US Greenback Is Doomed!

By Paul Chong         Sunday 6 December 2009

(A composite report from reliable sources)

“Capitalism creates a rational frame of mind which, having destroyed the moral authority of so many other institutions, in the end turns against its own.” – Joseph A. Schumpet

Japanese toymaker Bandai has released paper-thin bath soap that looks like the American 100-dollar bill.(Xinhua/AFP Photo)

Environmental experts recently called toilet paper

“one of the greatest excesses of our age.”

Once the pride & might

Its collapse is now in sight!

This is not just theory. It’s the real thing! Let’s hear from the experts:

US billionaire & investment guru, Jim Rogers, influential former partner of financier George Soros (The World Today Dec 3, 2009) is advising investors to desert the greenback and put their money into commodities. He says the US dollar is a flawed currency that has no future.

Nobel Prize winner Dr. Paul Samuelson, hardly an alarmist, has characterised U.S. financial imbalances as so severe and “irreversible that we must accept that at some future date there will be a run on the dollar. Probably the kind of disorderly run that precipitates a global financial crisis.” . . . while other monetary experts now warn, “We’re in the terminal stages of the world’s most gigantic pyramid scheme.”

Or as Dr. Ron Paul, a member of the U.S. House of Representatives, recently noted about the rampant, unprecedented money creation going on, “If we continue doing what we are doing right now, we will literally destroy the dollar.”

The first dramatic debt growth spurt of US debt-based approach financing system occurred with the Civil War. The debt was just $65 million in 1860, but passed $1 billion in 1863 and had reached $2.7 billion following the war, slowly fluctuating for the rest of the century, finally growing steadily in the 1910s and early 1920s to roughly $22 billion as the country paid for involvement in one war after another – wars which they never did win.

When compared to hard money backed by gold or silver, this debt-based approach has the advantage of making the currency elastic, giving the government a means of expanding or contracting the money supply in response to changing economic conditions. The disadvantage of this approach is inflation. The money supply must be continually expanded in order to finance interest payments on the debt by which it is issued. This devalues the currency, causing inflation.

All signs point toward the U.S. dollar – already down one-third against other world currencies since 2002 – heading at breakneck speed for a precipitous and historic crash.

While all global currencies are falling against tangible

assets, the US Dollar is falling faster.

Unmistakable warning signs reveal here point to a monetary crisis on the verge of spinning wildly out of control, leading to massive INFLATION and quite possibly, a sudden and catastrophic dollar collapse that will forever change US nation.

Mr. Obama, in a recent cable news interview during which he tried to rationalize his multi-trillion dollar spending spree, conceded with a chuckle,“we are out of money now. We’re operating in deep deficits…” This admission came only a few months into his term, and even before he committed upwards of $50 billion more in U.S. taxpayer funds to bailing General Motors out of the hole!

Major foreign investors such as China are quickly catching on to the hard reality of US insolvency. Inescapably, they’re concluding that the “only way Washington can keep its Ponzi finance going is by running the monetary printing presses non-stop.”

Mega-investor Warren Buffett recently admitted publicly that the frantic spending and money creation underway right now will trigger a currency-destroying inflation that will be much more severe than in the 1970s.

Big-time investment gurus such as Jim Rogers dispatched a strongly worded email offering this sobering assessment:

“The world at large does seem to understand innately that governments are bankrupting themselves and destroying paper currency.”

The sheer havoc unleashed by a dollar crisis will be nationally jolting on a par with Pearl Harbour, John F. Kennedy’s assassination and 9/11. And yes, the bottom could drop out in just a single harrowing day.

The coming dollar collapse will wreak economic and social havoc far beyond skyrocketing prices. Widespread fuel and food shortages, relentless crime waves and the government’s endless socialistic machinations will devastate the American way of life like a giant tornado.

US – Greatest Debtor Nati

With US main creditors & all the global supporters pulling out,

there will be a catastrophic tsunami unimaginable.

Just this week, US Fed Chief Ben Bernanke declared the US economy is facing “formidable headwinds” & effectively vowed to continue its relentless printing paper dollars.

China’s Andy Xie, recently named by BusinessWeek as one of China’s most influential economists, quickly reacted with the accusation that Bernanke was “poisoning” the US economy by keeping interest rates near zero & creating a tidal wave of newly printed paper dollars. He warned that the next global crisis will be driven by asset inflation . . . which is exactly the present scenario.

Incidentally, toilet roll goes off very quickly towards its end!

Being at the top is not good, there is only one
way to go from there – down.

General Motors Today . . . America Tomorrow?

General Motors Today . . . America Tomorrow?

GM is not one of those fly-by-night corporations. It has always been an accepted slogan & mantra “As General Motors goes, so goes America.” May the words not ring completely true.

But yes, GM has fallen & filing for bankruptcy.

GM Headquarters in DetroitGM Headquarters in Detroit, Michigan, USA

The inconceivable has happened. Over the satellite news by Bloomberg & Aljazeera yesterday, I sat refusing to believe that General Motors was filing for bankruptcy (Chapter 11) to emerge later as a leaner & more competitive automaker, an assurance given by Obama just four hours after the announcement.

This is the great American icon of innovation & success for nearly a century. The mighty corporation that survived two World Wars, The Great Depression, the Korean & Vietnam Wars, and every economic crisis & shock . . . has finally reeled under its insurmountable mountain of debts of some $173 billion. It had received $20 billion from US government & was expecting $30 billion more.

180px-GM_headquarters_in_Detroit.JPG Another View of GM HQ

US Bankruptcy Laws are rather complex, but suffice to say that under Chapter 11, GM has provisions for reorganisation & rehabilitation. There will be closure of unprofitable lines of manufacturing, downsizing, laying off of workers . . . generating a consequential chain of reactions. The implosion of GM will be felt throughout the land.

It is much more than just the failure of GM, one of the most powerful engines of economic growth this century for the investors & every American family. For the dealers & suppliers the dream of a life-long guarantee of livelihood just unbelievably vanished. Hundreds of thousands of workers will be affected. It’s official that unemployment has reached 9.4%, but the worst layoffs are yet to be. This figure is grossly understated when you take into consideration of the millions who suddenly have to switch from full-time to part-time or part-part-time jobs, or worst still having to resign completely looking for work.

Debts killed GM, but will debts also kill the United States of America?

We have seen America has failed to rescue GM, AIG, Fannie and Freddie, the entire banking industry and many other companies. In the process, the US government has created & is creating its own mountain of debts at an enormous rate of $3.8 billion per day. GM’s sorrow pale in significance when compared to the grief of Washington.

With its staggering record spending, Washington is also failing to control the surge in interest rates. While continuing feverishly printing its “fiat” money to buy more than $700 billion in bonds so far this year, no thought is focused on creating jobs & economic productive activities. As more & more money, created out of nothing, sink beneath its economic sink hole, rising interest rates will only prove to be its kiss of death.

Just when GM’s longtime rival Chrysler was preparing to move out of bankruptcy having taken time off to reorganize itself under legal protection, GM’s bankruptcy will be the largest industrial bankruptcy in US history & overall the fourth-largest.

Right now, its two main financial saviours, China & Japan, are rethinking their own risks in furthering their purchase of US Treasuries. Japan is also in very poor shape to be of much help. China is already taking steps in the right economic direction. Ultimately, US will have to bear its own burden or like the Titanic sinking into the deep blue ocean. Already the government has committed billions in bailing out the banking & insurance sectors.

We as lay persons will stand by & watch the catastrophe unfold. Medically, every disease must run its course. There are no quick & easy fixes. Does America possess the strength & tenacity to come out of this mess? I pointed out the “domino effect” in my earlier article “US Extreme Game of Economic Dominoes”. GM has the domino potential & dragging America along.

How long can America go on spending like crazy & borrowing like mad? Or keep on feverishly printing their paper money? Only time will tell.

Paul Chong

A Chinese by Descent

An Australian by Consent

Wednesday, 3 June 2009

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