China And Russia Drop Dollar
It is well known that the U.S. Federal Reserve continues to print money to pay down debts owed to countries such as China. It is also known that the Fed printed billions to “bail out” banks and create “stimulus” plans to boost the economy.
There are a lot of doomsayers on the internet and in media that say this devalues the U.S. dollar both locally and globally. Technically their claim is correct: each dollar used to be backed by actual gold; that backing was removed in the 1970s and ever since then money could basically just be printed up.
But this is where the doomsayers logic ends. Their belief is that because money’s value is only as good as the economy’s belief in it, the value can disappear because there is no gold backing the paper money. Once confidence in the dollar is lost, many doomsayers say that the U.S. economy will completely collapse.
Dollar on fireThe U.S. dollar has been the world’s strongest currency for decades. Recently, however, this exalted position has shown signs of weakening. A disturbing national debt situation and a sputtering economic recovery are the main reasons why Russia and China have each taken steps to distance themselves from the U.S. dollar.
According to an article in the Washington Times, Mikhail Degtyarev, a member of Russia’s nationalist Liberal Democrat Party, has submitted a bill to Russia’s parliament this past week that would ban the use or possession of the American currency. The failed Moscow mayoral candidate cites fear of a collapse of the U.S. dollar as the basis for this bill.
“If the U.S. national debt continues to grow, the collapse of the dollar system will take place in 2017,” Mr. Degtyarev says.
“The countries that will suffer the most will be those that have failed to wean themselves off their dependence on the dollar in time. In light of this, the fact that confidence in the dollar is growing among Russian citizens is extremely dangerous,” said Mr. Degtyarev.
A similar ban was placed on the dollar during the Soviet-era. While not quite as extreme, this bill would prohibit Russian citizens from holding dollars in the country’s banks, and banks would be unable to carry out transactions in the dollar. The bill would not prevent Russians from buying or selling dollars while abroad, however, and they could still hold dollar accounts in foreign banks.
Financial Analyst Andrei Shenk warns that the bill would harm Russia’s investment climate. He says, “The American financial system, despite all its existing problems, remains the most stable and low-risk in the world.”
This bill comes on the heels of an announcement that the Shanghai Futures Exchange could price its crude oil futures contract in the Chinese yuan. According to zerohedge.com, the exchange’s chairman has stated that they are speeding up preparatory work to secure the regulatory approvals needed to make this move.
The U.S. dollar remains the world’s strongest currency mainly because of its status as the petrodollar, making it the only currency in which countries with weaker economies can purchase energy. There have already been warning signs that the petrodollar collapse is on the horizon and this announcement will only add credence to these claims.
Much like the situation in Russia, the severity of this report may be a bit overstated according to some. Experts with direct knowledge of the plan have stated that the contract would be in both yuan and dollars.
Nevertheless, it does appear that both world powers are testing the waters to see what a global economy would be like without the U.S. dollar on top.
A few popular predictions are being made across the internet and in the media by doomsayers:
vanished and now gold is the only accepted currency. The concept cited is “hyperinflation.”
When the dollar collapses we will be thrown into a state of chaos and lawlessness. Money will be burned like in Germany a few decades ago due to lost value. People will steal and commit other crimes to stay alive and with no economy there will be no one working to maintain the infrastructure.
Gold and silver will become the standard once again. Which is oddly suspicious, because when you Google anything about the dollar collapsing, you get a lot of sites trying to sell you gold and gold trading schemes.
Since other countries are trying to move the World Reserve Currency away from the U.S. dollar due to decreasing value, the U.S. will be left high and dry by the other countries.
Countries will stop lending to us and the interest on the existing loans will default.
What is likely to happen if the U.S. dollar collapses (based on something known as “logic”). Here are a few possible situations:
1.) The U.S. dollar collapses and there is a brief time of chaos. However the U.S. chief export is consumption, we consume the highest amount of resources and goods in the world. Countries that once sold to us can no longer sell if there is no money, so the dollar could in theory be propped up by another currency. Imagine a dollar backed by the yen, the Euro, or once again by gold.
2.) There are over 300 million “consumers” in the U.S. Other economies would suffer if U.S. citizens suddenly lost all of their money and their spending power. The U.S. could adopt another currency or begin consuming using multiple currencies and abandon the dollar. Financially, it makes little sense to let a huge consumer base collapse and vanish so global companies and countries that export often to us will step in.
3.) Like a repo man coming to collect his due, the countries that the U.S. government owes large amount of debt to will come in to collect their payment. Of course what happens if someone can’t pay? Things get taken away. China, a country who the U.S. owes billions to could technically lay claim to the U.S. So we would become a part of another country altogether.
As an interesting side note, some local towns in America have started to print their own currency that is traded and accepted among merchants within the town. This shows an extremely important concept in the debate of what happens if the dollar fails.
The townspeople in these towns aren’t backing their local money with gold or other currency, rather they back it with their confidence. The local money has zero actual value; the only reason it is useful for purchases in the town is because businesses and people that accept it agree that is has some value; they can accept it for a sale and take it to another accepting business to trade for goods and services.
Some have seen this problem coming for a long time and changed their entire way of life by going off-grid. They have found alternative sources such as solar, wind and diesel to power their homes and machinery. A majority of us, who have not gone off-grid, are making a concerted effort to avoid dependence on this ailing infrastructure and preparing for life without it.
This experiment is a microcosm of the national economy and even the global economy, paper money’s primary value exists only because the economy continues to believe in its value.
Technically you could pick up an orange and claim that oranges are equivalent to what was once $100. If a lot of people also believed it, you’d be buying and selling in oranges instead of dollars.
In the end one key concept came to mind when trying to dispel the doomsday predictions: As long as you have some currency that the economy sees as having value you can continue to make and spend money. Does it matter if that currency is the U.S. dollar, a Euro, gold, or an orange?
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Table Of Contents:
The Most Important Thing
Making Your Own Beverages: Beer to Stronger Stuff
Ginger Beer: Making Soda the Old Fashioned Way
How North American Indians and Early Pioneers Made Pemmican
Spycraft: Military Correspondence During The 1700’s to 1900’s
Wild West Guns for SHTF and a Guide to Rolling Your Own Ammo
How Our Forefathers Built Their Sawmills, Grain Mills,and Stamping Mills
How Our Ancestors Made Herbal Poultice to Heal Their Wounds
What Our Ancestors Were Foraging For? or How to Wildcraft Your Table
How Our Ancestors Navigated Without Using a GPS System
How Our Forefathers Made Knives
How Our Forefathers Made Snow shoes for Survival
How North California Native Americans Built Their Semi-subterranean Roundhouses
Our Ancestors’Guide to Root Cellars
Good Old Fashioned Cooking on an Open Flame
Learning from Our Ancestors How to Preserve Water
Learning from Our Ancestors How to Take Care of Our Hygiene When There Isn’t Anything to Buy
How and Why I Prefer to Make Soap with Modern Ingredients
Temporarily Installing a Wood-Burning Stove during Emergencies
Making Traditional and Survival Bark Bread…….
Trapping in Winter for Beaver and Muskrat Just like Our Forefathers Did
How to Make a Smokehouse and Smoke Fish
Survival Lessons From The Donner Party
Books can be your best pre-collapse investment.
The Lost Ways (Learn the long forgotten secrets that helped our forefathers survive famines,wars,economic crisis and anything else life threw at them)
Survival MD (Best Post Collapse First Aid Survival Guide Ever)
Conquering the coming collapse (Financial advice and preparedness )
Liberty Generator (Build and make your own energy source)
Backyard Liberty (Easy and cheap DIY Aquaponic system to grow your organic and living food bank)
Bullet Proof Home (A Prepper’s Guide in Safeguarding a Home )
Family Self Defense (Best Self Defense Strategies For You And Your Family)
Survive Any Crisis (Best Items To Hoard For A Long Term Crisis)
Survive The End Days (Biggest Cover Up Of Our President)
Drought USA (Discover The Amazing Device That Turns Air Into Water)