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Peter Schiff: It’s All About the Benjamins, And US Currency is Creeping on Broke

Sunday, November 8, 2015 8:06
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Dollar

 

In the interview below conducted by Alex Jones, Alex interviews one of my favorite guests, Peter Schiff. To being the interview, Alex starts out rather dark when he comes right out and asks, “just how bad is this going to get,” referring to the looming financial collapse. As I said the post titled, Peter Schiff and Reagan Advisor: Complete Economic Collapse Immediately Ahead, Peter does what Peter does best, and that is he under-complicates matters to a level where every day people who need the help can understand. 

Before going any further, and before you listen to Peter’s analysis, decide if you are going to listen for entertainment purposes, or if you are going to listen to save your family. How often has Peter been right when all the talking heads have ALL been wrong? Think about that. To help you along, Peter begins with his predictions on the Fed raising interest rates. Despite 90-95% of Peter’s peers saying that is was all but a certainty that the Fed would raise rates, MANY of the links listed below feature Peter railing about what a preposterous idea that was, and how it was NEVER, NEVER EVER, going to happen. Once again Peter was right, once again, none of his peers listens. Thankfully his clients do. 

Peter begins his analysis with the jobs numbers. The economy is in freewill. NEVER, NEVER ONCE in the history of the the Republic, has labor participation by men been this low. In short, take the bad job numbers that were forecasted, totally cooked ones at that, then go back and revise them even lower, then lower some more, and maybe you start to get some idea the sheer severity of what is looming around the corner, because those are the revised numbers that GOVERNMENT is giving you… and you better know they are lying by now. 

To use an analogy for what we are experiencing, picture the entire country on Janet Yellen’s party bus, compliments of the Fed. The rest of the world knows that trouble is already starting to unfold, but not Americans. Americans are so busy partying and having a good time on the Fed party bus that they don’t even notice the chaos unfolding. Only because Janet Yellen is providing all the party punch (lose monetary policy) for the people on board, the American people are so drunk on stupid, they’re having the time of their lives as the bus is going over the cliff. 

Just last month the Fed revised their estimates DOWN for third quarter growth. Their most recent projection was .9% growth which in reality means we’ll probably end up around 0%, or slightly under. Then, should the fourth quarter also slide backwards a bit, we’re already in a recession, because a recession is defined as back to back negative quarters. As Peter has been forecasting for about 6-8 months now, count on QE4 coming with that recession, and with QE4, the ultimate collapse of the Dollar.

THE ARTICLE THAT FOLLOWS THE INTERVIEW BETWEEN ALEX AND PETER CONFIRMS THE WORST CASE SCENARIO FOR AMERICANS, MANY OF WHOM ARE TOO FINANCIALLY ILLITERATE TO COMPREHEND WHAT THE COLLAPSE OF THE DOLLAR, AND THE LOSS OF THE GLOBAL RESERVE WILL DO TO OUR ECONOMY.

 TO BE BLUNT: IT WILL CATAPULT US BACK TO THE STONE AGE.

HOW DOES THAT SOUND? 

FOR MORE NEWS BY VOICE OF REASON CLICK HERE!

WWW.THELASTGREATSTAND.COM

Economist.com Writes: 

IF HEGEMONS are good for anything, it is for conferring stability on the systems they dominate. For 70 years the dollar has been the superpower of the financial and monetary system. Despite talk of the yuan’s rise, the primacy of the greenback is unchallenged. As a means of payment, a store of value and a reserve asset, nothing can touch it. Yet the dollar’s rule has brittle foundations, and the system it underpins is unstable. Worse, the alternative reserve currencies are flawed. A transition to a more secure order will be devilishly hard.

When the buck stops

For decades, America’s economic might legitimized the dollar’s claims to reign supreme. But, as our special report this week explains, a faultline has opened between America’s economic clout and its financial muscle. The United States accounts for 23% of global GDP and 12% of merchandise trade. Yet about 60% of the world’s output, and a similar share of the planet’s people, lie within a de facto dollar zone, in which currencies are pegged to the dollar or move in some sympathy with it. American firms’ share of the stock of international corporate investment has fallen from 39% in 1999 to 24% today. But Wall Street sets the rhythm of markets globally more than it ever did. American fund managers run 55% of the world’s assets under management, up from 44% a decade ago.

The widening gap between America’s economic and financial power creates problems for other countries, in the dollar zone and beyond. That is because the costs of dollar dominance are starting to outweigh the benefits.

First, economies must endure wild gyrations. In recent months the prospect of even a tiny rate rise in America has sucked capital from emerging markets, battering currencies and share prices. Decisions of the Federal Reserve affect offshore dollar debts and deposits worth about $9 trillion. Because some countries link their currencies to the dollar, their central banks must react to the Fed. Foreigners own 20-50% of local-currency government bonds in places like Indonesia, Malaysia, Mexico, South Africa and Turkey: they are more likely to abandon emerging markets when American rates rise.

At one time the pain from capital outflows would have been mitigated by the stronger demand—including for imports—that prompted the Fed to raise rates in the first place. However, in the past decade America’s share of global merchandise imports has dropped from 16% to 13%. America is the biggest export market for only 32 countries, down from 44 in 1994; the figure for China has risen from two to 43. A system in which the Fed dispenses and the world convulses is unstable.

A second problem is the lack of a backstop for the offshore dollar system if it faces a crisis. In 2008-09 the Fed reluctantly came to the rescue, acting as a lender of last resort by offering $1 trillion of dollar liquidity to foreign banks and central banks. The sums involved in a future crisis would be far higher. The offshore dollar world is almost twice as large as it was in 2007. By the 2020s it could be as big as America’s banking industry. Since 2008-09, Congress has grown wary of the Fed’s emergency lending. Come the next crisis, the Fed’s plans to issue vast swaplines might meet regulatory or congressional resistance. For how long will countries be ready to tie their financial systems to America’s fractious and dysfunctional politics?

Strengths

INTERACTIVE: The shake-up of America’s strengths over 35 years

FOR MORE NEWS BY VOICE OF REASON CLICK HERE!

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That question is underscored by a third worry: America increasingly uses its financial clout as a political tool. Policymakers and prosecutors use the dollar payment system to assert control not just over wayward bankers and dodgy football officials, but also errant regimes like Russia and Iran. Rival powers bridle at this vulnerability to American foreign policy.

Americans may wonder why this matters to them. They did not force any country to link its currency to the dollar or encourage foreign firms to issue dollar debt. But the dollar’s outsize role does affect Americans. It brings benefits, not least cheaper borrowing. Alongside the “exorbitant privilege” of owning the reserve currency, however, there are costs. If the Fed fails to act as lender of last resort in a dollar liquidity crisis, the ensuing collapse abroad will rebound on America’s economy. And even without a crisis, the dollar’s dominance will present American policymakers with a dilemma. If foreigners continue to accumulate reserves, they will dominate the Treasury market by the 2030s. To satisfy growing foreign demand for safe dollar-denominated assets, America’s government could issue more Treasuries—adding to its debts. Or it could leave foreigners to buy up other securities—but that might lead to asset bubbles, just as in the mortgage boom of the 2000s.

It’s all about the Benjamins

Ideally America would share the burden with other currencies. Yet if the hegemony of the dollar is unstable, its would-be successors are unsuitable. The baton of financial superpower has been passed before, when America overtook Britain in 1920-45. But Britain and America were allies, which made the transfer orderly. And America came with ready-made attributes: a dynamic economy and, like Britain, political cohesiveness and the rule of law (see article).

Compare that with today’s contenders for reserve status. The euro is a currency whose very existence cannot be taken for granted. Only when the euro area has agreed on a full banking union and joint bond issuance will those doubts be fully laid to rest. As for the yuan, China’s government has created the monetary equivalent of an eight-lane motorway—a vast network of currency swaps with foreign central banks—but there is no one on it. Until China opens its financial markets, the yuan will be only a bit-player. And until it embraces the rule of law, no investor will see its currency as truly safe.

All this suggests that the global monetary and financial system will not smoothly or quickly wean itself off the greenback. There are things America can do to shoulder more responsibility—for instance, by setting up bigger emergency-swaplines with more central banks. More likely is a splintering of the system, as other countries choose to insulate themselves from Fed decisions by embracing capital controls. The dollar has no peers. But the system that it anchors is cracking.

Burning Dollar

FOR LINKS TO UNDERSTAND THE ECONOMY & THE COMING ECONOMIC COLLAPSE:

Peter Schiff and Reagan Advisor: Complete Economic Collapse Ahead

Peter Schiff: Warning! Economic Storm Clouds Ready to Rain

Jim Willie and 20 Reasons Why Quitting Prepping After September Was Wrong

There Are 102.6 Million Working Age Americans That Do Not Have A Job – Not Good!

Peter Schiff: The Currency Crises Will Come Quickly; Don’t Be Too Late To Prepare

Peter Schiff: Death of the US Dollar is Imminent; Fed Out Of Options;

Peter Schiff: 11 Trillion In Global Stock Losses and Awful Jobs Report

Peter Schiff: Janet Yellen and the Fed Are Conning the World Financial Markets

Will EU Become a New Enemy to the U.S. After Refugee Crisis Collapses EU?

Peter Schiff with Mr. “I Have No Fear Of an Economic or Stock Market Collapse”

Peter Schiff Explains Why Financial Bubbles Are Ready to Pop!

The Elite Have Prepared For the Coming Economic Collapse – Have You?

Peter Schiff: Does August Jobs Report Mean It’s Time For The Fed to Hike Rates?

China Issues Warning to Washington Confirming It’s Been Liquidating U.S. Treasuries

Peter Schiff On the 2 Day Stock Market Crash That Was Larger Than Any 1 Day 

10 Horrifying Realities Americans Find Too Awful To Face

Peter Schiff On China’s Currency Devaluation and the Federal Reserve Board

Peter Schiff Joins Alex Jones For A Few Epic Schiff Rants

Gerald Celente Predicts Economic Collapse Means World War III (Video)

Can You Imagine Empty Grocery Stores?

Putin Makes Chilling Threat to Obama That Could Change Everything in the U.S.

Gerald Celente: America Headed Towards Total Financial Collapse

Deathblow to the Dollar – Even Our “Allies” Abandoning U.S.

“America Is A Collapsing Third World Country” Says Gerald Celente

What Will Happen To YOU When The Dollar Collapses?

 

FOR MORE NEWS BY VOICE OF REASON CLICK HERE!

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