marriage of convenience" between the USD and the EUR - or even think this is a "grand plan": please remember East Asia's policies, expectations, demands (including SDRs), past currency manipulations and plans for the future. And how the current global trade flows function.


All I can think to add to what Ghordius wrote above (for now) is that the EUR is a supra-national currency, with no single nation in control of the issuance of currency (BIG difference between the ECB and the Fed, although it's clear the Fed is in collusion with the big banks).

Also, it uses the market price of gold to calculate it's reserves, with which it lends against.  This gives it an enormous advantage over both a debt-based and a gold-redeemable currency.

This also has the effect of limiting the ability of any one Eurozone member from issuing unsustainable debt (Greece, Spain, et. al. are running up against this market limit right now).

This has the effect of in the long run, making the EUR the most stable of all transactional currencies in the world.

The USD could do the same, but to try and adopt the EUR model, it would create a price shock in gold (and the USD) that TPTB are clearly trying to avoid.

This IMO will result in the EUR becoming (at least in the West) the transactional currency of choice.  Not a great store of value (unless you buy stable EU nation bonds, depending on the larger environment), but a superior medium of exchange than other currencies (owing to it's wide acceptance and greater stability).

Gold, bitchez.

pazmaker's picture

very thought provoking Low P.

Its the Vatican Stupid's picture

LowPro, sounds like you been Fofoa'd.

Harbanger's picture

His premise is based on this statement:

"I don't see how this "EUR collapse" could happen with an eurozone that is a net exporter, an ECB that values it's gold at market value and the European Fiscal Compact that is going to at least try to institutionalize nearly-balanced-budgets in the eurozone's future."

1) Eurozone is net exporter

2) ECB values Au at market value.

3) a nearly balanced budget is in the eurozones future.

If I look at these points objectively,  I can't say that they're accurate. 1)NT 2)rigged 3) wishful thinking

ATM's picture

Exactly where I was going t go.

The way out for the Eurozoneis to Federalize then print. All other choices allow the population to readily connect the dots to the politicians, bureaucrats and technocrats. They of course will do all in their power to shift blame, retain power and milk the system that has been so good to them.

Ghordius's picture

"federalize" ? why? because the MegaBanks want it? they are those who are loudest in requesting it and most flabbergasted that they are not being serviced as they are used to...

Ghordius's picture

+1 for the "Gold, bitchez"

since it's quoting time, here an excellent piece from Jesse's Cafe Americain: where he inserts the following

"To put it crudely, the US wants to inflate the rest of the world, while the latter is trying to deflate the US. The US must win, since it has infinite ammunition: there is no limit to the dollars the Federal Reserve can create. 

What needs to be discussed is the terms of the world’s surrender: the needed changes in nominal exchange rates and domestic policies around the world."

Martin Wolf, Financial Times, 12 Oct 2010


re: below Harbanger:

1) it was last time I looked, and I look at trends over decades, too - note that aggregated numbers for the eurozone are not used very often, usually it's single countries or aggregated EU - not the same

2) as for 1), near enough is enough - yes, it's the FOA argument, though if the gold market(s) were not manipulated this would count x-times more, wouldn't it?

3) yup. it's in the future - as for "in the next 15 miles of a marathon". as for 1) and 2) the whole point is not "looking good", it's looking slightly better than the ugliest horse in the glue factory. though that international treaty would look good as a formal agreement between the Dems and the Reps, wouldn't it?

1100-TACTICAL-12's picture

MDB if you were real , you would be exactly the kind of person I despise for ruining our Republic. Thank god you are not real, and there is not many that think along the lines of the sarcasim you write. Right?

Harbanger's picture

You're freaking out MDB by denying his existence.

ATM's picture

MDB is nothing but a liberal software program that was designed to tell us to feel good, think happy thought while the Titanic sinks with us on board.

BigJim's picture

If there were not that many people thinking along the lines of what MDB writes, how do you think they ruined our Republic?

LongSoupLine's picture

"rednecks"  LOL!

"...the fact that he was appointed by our ELECTED congress proof enough of his good intentions?" - LMAO!

"...politicians need to withstand the objective scrutiny of a thoroughly moral and knowledgeable American public." - LMFAO!

"Although criticizing the morality of politicians may be widespread, it is far from reasonable." - (ok, I just shit myself!)


MDB you ARE the king of all trolls. 


mvsjcl's picture

On the way to work, I was startled to observe a detatched ass on the side of the road. Yours perhaps?

halleys5's picture

MDB - "You can't go through life, being negative about everything. Sometimes you have to take things lightly, and look on the bright side."


That's what I try to do every time I look at my 401k statement. In my case it's very easy to take things "lightly" since my account has been "lightened" substantially in the last five years....

Wish I was better at this game but the cyborgs have my number

Precious's picture

It's the DAILY SHOW with your hose, MAJOR DIARRHEA BLOW.

Buckaroo Banzai's picture

This is the kind of sophisticated trolling we've come to expect from MDB. You are on your game this morning, sir. Kudos!

Burr's 2nd Shot's picture

I logged in just to applaud this posting. Job well done.

mick68's picture

Apparently you've been asleep the last three decades where corporations jumped on the PMA bandwagon, using it as a tool to control and manipulate employees into submission.
The only people still buying into this lie are weak minded women and gay men, for the most part, oh, and you.
The rest of the world has re-discovered the lost art of thinking for themselves and correctly assessing each circumstance based on it's own merits, as opposed to the swirly eyed visions of 1984 where people are forced to view all circumstances through the same clouded and incorrect lens.
Those who have bought into this myth can't see it for what it is, thinking themselves on a higher plane of reality, when in fact they are severely deluded souls in desperate need of a large dose of critical thinking 101-303.

azzhatter's picture

this session of trolling for comments is a bit weak, a little too obvious but I gave you a down arrow for the effort

azzhatter's picture

I am a little optimistic this morning, I woke up with a million dollar boner

_underscore's picture

Excellent post MBD - just a shame most posters here  (apparently?) don't seem to get the dry irony (..I bet they don't even get Jeremy Clarkson either..ho hum..)  Keep it up!

Your #1 Fan. ;)



tocointhephrase's picture

 "Although criticizing the morality of politicians may be widespread, it is far from reasonable". 

I feel sick, please pass the bucket! 

Random_Robert's picture

"thoroughly moral and knowledgeable American public"








bigsteveee's picture

If you choose to stick your head and the sand and pretend like nothing is wrong, that is your perogative but most people hear are attempting to prepare for the worst while hoping for the best, not quoting bible quotes in order to justify the stupidity of executives. And you consider the american public knowledgable in the slightest means that you might be the most ignorant person I've ever been subjected to.

moonstears's picture

"OR, you could take a more POSITIVE approach:" ...good shit MDB... a classic movie clip dedicated to you!

WhiteNight123129's picture

MDB, baffling the ZH crowd with bullshit, as usual quite smart in his fainted idiocy.

bankruptcylawyer's picture

MDB you are trying to hard. 



( too long, didn't read ) . hahahaha

Harbanger's picture

"no, i'm sure that book sucks..."

"Martin Seligman's learned optimism now orients the armed services' psychological stance, Dr. Keith Ablow blamed this in part for the actions of the U.S. soldier accused of killing 16 civilians in Afghanistan. He wrote that soldiers are " taught to deny stress and trauma, and false bravado is actually encouraged, under the banner of "resilience." It's a bad, bad idea that pushes soldiers to "fake good" until they fall apart. And, then, the system continues to withhold needed care, particularly of a psychotherapeutic, insight-oriented variety. " -wiki

mick_richfield's picture

"Learned Optimism" by a guy whose last name means "Happy Man".

yeah, whatever.


Pladizow's picture

How about we all hold hands, sing Kumbya and go watch the movie "The Secret" together?

Harbanger's picture

If we want to learn something, we should all go watch the movie, "2016: Obama's America"

Not Too Important's picture

Worse than you think.


It isn't 'Too Big To Fail' we need to worry about. It's 'Too Central To Fail' that is the most dangerous:

A serious read for serious players.

Acet's picture

For some reason, MDB's appeal to positive thinking kinda reminds of the saying by Augustine of Hippo:

"Oh God grant me chastity and continence, only not yet."

El Viejo's picture

... and "Oh God grant me patience, and can I have it right now!"

GMadScientist's picture

That's your upper lip; I have profound faith that you'll figure out how to get that brown stuff off eventually though.

Byte Me's picture


I always look on the bright side. And - to that end I am looking forward to the day when you take your sicko, inverted humour away to your own blog - where we will gladly ignore it at our leisure.

(Your posts used to be entertaining  - either buck up, or eff off.)

otto skorzeny's picture

sure beats the usual "got phyzz/lead" claptrap that is posted on here-usually sprinkled with some George Carlin words of wisdom