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I make no apology for repeating my warning that, thanks to the dismal Obama administration, Uncle Sam is bankrupt. Serious financial commentators are now predicting riots in the streets and even, perhaps, outright economic collapse.
The U.S. dollar, the world’s reserve currency for almost half a century, is its reserve currency no more. Each dollar bill the administration prints is just as much a forgery as that bogus Hawaiian birth certificate.
Every two months, the administration prints or borrows more money than the combined annual profits of the 100 biggest publicly traded companies in America.
Every second, the U.S. government spends $64,000 it doesn’t have. The $64,000 Question is not whether but when the collapse will come. The crash of 2008 was a walk in the park. This is the big one. And the frankly communist outlook of the current administration means it is temperamentally disinclined to take any of the steps that are now essential to save America.
Trouble is, the GOP have little or nothing to say about this. For 10 successive suspicious weeks, U.S. federal debt has remained at just under $17 trillion, just under the debt ceiling set by your elected representatives in Congress.
Yeah, right. Dream on. The Treasury is fiddling the books. Fraudulently. According to my calculations, federal debt has risen not by zero but by $400 billion in those 70 days.
Here is just one of the ways the Treasury can get away with making $400 billion vanish. Under an act intended to allow officials to mint commemorative coins (not exactly a legitimate function of the Treasury), the Secretary Jack Lew can issue platinum coins of any denomination he wants.
To keep the debt apparently below the congressional limit even though it is rising at $40 billion a week, all he has to do is mint a half-ounce coin with a face value of $2 trillion and deposit it with the Fed.
Bingo! Not just 70 days’ squandering but a whole year’s socialist profligacy fully “paid for,” just like that. And Congress none the wiser.
I don’t know whether this is how Lew is cooking the books. I don’t know how he’s cooking them. But I do know that he’s cooking them. You don’t need to have a Ph.D. in macroeconomics to work that one out.
I am angry – and I’m not even a U.S. citizen. Every red-blooded American should be furious when in-your-face corruption as outrageous as this prevails at the highest level in the institution whose job is to account for your money honestly.
Today the U.S. has more government debt than any country in the history of the world. More debt than every country in the European Union – combined.
To minimize the interest on all that debt, the Fed has lowered its benchmark interest rate 10 times since August 2007, from 5.25 percent to somewhere between 0 and 0.25 percent. But it can’t go on doing that, because worldwide no one believes in the dollar. So interest rates are going to have to go up.
Porter Stansberry, an investment expert based in Baltimore, explains what will happen then: “What if the average real interest rate ends up being just 4 percent and we pay it off over 30 years, like a mortgage? We’ll spend $34.3 trillion just to repay what we owe right now. If the rate ends up being 6 percent, we’ll spend $43.1 trillion.”
The crunch will come when Uncle Sam’s creditors either completely stop accepting dollars in repayment or greatly discount the value of these new dollars.
The New York Post puts it this way: “The U.S. dollar is getting perilously close to losing its status as the world’s reserve currency. Should it cross the line, the 2008 financial crisis could look like a summer storm.” The Financial Times and the Wall Street Journal have said the same.
Sam Zell, America’s 60th richest man, says this: “My single biggest financial concern is the loss of the dollar as the reserve currency. I can’t imagine anything more disastrous to our country. I’m hoping against hope that it ain’t gonna happen, but you’re already seeing things in the markets that are suggesting that confidence in the dollar is waning. I think you could see a 25 percent reduction in the standard of living in this country if the U.S. dollar was no longer the world’s reserve currency. That’s how valuable it is.”
The Chinese, via the official Xinhua news agency, have said: “International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert catastrophe caused by any single country.”
James Rickards, the author of “Currency Wars,” says this: “If the currency collapses, everything else goes with it: Stocks, bonds, commodities, derivatives and other investments are all priced in a nation’s currency. If you destroy the currency, you destroy all markets – and the nation.”
You heard it here first.