In recent days, there have been a number of articles in the media about the steady decline of the U.S. dollar against the price of gold and other currencies. As many economists have foreseen the possibility of the dollar’s decline against other currencies for some time, most do not understand the importance of this. Some believe that the dollar’s decline against the currencies of trading partners of America will help correct the trade deficit the United States and the dollar will stop falling when the trade imbalance is corrected. However, the evidence is that the opposite is happening: the U.S. dollar has declined 40% against the euro over the past 2 years, yet during this time the U.S. trade deficit continues to deteriorate.
Now there is nothing the U.S. can do to prevent the collapse of its currency and its economy. It has no reserves to support its value, and it has the most indebted country status in the world, and is dependent on the credit of its current and former enemies. Over the last few years, Russia and China have said they are switching their considerable dollar reserves into euros. This will only hasten the lack of confidence in the dollar, creating an overall lack of confidence in the currency and the setting free fall. It will soon lead to the collapse of the dollar and U.S. economy.
The collapse of the dollar — the world reserve currency — will throw the world into a global depression. Those nations with a heavy foreign debt will not be able to trade in order to earn sufficient income to service their debts, and slip into bankruptcy. The economies of New Zealand, Australia, Canada and the UK will also totally collapse, because of their debt and not being able to service their loans. It will result in Anglo-Saxon nations facing abject poverty as its people face starvation and a total breakdown in society. Crime will become rampant. Order will cease to exist. Disease will become widespread.
Whodunit? Sneak attack on U.S. dollar
It’s the biggest mystery in global finance right now: Who conducted a sneak attack on the U.S. dollar this week?
It began with a thinly sourced but highly explosive report Monday in a British newspaper: Arab oil sheiks are conspiring with the Russians and Chinese to quit using the dollar to set the value of oil trades — a direct threat to the global supremacy of the greenback.
Is it true? Everyone from the head of the Saudi central bank to U.S. officials scrambled to undercut the story, but no matter.
For American officials, the possibility of the dollar losing its long-term dominance in global commerce is a nightmare scenario because it would likely mean sharply higher interest rates at home and a declining ability to finance the U.S. debt. No one believes it could really happen right now, but stories like the British report this week make it seem incrementally more likely.
So who wanted dollars diving and gold rising? In other words, who is Fisk’s source, and why did he or she want to tank the dollar? It’s the global currency version of the old Washington parlor game of speculating on the real identity of Deep Throat.
No one knows.
Original full article located at Politico