Is our country near bankruptcy? There are some disturbing things going on. Ben Bernanke is resigning. The Fed’s Debt to Asset ratio is 77. They are maxed out. They have taken on a tremendous level of debt in trying to get the U.S. Economy moving. And yet, it is barely off the ground. Our stock market versus GDP is at an all time high. The percentage of the our workforce that is employed, 64%., is at an all time low. 50 million people are on food stamps. That is not a thriving economy.
Income inequality in the U.S. is about equal to China’s. Their is improving, ours is getting worse. And yet, China is struggling too. China’s currency is declining, and they are propping up their currency by buying U.S. treasuries. They are being sneaky about it. We don’t like them propping up their currency (RMB) even if it helps keep our interest rates low, per Obama? They have been buying treasures through a deal they worked out with Belgium to be the front person. Except, when China’s buying slowed this summer Belgium became the the third biggest buyer in the world. Duuu. It fooled no one, but perhaps it was just a diversionary tactic.
There are rumors that there are thousands of skyrise apartments and office buildings in China that have been built and never occupied. Why, because the money in China is increasingly moving to the rich through corruption and political misallocation of money. Unlike in the U.S. where we just move it legally from corporations directly to the rich and pay workers less each year. Thanks to PAC’s we can count on this to continue until we have too few consumers to support our working class. Nevermind, we are already there … a downward spiral.
So, is China and the U.S. going down the tube together. Well, never underestimate the China not to have a Plan B and long term plan. Clue number one, China just signed a $400 billion plan for Russia to deliver it energy for 25 years. Look for some major pipelines and rail construction to make this happen. Hint number two, China is amassing the largest supply of gold in the history of the world. First, they are the biggest producer of gold in the world and they keep it all to themselves. Also, they are the biggest buyer of gold in the world, slow and steady for decades. In the last few months, they are accelerating purchases. So, what does China and Russia both want? How does the U.S. control much of the world … hint the U.S. dollar being the world currency is HUGELY ENABLING. (is that good English?)
Who is the biggest energy exporter in the world? Answer Russia. Number two, the Saudi’s. Who started pricing oil in U.S. dollars. Remember the gasoline shortage in the 70’s. We made a deal with Saudi Arabia to protect their asses if they priced oil in U.S. dollars. We essentially went from backing our dollars with gold to backing them with black gold. Sweet deal for us. Not too bad a deal for the Saudi Royal Family who gets protection and a decent price for their oil and a steady customer than guzzles energy, us. But, what has changed? Fracturing. The U.S. is moving in the direction of energy independence. I personally don’t think we are smart enough to put policies in place to make it happen, but we are for now moving in the right direction anyway.
So, where is all this leading. It seems obvious to me. China is going to back their currency with gold and perhaps oil also. How? A three way deal with China, Russia and the Saudi’s. If the Saudi’s and Russia agree to price oil in China’s currency, the RMB (Renminbi), its a done deal. And then China can sweeten the deal by backing their currency with gold. All the pieces are in place to make it happen. China and Russia’s ambition in this matter are no secret. Saudi’s displeasure with the U.S. in Iraq and with U.S.'s biased position in the Israeli / Palestinian conflict is well documented. The decline in the Royal Family’s prosperity might encourage a lucrative deal with China.
So when this happens .. what happens to the U.S. dollar.? The days of the U.S. being able to print money to prime our economy are gone. Print more money and there will be a quicker decline of the dollar. We will depend on our Congress to manage our fiscal policy. Fat chance of that happening with PAC’s and lobbyists running our government. The Federal Reserve, well they are broke. Some have even predicted a collapse of the U.S. economy. I think that is probably not probable, but not impossible. A major recession/depression for sure if the U.S. loses its role as the world currency.
The other possible player in all this… the IMF is the only one that has a good balance sheet of the major players. China could encourage them to start a world currency backed by China’s gold. I’m still trying to figure out that angle, but it is just a detail on how the U.S. currency losses out to a new world currency.
What signs will we see that a deal between China, Russia and Saudi Arbia to price oil in RMB’s is imminent. The price of gold will take off as China buys as much as it can in the final hours and the rest of the world wakes up to their plan. I am betting all the current gold ETF;s (paper gold) will not be worth much when everyone realizes that China controls the bulk of the gold in the world and they chose not to honor all the ETF agreements under the original terms.
If you own stocks, I would get out of any financial stocks, tech stocks, or big U.S. companies. I would move toward hard assets like land and property, stocks in food companies, oil companies than have oil reserves preferably priced in something besides dollars (the value will remain even if the dollar collapses but it could take some time to get revalued), perhaps utilities, railroad stocks (Buffet knows), and similar. Keep away from military equipment suppliers (we won’t be able to afford flushing money down our Military Industrial Complex) and airlines (travel has to collapse).
Good luck, Americans. I hope I am wrong on this one and that all these pieces of the puzzle can be put together another way that what I just did with them. But, all the pieces are in place for the U.S. to lose its position as the owner of the world currency … and we are just not in good enough shape financially or any other way to stand on our own feet right now without owning the world’s de facto currency.
If we only had a congress that did long term planning like the communist party of China … if the people only had a congress period ...
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