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What Will Happen To You When The Dollar Collapses?

 
 
 
 
 
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Historically, when a nation’s debt exceeds its ability to repay even the interest, it can be assumed that the currency will collapse. Typically, governments exacerbate the situation by printing large amounts of currency notes in an effort to inflate the problem away, or at least postpone it.

The greater the level of debt, the more dramatic the inflation must be to counter it. The more dramatic the inflation, the greater the danger that hyperinflation will take place. No government has ever been able to control hyperinflation. If it occurs, it does so quickly and always ends with a crash.

Although there are observers (myself included) who frequently discuss what a reserve-currency crash would mean to the world, there is little or no discussion as to how this would impact people on the street level, and perhaps that discussion should begin.

When currencies crash, the state often tries to float a new currency. Sometimes, it’s accepted, sometimes not. Generally, the people of the country (and those trading within the country) move immediately to “the next best thing.” In 2009, when the Zimbabwe dollar crashed, several currencies were used, but the US dollar was the clear favourite, as it was the world’s reserve currency and therefore the most “spendable” currency.

Not surprisingly, the Zimbabwean government fought the use of the dollar, as they wanted to retain control of the economy and the people. People were therefore penalised for using the US dollar and other currencies.

And that’s what most governments do, but here’s where that idea usually falls down: First, the “black-market” currency is so desired by the now-jaded citizens that they do all they can to avoid the new official currency. Soon, most transactions, although illegal, are undertaken in the black-market currency. Second, since no one really wants the new currency, even the political leaders are soon using the black-market currency.

Ultimately, the black-market currency is legalised (since it’s the only truly workable solution), and it often becomes the unofficial currency, if not actually the official one.

First, the Euro Crash

It’s safe to say that the EU, the US, and quite a few other jurisdictions are nearing currency crashes, and in all likelihood, the euro will go before the dollar. So, unless the EU has already prearranged a new euro, the US dollar might well be chosen as an immediate solution to the problem, as the US dollar is presently recognised and traded throughout Europe. Therefore, a relatively painless transfer could be made.

Then, the Dollar Crash

However, the dollar, which is presently praised as being a sound currency, is really only sound in relation to the euro (and some other lesser currencies). Once its less stable brother, the euro, collapses, the dollar will be exposed.

As the US dollar is a fiat currency and is on the ropes, the US (and any other country that is using the dollar as its primary currency when the time comes) will experience a currency emergency at the street level that will be unprecedented.

The big question that is generally not being discussed is: The day after the crash (and thereafter), what will be the currency that is used to buy a bag of groceries, a tank of petrol, a meal at a restaurant? Certainly, the need will be immediate and will be on a national level in each impacted country, affecting everyone.

And Then…

I have discussed for some time that the US will be prepared ahead of time with a new, electronic currency. This will serve three purposes:

It will allow the US government to blame paper currencies for the crash, in order to distract the public from recognising that the government itself is the culprit.

It will allow the US government to create a currency system that disallows the holding of tradable currency by the population—that is, a debit card would be created by banks through which all transactions must pass, assuring that all transactions are processed by (and thereby subject to the control of) a bank.

It will allow the US government to have knowledge of every penny earned and spent by any individual or organization, allowing for direct-debit income taxation.

If the US does institute such a system, US citizens will then become the most economically controlled people in the world, overnight.

It’s likely that a black-market system would spontaneously be created by US citizens in order to bypass the new government system. A portion of daily trade would occur under the table. It would unquestionably be made illegal, and we can only speculate as to how prevalent it would become: 10% of all transactions? 30%? Anyone’s guess. Certainly, the government would crack down, and penalties might become severe.

Elsewhere in the world, there would be greater freedom, but what would their currencies be? There are many countries that presently use the US dollar as one of their official currencies. After a crash, the greater the link to the US dollar, the greater the loss of economic freedom, although, in most such countries, the government is likely to be less efficient than in the US, which would work in favour of the individual.

Such countries would also have the option of switching from the dollar to another dominant currency. With the euro and dollar gone, that currency might be the Chinese yuan. The difficulty with this possibility is that, presently, the yuan is not in common use on the street.

Adoption of a currency such as the yuan would require a sudden switch in monetary policy, complete with teething problems. However, recent developments amongst the BRICS and others indicate that many countries are already seeing the writing on the wall and are readying themselves for the use of the yuan as an alternate.

A Return to Precious Metals as Currency?

A further possibility is taking place in Mexico today. Mexico is remonetising silver. A one-ounce pure silver Libertad coin will function in parallel to (and be interchangeable with) the existing paper peso. Banks will value the Libertad daily, based upon the silver price. Thus, Mexico will create a legal way for its citizens to protect themselves against devaluation of the peso, whilst creating an internal protection against currency crashes in other countries.

If the Mexican government remains consistent in its plan, it will do more than simply help stabilise Mexico economically; it will serve as an example to other countries that when the Goliaths of the euro and US dollar fall, there is a very sound alternative.

Further, the more countries that follow this policy, the more silver (and for that matter, gold) would become an international currency. It would matter little to a petrol station owner in Canada, Australia, or Chile whether his till was filled with coins marked, “Mexico,” or whether they said “Iceland,” “New Zealand,” or “South Africa.” After all, an ounce of silver is an ounce of silver, no matter what the issuing country is.

As the Great Unravelling proceeds, we would be wise to monitor what happens with the Libertad in Mexico and watch for a similar return to precious metals in other jurisdictions. As this development progresses, we might wish to consider that, whatever jurisdictions are the most forceful in demanding the continued use of doomed paper currencies (or, worse, transferring into electronic currencies), we may choose to store our wealth, no matter how great or small, in a safer jurisdiction. Further, we may choose to reside in a jurisdiction where a currency crisis will be less likely to occur; to live under a government that does not seek to monitor and tax our every economic transaction.

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  • noode US

    Historically, when a nation’s debt exceeds its ability to repay even the interest, it can be assumed that the currency will collapse.

    According to U.S. NATIONAL DEBT CLOCK,
    http://www.brillig.com/debt_clock/

    The Outstanding Public Debt as of 26 Apr 2015 at 07:00:04 PM GMT is:
    $ 18,158,362,908,755.80

    The estimated population of the United States is 320,466,287
    so each citizen’s share of this debt is $56,662.32.

    The National Debt has continued to increase an average of
    $2.23 billion per day.

    If we consider facts, actual value of US Dollar is not worth even a cent.

    • Defiant

      True, but its even worse than that, the real domestic debt is around 130trill with a T, and the 6 biggest banks in the U.S. hold a combined debt of $256trillion with a T in toxic derivatives, collapse is not if but when, the FED cant print the economy out of this one, especially with most the economy outsoucred, and the launch of the new Chinese investment bank, the UK, Germany, France and Italy have already joined, Japan and Australia are considering it contrary of what the U.S. wants.
      The Fed cant even raise the interest rates by 0.5% wich is a joke.

  • Bill Atwood

    Yeh, while the current money system is totally loaded with unjust counterfeit IOU’s masquerading as certificates of value, the really really amazingly stupid part of all that is how most of the people will get all pissed off over everything when that system falls, and then sign on into a new system designed by the same shysters that collapsed the old system. Heh, a counterfeit IOU (paper dollar bill) as werthless as it is, at least you can trade it with somebody for whatever you want to anybody else that wants it. WITHOUT GETTING APPROVAL from the bankers and the politicians that sell out to the bankers, and the police that enforce the regulations dreamed up by the people in power to enrich themselves at the expense of the freedoms of the body politic.The new system they have planned for you is gonna deny you even the right to have control over your own money you work to get every day of your life. The electronic money they are gonna bring into vogue when the dollar collapses will require EVERY TRANSACTION to be approved by somebody, or else there will be no transaction made,. The people that program the computers that will run this system, and or the people that hire the people that program those computers, then will have ABSOLUTE TOTAL CONTROL over the economy and the individual assets of everybody dumb enough to go into that system. Forget about hiring a babysitter with cash, they will tax every transaction, and also require licenses for some transactions as well. That don’t sound even as good as what we already have, and in fact it sounds infinitely worse than what we have now already where we still at least can buy what we want from whoever we want. And all the self righteous people with “nothing to hide” can then learn that they messed up when they can no longer by chips and cake, cuz the insurance company won’t cover their health risk, their dna suggests they are subject to becoming obese or diabetic or whatever., so they will be ordered what to eat, and maybe even when to eat too? Already we are seeing mandatory insurance laws as in the case of auto insurance, and now even health care.Heh, It would not be mandatory if it was really a good deal, because if it was a good deal everybody would want insurance. Socialist control freaks, the enemy of personal freedom. And as if that ain’t bad enough, that system will require taking an oath of allegiance to serve (worship) the beast, and take the mark of the beast, and then by that act wind up finding themselves damned to hell because they rejected the warnings of Almighty God given in the scriptures.
    Pretty close to the showdown I’d say ? It is these people that claim they need to MANAGE the economy, that are the people that are promoting this new world oder. And you can bet your sweet bippy they are gonna manage it to suit themselves, not you, and then rob you of your labors even more than before where at least you could hold your payment for a days work in your own hand and spend it however you liked to.Heh, the only think you will have in your hand if you go into that nwo system will be the plague of sores that God said he would put on the people worshipping the beast and taking the mark of the beast.

    Go figuire.

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