Remember Enron, the company that collapsed because of its massive accounting fraud? Can you imagine what would happen in the US, and around the globe, if the Federal Reserve were shown to be conducting a similar accounting fraud?
When a central bank fails, it ALWAYS tries to print its way out of trouble.
The Fed started following that script in 2008. They printed more than $4 trillion to rescue the economy.
When their loans go bad… when interest rates start to rise…. when the accounting hoax hits the mainstream… they will be forced to print even more worthless dollars.
History proves it’ll happen, just like it has time and time again.
But there’s a limit to how much a central bank can print before triggering a major crisis of confidence in our currency.
Pull any dollar bill from your wallet and take a closer look at it. Today’s Federal Reserve notes are not backed by any real asset. Instead, our entire monetary system is based on nothing but trust.
It’s that trust in our currency that has made America an economic superpower over the past century. It was trust that allowed our government to bail out major banks and prevent the collapse of our financial system in 2008. And it’s that trust that has given us a great standard of living.
It has allowed us to live in McMansions, drive BMWs and Mercedes, pay far cheaper gasoline prices, buy 3-D HDTVs, load our pantries with cheap food, and so much more.
Simply put… without trust in our currency, our way of life is over.
Unfortunately, once the Fed’s insolvency becomes evident, everyone will lose trust in the U.S. dollar… once and for all.
No one will want to buy or hold U.S. dollars after the Federal Reserve proves to have been hiding losses, either. That’s why Forbes recently published an article, warning:
“The possibility [of the Fed being insolvent] ought to concern you if you have any Federal Reserve notes in your wallet. These notes aren’t redeemable for gold or anything else tangible. They are trust-me money. What if people stop trusting the dollar? What are you going to be able to buy with it?”
The answer is… you won’t be able to buy much. When people lose trust in our currency, the price of things like gas, medicine, corn, wheat, milk will skyrocket. I’m talking about paying $9.50 per gallon at the gas station… $10 for a gallon of milk… and $5 for a loaf of bread. Millions of unprepared Americans will hit rock bottom.
Seniors who live on a fixed income will become poor virtually overnight… and may even struggle to feed themselves. Social Security and Medicare benefits will be cut in half. Pension funds will be devalued, ruining the retirement plans of millions of retirees. Global markets will plunge, as investors bail out of stocks. Anything that’s backed by the U.S. government will become worthless.
Nouriel Roubini, the New York University professor who correctly predicted the 2008 collapse, has warned about this risk. Here’s what he said: “At some point [the Fed] may crack, in which case, the ability of the government to credibly commit to act as a backstop for the financial system – including deposit guarantees – could come unglued.”
That means things like FDIC insurance won’t mean anything anymore, which will lead to a run on the banks, similar to what happened in the Great Depression. You may not even be able to redeem your money, or pull any of your savings out of the system.
But here’s what’s really scary: The day Americans and foreigners no longer have faith in Federal Reserve notes as “money” is closer than anyone thinks.
Governments Around the World Are Already
Preparing for This Collapse
Some people think that even if there’s a crisis of confidence, the dollar won’t crash because there are no alternatives to our currency.
But that is NOT true. There IS a replacement ready to roll forward and take the dollar’s spot as the world’s reserve currency. The International Monetary Fund, or IMF, is the world’s bank. And the IMF knows what I’m telling you here today. They can see the accounting records. They can read the tea leaves just like I can. And they know the Fed is functionally insolvent.
They know the Fed has so much leverage that they won’t be able to print much more money without triggering a collapse of the dollar. They know the Fed won’t be able to save our financial system in the next crisis.
Which is why they’ve developed an emergency plan that involves a new global “money.”
The plan is to use this “new money” to replace the dollar as the world’s reserve currency during the coming crisis.
The IMF has designed an emergency plan based on a new global money known as Special Drawing Right, or SDR.
For the past few years, the institution has openly called for the SDR to replace the dollar as the world reserve currency.
And they may be planning to print SDRs to save our financial system during the next collapse. Strauss-Kahn, the former head of the IMF, has confirmed that in the next crisis, “the IMF might even be called upon to provide a globally issued reserve asset.” That’s when the SDR could replace the dollar as the world’s reserve currency. And this day is closer than anyone thinks.
Barron’s has already reported: “The talk [to replace the U.S. dollar by SDRs as the world’s reserve currency] has gained momentum recently.”
The Financial Times has already picked up on the story, reporting: “In the eyes of the IMF, the best way to ensure the stability of the international monetary system is actually by launching a global currency.”
Once this plan to replace the dollar is fully executed, the dollar will finally be dethroned as the king of the financial world.
As the dollar goes down… so does the American economy… and the entire way of life we’ve enjoyed for decades.
When the Federal Reserve collapses, when the dollar goes down, and when a whole new competing currency enters the financial markets, the stock exchanges will plummet. The value of your dollars will instantly drop overnight. Riots may break out when Americans can’t get cheap, easy access to all the things they’ve taken for granted, things like water, gas and food.
It will be nearly impossible to get your hands on your own savings, just like it’s always been throughout history in times of economic crisis. It’ll be no different here when the collapse comes.
[by Jim Rickards, writing for AGORA FINANCIAL]
As always, posted for your edification and enlightenment by
NORM ‘n’ AL, Minneapolis