The Asian Pivot Already Happened

November 30, 2012

The “Asian Pivot” in the title is a recently-invented phrase which describes world nations pivoting away from American allegiance and pivoting toward Asia and specifically China.

Spengler is a link to an outstanding article by “Spengler” at The Asian Times. You MUST read this. The American Main Stream Media will not report this, yet this meeting that happened November 16th – 20th, was the single most important market shift in the last 100 years.

Here are a few excerpts:

“It is symptomatic of the national condition of the United States that the worst humiliation ever suffered by it as a nation, and by a US president personally, passed almost without comment last week.

Does the United States have a competitive advantage? Apart from commercial aircraft, power-generating equipment, and agriculture, it has few areas of real industrial pre-eminence. Cheap natural gas helps low-value-added industries such as fertilizer, but the US is lagging in the industrial space.

…The US still dominated the nuclear power plant industry. With the sale of the Westinghouse nuclear power business to Toshiba, and Toshiba’s joint ventures with China to build (thorium) power plants locally, that advantage has evaporated.

The problem is that Americans have stopped investing in the sort of high-tech, high-value-added industries that produce the manufactures that Asia requires.”

CLICK HERE FOR THE ARTICLE: The Asian Pivot


How Will The American Economy Die?

February 2, 2012

by Russell D. Longcore

I have been writing about secession now since May of 2009. One of the constant themes of my writings is that secession is not going to happen in America until and unless the economy collapses. AFTER it collapses. A lot of what I’ve written has been perception, conjecture and prediction based in reason. But much of that conjecture and many of those predictions are now coming true. Tick. Tock. It’s not a case of “If,” like there was a possibility that America could avoid collapse. Now, it’s simply a countdown to inevitability.

The following is a plausible and likely scenario of the death of the American economy.

First, the money goes.

The world economic system is built upon two things: (1) fractional reserve banking and (2) fiat money. There is not one nation on earth that has a commodity-based money and currency. Keynesian economics, taught in nearly every college Econ curriculum, is so ubiquitous…so ingrained…that it is like the dye colors in your shirt. No amount of washing gets the dye out.

Is there a banker on earth that does not use fractional reserve banking? Money is created out of thin air and pumped into the world economy. It would be impossible without fiat currency…the currency considered to be money because some government says that it is. When your currency is backed by “the full faith and credit of” your government, and nothing else, and your government goes broke…your currency is not far behind. In the regular world, issuing paper money with nothing behind it is called “Counterfeiting.”

The power in Washington is built on those two things above and add a third: the US Dollar is the world reserve currency. Being the world reserve currency was brought about back in the early 1970s when Nixon negotiated a deal with the House of Saud, in which Nixon guaranteed the Saudis that he would protect their kingdom from their neighbors if they agreed to (a) use only the US Dollar to settle oil payments, and (b) use their surpluses to buy US Treasury debt instruments. Over time, the Dollar became the currency all nations used to settle all kinds of commercial transactions. This reserve status gave the USA a tremendous advantage over all other nations. The blowback of unintended consequences is that many foreign nations own trillions of US Debt, and that gives those nations leverage over Washington. For a good look at who owns US Debt, CLICK HERE.

Right now, in real time, Washington is making plans to make war upon the nation of Iran. They are using the excuse that they must keep Iran from possessing nuclear weapons. The reality behind the scenes is that Iran started an oil bourse (a commodity exchange) on Kish Island in 2008, specifically to begin trading their own oil in currencies other than the US Dollar. That is a grave threat to the reserve currency status of the Dollar. Previously, Iraqi President Saddam Hussein announced that Iraq was going to begin accepting payments for oil in Euros, not Dollars. What happened to him? Muamar Gaddafi of Libya was buying enormous quantities of gold bullion with the intention of creating an African dinar, a gold-backed money for all of the African nations to use. Where is Gaddafi now?

“But so what?” you may ask.

The only thing that maintains the purchasing power of the Dollar is its world reserve status. You already know that the Dollar has no precious metals backing it. The Dollar only has the “full faith and credit of the United States” behind it. But Washington is many dozens of trillion dollars in debt. Some estimate that the US has over $100 Trillion of debt. Just a week ago, the United States current Federal budget debt limit reached $15 Trillion, and that is equal to the Gross Domestic Product (GDP) of the entire nation. So we owe more now than we take in annually.

Any action by any other nation that threatens the world reserve currency status of the US Dollar panics Washington. They must snuff it out by whatever means necessary. Even war.

But they cannot.

Iran has powerful friends around the globe. Just last week, Iran inked a deal with India to sell them oil for gold. Iran will do the same with China. Russia will pay with gold and rubles. And, because Iran sits on an ocean of oil, and many nations rely upon its oil for survival, Iran will defeat Washington and its allies who have set up embargoes against Iran.

The whole world does not have to forsake the Dollar all at once to send shock waves through Washington. But more and more nations are rejecting the terms of the DC/European embargo against Iran. On Thursday, Turkey announced that they would not participate in the embargo. Turkey is a very crucial ally to DC. One at a time, nations will find that they can do business around the world in their own currencies or in gold.

But here’s another unintended consequence, and a potential trigger for the collapse of the Dollar. As nation after nation decide they do not need the Dollar, they will do what they can to rid themselves of American currency and American debt. Nations around the globe have purchased US Treasuries. Now they will have no need for the bonds, and will want to sell them. Questions come up: Who will buy them? And what are they worth?

What happens when you offer bonds for sale and no one buys them? You have very expensive wallpaper or toilet paper. What happens when you CAN sell them, but at pennies on the Dollar? You take staggering losses.

One other problem is timing. In order to reclaim some value for US Treasuries, your nation’s bond traders must have perfect timing to offer enough bonds for sale but not so many that it triggers a bond market collapse. Then to find buyers at acceptable prices? It is not reasonable to believe that every nation will find buyers at all, at good prices and not create a bond market crash.

So, built into the global process of forsaking the US Dollar as the world reserve currency are the seeds of the Dollar’s collapse. Either the bond market collapses as nations get out of the Dollar, or getting out of the Dollar causes the value of the Dollar to collapse. Keep in mind that if the Dollar were as “good as gold,” no nation would want to jettison the Dollar.

Dear Readers, there is no third choice that prevents the collapse of the Dollar.

What Does Collapse Mean?

There can only be one meaning for the word “collapse.” Hyperinflation is that collapse. Think about it. Inflation is the loss of purchasing power. Inflation that occurs over decades is like death by a thousand cuts. Americans for the last 80-plus years are used to inflation and the loss of their purchasing power. In hyperinflation, what took perhaps 40 years to lose a certain amount of purchasing power can easily happen in 40 days…or even 40 hours. There will come a day soon here in America when the Dollar will not be accepted between buyers and sellers for even the simplest transactions. It happened in Zimbabwe. I presently own 160 Trillion in Reserve Bank of Zimbabwe currency, and I paid six dollars for it.

The American Dollar has purchasing power…value…now because the world uses it. And the nation with world reserve currency status that is inflating its money will continue to pay its debts with fiat currency, which is losing more and more value. Once an unknown number of nations stop…or even just slow down…using the Dollar for international trade, the value of the Dollar will evaporate. I say “unknown” because it’s not just the number of nations that is important. It is the economic might of the nations that stop using the Dollar. If the BRIC nations…Brazil, Russia, India and China…arguably the four strongest non-USA world economies…continue the process of weaning themselves off the Dollar, it will have drastic and sudden repercussions for the Dollar.

Also remember how this world turns. The business day in Berlin, Rome or Athens is six hours ahead of the American East Coast. A bond market collapse could start in a European bond market at 9:00 am in Berlin while it’s 3:00 am in New York. The Dollar could get hammered on foreign markets for six hours before the banks open in New York, or the New York Stock Exchange opens for business at 9:30 am. Americans will be completely defenseless against the collapse.

Washington’s Response

The politicians in DC will be powerless to stop the financial carnage because they cannot control the value of a currency that others refuse to use. The Federal Reserve may pump additional trillions of greenbacks into the American economy, but at some point, wheelbarrow loads of paper money won’t buy you a loaf of bread. This will cause the Federal bureaucracy to grind to a halt as Federal union employees refuse to work for worthless money. And how will Washington pay its military personnel? How will state governments pay their law enforcement officers and prison guards? Society will collapse at that time. It will be The End Of The World As We Know It.

You see, when the VALUE of the American Dollar ceases to exist, our bubble society will also cease to exist. This is why I hold the position that once the economic system in America fails, Washington will be entirely unable to stop secession. And that only the collapse of the Dollar will trigger the desire for secession.

Here is the mental picture I want you to form when thinking about the world economic system. Blowing soap bubbles. You dip a drinking straw into the bubble liquid and begin blowing on the dry end of the straw. Hundreds of bubbles of many sizes will form, expand and then pop. For a hundred years the world has experienced economic bubble after bubble…boom, bust, recession, depression, real estate, housing, tech stocks, mortgages but to name a few. But don’t miss this! When fractional reserve banking and fiat money run the world, ALL ECONOMIC ACTIVITY IS A BUBBLE that must eventually burst.

This has been a hard article to write. The subject is one of life or death for billions around the world, and millions on our own continent. I take no joy or satisfaction in this article, save the satisfaction of knowing that some of you will read this and act to save yourself and your family.

Think. Use your brain. Do not let anyone tell you how to think or do your thinking for you. Question ALL authority. Free Your Mind.

Secession is the only hope for humanity. Who will be first?

DumpDC. Six Letters That Can Change History.

© Copyright 2011, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


Look Behind The Curtain

January 3, 2012

Russ Longcore here, thanking you very much for visiting us here at DumpDC.com. I thought you might like to look behind the curtain and see the annual report on our visitors. It give a global view of who visits and why. Maybe I’m the only one who cares. But it’s gratifying to know that the world is coming to DumpDC to learn about secession.

Go to: DumpDC Annual Report

Thanks again, my friends. Keep preparing for TEOTWAWKI. Get your money out of paper investments and into precious metals. Buy lots of ammo, make sure you have at least six months of food and home needs in storage. Read. Research. Don’t believe anyone…even me…without doing your own research.

Resist.


The Fiat Dollar & Debt Democracy Experiments Have Failed

August 4, 2011

by Ron Holland

Washington claims the federal debt limit extension and the threat of default is postponed. This is just more political theatre as the Treasury debt downgrade will happen and eventually a bankrupt America will attempt to inflate the debt away and default. It is the same across the Atlantic where the sovereign debt crisis still stalks the politicians in the EU.

The political and economic reality of the sordid situation cannot be covered up by the establishment news hacks or by more lies or the blame game by either party. The Washington experiment of borrowing trillions to buy elections today to be paid for by future generations has failed in the US and across Europe.

America’s Ability To Service Our Sovereign Debt Is Ending

The real dollar and debt crisis is being obscured here in the US by the political theatre in Washington. Of course the debt limit increase was passed yesterday by a vote of 269-161 and now we can look forward to the first of many downgrades and any purported balanced budget amendment will not be worth the paper it is printed on.

All the false conventional media propaganda and Congressional actions were designed only to help the politicians and institutions responsible for the coming debt debacle avoid the blame. They are now attempting to transfer their responsibility to the only innocent Washington politicians, the Tea Party caucus. They will succeed and at the same time build the case for dramatic future revenue (tax increases).

The Dollar Death Throes Are Hidden From Most Americans

The fiat dollar is collapsing and as a writer and editor paid monthly in Swiss francs, looking at the last year of exchange rates will show the real situation not apparent to Americans living inside the Washington dollar iron curtain.

About 12 months ago, a thousand Swiss francs equaled about USD$870.00. Today, the same CHF 1,000 equals USD$1,270.00. This means the dollar has fallen nearly 46% compared to the rising value of the Swiss franc and conversely my monthly retainer has increased almost 50 percent in dollars per thousand of CHF. Unless you are being paid in dollars and reside outside the US or are paid in a foreign currency and live in America, the bloodbath in the dollar is not apparent in the near term – but it is real and ongoing.

Yes, to my knowledge, the Swiss franc is the best example of the performance of a major currency versus the United States dollar but many other currencies have done very well when compared to the dying dollar as well. Going back to 2001, CHF 1,000 equaled USD$550.00 so here you can see the short and long-term trend of the Swiss franc versus the dollar.

Debt Democracy Has Also Failed!

Today, on the democracy front, Greece, the historic birthplace of democracy around 508 BC and America – the witch’s caldron which spawned the failed debt-financed regulatory democracy experiment – are now competing to see whether it’ll be Athens’ or Washington’s politicians who will be more despised. I believe the US will win the race to the bottom only because Greek politicians have only subjected Greece and several wealthy EU countries like Germany to their wealth thievery, while the failed American example of democracy financed by sovereign debt is bankrupting the US and all of EU Europe.

My Bet & Ten Year Dollar Forecast

The goal of Washington and the FED is to create high inflation and eventually default during a future foreign policy or financial crisis so the blame for the dollar’s demise and debt problems can be transferred elsewhere. Although I doubt they can pull off this PONZI scheme, the only real solutions to the American debt crisis are either repudiation, which would benefit the people, or hyperinflation designed to benefit the bankers and political class.

Thanks to the fake debt deal, in the meantime the government will pass legislation and end deductions in order to increase government revenue. Americans will certainly lose beneficial capital gains treatment and any tax benefits on home profits. The coming hyperinflation will likely cause real estate values in depreciating dollars to go up. We could see housing prices rebound and maybe double back to 2007 pre-bubble levels, which will be touted by the political establishment as good economic news at last. The problem will be the inflated dollars will have lost substantial purchasing power.

You’ll be taxed at high rates on the false inflationary gains of your home, as the accompanying salary increases – due to inflation – will force you into the highest income tax levels with no deductions. The average American will finally realize how badly they will have been scammed when they decide to sell their real estate and – after paying taxes with inflated dollars – decide to purchase the least expensive new Kia or Corolla and the import car is priced at $120,000. This is an example of how countries subjected to hyperinflation are eventually priced out of buying most foreign imports from cars, electronics and beer to name just a few important products of interest to me.

The Fiat Dollar Problem Will Eventually Be Solved By Currency Competition

The profit opportunities for smart international investors from a dollar collapse will likely be enormous due to a paradigm shift in political, economic and monetary theory away from sovereign debt-financed democracy and fiat currency. The monetary elites will attempt to create a fake gold and commodity resource standard to back formerly fiat currencies in order to build “currency confidence” in the US and Europe.

Initially, this may well translate into gold and resource backed currencies and, after the fake elite money standard fails, maybe to the Austrian economc ideal of public and private currency competition. Gold and silver, as well as mining and natural resource equities in certain mineral and oil rich countries, will benefit from the fake gold and resource standard as well as the future ultimate solution of currency competition.

I will have more on this in a future report and in a new editorial on “The Failure of Greece.” We live in an interesting time of transition from debt-democracy and fiat-currency. Take action to avoid the downside in dollars and benefit from rising gold and natural resource prices.

$50.00 Imported Beer?

In the meantime, I hope I’m wrong regarding my expectations for the dollar and debt democracy. But if I’m right, sometime over the next ten years, I’ll buy the first 10 of you who remind me of this editorial and my dollar forecast the foreign beer of your choice at my expense. After all, what is $50 per beer among friends?

© Copyright 2008 – 2011 The Daily Bell. All Rights Reserved.


TEOTWAWKI Realities

July 18, 2011

By Russell D. Longcore

In this article, I’d like to present you with some cause-and-effect scenarios about The End Of The World As We Know It (TEOTWAWKI) and When The Shyt Hits The Fan (WTSHTF). You see, I could just smack you in the face with a bunch of potential scenarios like they are a fait accompli (pretty fancy talk for a tinfoil-hat guy). But you’ll likely be more convinced if you see what will happen and convince yourself of the outcomes.

So here goes.

1. The Global Economic Collapse: It’s ALL about the money. Washington DC has led the entire planet in monetary policy since WWII. American gold-backed dollars became the world reserve currency and continue in that role to this day. But during that same time period, the gold was disconnected from the dollar, and the dollar became only paper currency. Couple that with fractional reserve banking, in which banks can create money from thin air. Now you have a world reserve currency that has no limit. Consequently, as the criminals in DC ran monetary policy, there were able to defraud every nation on earth with currency that has continued to lose value over time. DC, the International Monetary Fund and the global bankers have loaned trillions of dollars to nations all over the planet. Now the nations are defaulting on their sovereign debts, and America is in line to do the same. And, none of the nations have the political will to stop.

This system is grinding to an end. So, here are four likely outcomes:

a. Hyperinflation – just like in Weimar Germany, Argentina and Zimbabwe, hyperinflation will destroy the money, eventually making paper money worthless. That’s because the government printed up too much paper money. For those of us 70 years old and younger, we have had inflation all our lives. We have never known money that doesn’t lose value. It’s like if you just paid all your bills by writing checks to everyone when there’s no money in your account. Eventually, people will stop accepting your checks (your dollars)…and then it’s all over.
b. DC default and bank failure – When DC cannot guarantee banks, like through the FDIC, banks will have no protection against bank runs. The banks will close. ATMs and credit cards will cease to work. You’ll be lucky if you can get ANY of your money out.
c. Eventually, the nations of the world that presently buy US Treasury bonds will refuse to buy more, knowing that they will be paid back with dollars that continue to lose value. Once DC cannot borrow anymore, DC defaults.
d. Somewhere on the planet, an entity that holds US Treasury bonds will try to sell their Treasuries, and dump too many bonds onto the Bond Market in too short a time. Think about crowd mentality…if you see everybody around you selling off something you own, won’t you also try to sell so you don’t end up with worthless paper? So, the bond market could easily crash, creating a ripple effect throughout the world economy that topples many nations’ economies at once.

So, in light of ANY of these events, what will happen around America?

Regular people keep very little money stashed at home. Most people will have less than $500 cash on hand in any given week. I don’t mean $500 in their bank accounts. I mean $500 at home. And I’m being generous. The number is probably more like $150. And when filling your tank can cost $100, that doesn’t leave much money for groceries, does it?

If the banks close, and ATMs and credit cards stop working, what will you do for cash THAT DAY? Merchants will accept only cash when the cards stop working.

If you still have a job, what will your employer use to pay you? Cash? A check that no bank will accept? Gold? Silver?

And what will happen to prices for everything when demand spikes? Prices will spiral upward. So, if you could find a loaf of bread it will cost many multiples of its original price. Guaranteed. So much for your cash stash.

Do you have a pantry or stash of food that could feed your family for a few months? Most people these days let the grocer be their inventory, and the people keep little at home. So what will happen if the credit cards/ATMs don’t work and you…and thousands of other people just like you…show up at your local grocer? Food riots will occur. Flash mobs will just carry off whatever they want. The stores, which only carry three days’ inventory at best, will be empty quickly.

What will you and your family do if you run out of food and other supplies? Will you resort to theft, burglary and armed robbery, like some of your neighbors will do?

You could live for a few weeks without food before starving to death. But what if your city water department shuts off the water supply? Where will you get potable water? There won’t be any of that on the store shelves either. You could die in just a few days without water. And how about the water needed for washing food, or flushing toilets? You could quickly have a toxic mess on your hands at home.

Now, consider what happens to the hundreds of millions of people that are on maintenance prescriptions for medical conditions, like heart, cancer, diabetes, etc. What will happen to them if they cannot buy their drugs anymore? What happens to all the people who are on drugs to control mental conditions, like psychosis, depression or schizophrenia?

Next – when money loses its value, or the banks do not work, desperate people will do desperate things. So crime will soar, and violent crime will skyrocket as hungry people steal anything to get a meal. The people that do NOT carry a firearm AT ALL TIMES will have a new name…victim…maybe dead victim.

Next – if you found that you had cash that no merchant would accept because of hyperinflation…how would you buy anything? You would either barter, or you would use an alternative money that merchants would accept. Gold and silver have been money for 6,000 years. In a post-apocalyptic America, gold and silver will be the new money. Everybody will accept gold and silver. And because of the existence of the new money, a thriving black market will instantly spring up. With gold and silver, you’ll be able to buy most anything you need or want. You will stop thinking about money in dollars, and you will start thinking about money as ounces of gold or silver…as it has ALWAYS BEEN back into antiquity.

The Founders invented the “dollar” in 1792, from the German word “thaler,” as a round coin containing 371 ¼ grains of pure silver. Money is supposed to be weight, not value against another currency.

In a related subject, desperate people will sell their stuff for pennies on the dollar for gold or silver. So you’ll be able to buy things you could not have afforded in pre-crash America…that is, if you have gold and silver.

OK- I’ve given some outlines for an economic crash scenario. Is there anyone out there that believes that ANY of these examples COULD NOT occur? WILL not occur?

This first part brings us to make some logical conclusions about who will survive and who will not.

Phase I: The First 90 Days After The Collapse

In the first 90 days, there will be a massive die-off of the elderly, the sick, children and adults that die from lack of food, water, medicine/medical care and murder. And many deaths will be attributable to suicide, as people decide it’s better to end it quickly than to starve to death. This huge number of corpses will overload the capacity of funeral homes and cemeteries. Think about it…who is going to pay for the interment when the money’s no good? This will rapidly become a public health issue, as thousands…perhaps millions of corpses lie undiscovered in homes and apartments, and remain unburied. Disease epidemics like cholera will spring up from people eating and drinking contaminated food and water.

In that first 90 days, those that survive will have prepared with food and water storage, as well as other stored goods for functional living. The survivors will also have armed themselves adequately to fend off looters and gangs. WSHTF, you will carry firearms everywhere you go, no matter if it’s into town or into your back yard.

Before you enter this phase with the rest of us, there are a couple philosophical issues you will HAVE to deal with:

1. Let’s say you’ve prepared for your family’s survival with 6-8 months of supplies. But friends, neighbors, and family…who HAVEN’T prepared…show up at your home and want shelter and food. What will you do? If you’ve prepared to take care of a family of four for 6-8 months, and you accept another four people…now your stores will only last 3-6 months. Who will you turn away to protect your own survival? Decide now. Better yet, contact your friends, neighbors and family and make a plan to join for survival. But then inform the scoffers that they will not be included in your survival plans, and will be turned away if they show up at your door.

2. You’ve armed yourself with firearms and ammo, and practiced shooting until you’re proficient and can hit targets. But paper targets don’t shoot back, and targets don’t try to loot your property and kill you. In a survival scenario, the regular laws don’t apply. Are you willing to suspend your perceived decency to protect your loved ones and your property? Remember the cannibal paradox. Taking too long in overcoming a taboo could mean your life. You waited too long to make the decision. Bang…you’re dead…and the looters have their way with your stuff and your family.

Phase II: Reforming a Society

One of the stranger outcomes of the economic collapse is that the political class will not be insulated from the fallout, death, starvation and chaos. Most of the politicians, both at state and federal levels, will be no more prepared for survival than the general populace. So, the chances are overwhelming that many of the criminal political class will be dead after the first six months of the economic collapse. Couple that with the very high likelihood that the populace may blame politicians for the disaster. I would not be surprised to see politicians murdered for their culpability in the crash of our American economy. I certainly don’t advocate that. I would rather see them tried, found guilty, sentenced and then put to death. But starving, angry gangs will not opt for due process. They want revenge.

Consequently, it may be much easier for secessionists to rise to prominence in the post-apocalyptic states. We may not have to defeat the statists…we may simply have to outlive the bastards!

Isn’t it entirely possible that the survivalists, who are traditionally far more liberty-minded than the rest of the population, will comprise a large percentage of the people that could form new polities…new governments…new nations, in the Post-Apocalypse?

And speaking of apocalypse…doesn’t this remind you of the Four Horsemen of the Apocalypse…Conquest, War, Famine and Death?

I hope this article has made you think, but more importantly, I hope it will make you ACT. To learn more, go to: http://www.survivalblog.com/

Secession is the Hope for Mankind.

DumpDC. Six Letters That Can Change History.

© Copyright 2011, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


A Run on the United States Government

July 16, 2011

by Michael S. Rozeff

A “run” is a mass withdrawal of cash funds from a borrower. We are in the midst of a continuing worldwide credit crisis, punctuated by “runs” of varying prominence and publicity.

These runs are rational, not panics and not due to quirks of psychology. They occur when investors realize that their funds are endangered in an institution. They try to get them out before they lose them.

The danger comes when the institution no longer is getting cash inflows in sufficient amounts to pay off all its obligations. In businesses, this comes about through sour investments. In governments, it comes about through wasteful spending that fails to be recovered in tax revenues.

In the year 2008, we saw runs on major Wall Street investment banks, money market mutual funds, domestic banks and foreign banks. Now we are seeing runs on governments in Europe such as Greece and Portugal. Sovereign debts are being sold down hard as investors flee from them, converting their bonds into currency.

Three years from the 2008 credit crisis, the Federal Reserve is still providing massive credit to U.S. banks. This props them up against bank runs. Every so often, the FED extends credit to foreign central banks to prop them up so that they can prop up their financial institutions. These are stopgaps. All of this propping up depends on faith in one currency: the U.S. dollar.

Runs on various institutions often show up as a flight into short-term U.S. treasuries, i.e, the dollar. This is because the treasury market is deep.

Since the dollar is also a credit instrument, it is subject to credit risk. What happens when trust in the dollar drops sharply? What happens to all these financial institutions being propped up by creating dollars when trust in the dollar fails? That is when the financial system cracks wide open. That is when governments will be tempted to freeze funds in banks and prevent withdrawals the way that Argentina did. That is when the FED will be tempted to guarantee almost any institution against cash withdrawals, but when such a guarantee will be ignored. That is when gold will soar in price against the dollar and all other fiat currencies.

I am describing a run on the United States government. This will be a withdrawal of cash financing from the U.S. government. This is the ultimate credit crisis upheaval. This will be accompanied by mass social unrest and political reorganization. Stock and bond prices will fall sharply. The S & P 500 will lose at least 60 percent. Government bonds will yield at least 10 percent. This event is foreseeable. It is also avoidable, but not without much pain and travail. Hence, although foreseeable and avoidable, it may still occur.

Whether we like it or not, we are all currency speculators now. This is hardly a burden we can relish.

Whether or not a run on the United States government occurs is in the hands of its creditors. It depends on their trust in the dollar. Their trust depends on their understanding of America’s political economy.

Anyone who looks objectively at actions being taken by the U.S. government to bolster its credit or cause its credit to deteriorate has to reach a very negative conclusion. Why? Simply because the country’s leadership has been taking it downhill for decades on end. America is like a bright and fresh red apple in which rotting has been proceeding inexorably. The apple still has some edible portions but large parts of it are gone. The seeds need to be planted and a new tree grown.

Dagong Global Credit Ratings Co. Has 15 categories of ratings of sovereign debt (AAA, AA+, AA, AA-, A+, A, A-, BBB, BB+, BB, BB-, B+, B, B-, CCC.) The U.S. has a rating of A+. Dagong lowered it from AA- to A+ in November 2010 after the FED announced a new QE program.

In a remarkable statement made in mid-June 2011, Dagong’s president said “In our opinion, the United States has already been defaulting.” Dagong has spent $1 million to enter the U.S. market, but the SEC has so far turned it down.

The debate over the debt ceiling, like all Washington debates, is throwing off negative signals about U.S. credit. Obama is the key person. He is airing various proposals in public in press conferences. If he were serious about any of them, he’d be working closely with key Congressmen in private behind closed doors. He would not be trying to box in Republicans or embarrass them in public or score political points. He would have been working on controlling the budget long before this. He would have shown leadership on this long ago. One does not place multi-trillion dollar proposals on the table and expect them to be taken seriously, debated and acted upon within 2 or 3 weeks. Obama’s credibility on serious budget control is nil. The Republicans and even members of his own party have little reason to trust him when he paints himself as on a high road and willing to compromise. Any compromise will be on his terms to further his agenda. The debate, such as it is, can’t be taken seriously.

Did the near-miss of the 2008 credit crisis prod the U.S. government into corrective action? Sure, bailouts and wars and deficits and the absorption of Fannie Mae. The U.S. government has had three years to enact measures to revive the economy, clean out the bad debts in the banking system, and get the U.S. budget under control. Make that thirty years or more. At this moment, I can’t think of one good step it has taken. Look for yourself. Do I see healthcare in there as the centerpiece along with Wall Street reform? Don’t make me laugh.

The U.S. government has no credibility in terms of restoring America. The government is living off its past reputation, like a once great entertainer grown tired and going through the motions.

Under these conditions, trust in the dollar and all the other fiat currencies that are linked to the dollar will continue downwards.

Unless there is a change in these conditions, someday there will be a run on the United States government. I see nothing that suggests a change in these conditions.

Michael S. Rozeff is a retired Professor of Finance living in East Amherst, New York. He is the author of the free e-book Essays on American Empire: Liberty vs. Domination and the free e-book The U.S. Constitution and Money: Corruption and Decline.

Copyright © 2011 by LewRockwell.com.


Where Will You Go?

July 7, 2011

When the Sovereign Debt Volcano Blows?

by Ron Holland

(Editor’s Note: To quote Davy Crockett…”you may all go to hell and I will go to Texas.”)

“People never believe in volcanoes until the lava actually overtakes them.” ~ George Santayana

Last fall, while on an investment cruise, I had the opportunity to visit a “dormant” volcano in Chile. There was even a ski area with lift, restaurants etc. near the top on the lava and cinders. I thought at the time how I would ski the volcano but never risk my funds on a real estate investment there for obvious reasons.

Today we find the United States and most of Europe in a similar situation. We risk an eruption and collapse of the mountain of unsustainable sovereign debt built up over the last two decades. Frankly, the US dollar and national debt situation is so dire and our means to contain a sovereign debt crisis so limited by multiple wars, Washington’s debt and political incompetence at home, that anything could happen – almost overnight. Even a minor foreign policy or economic event like a Greek default or Middle East crisis could reap havoc with the precarious interlocking sovereign debt pyramid in the West.

Of course, no nation wants a collapse – especially China – because a western debt collapse and write down is certainly uncharted financial waters and the contagion risks are global. Still, America and most European governments and the central banking elites, which created the criminal sovereign debt fiasco, are only trying to buy more time and delay the inevitable. This inaction means the threat of an immediate US debt and dollar collapse cannot be ruled out. Therefore, readers who have not protected themselves certainly have cause to worry because now could be too late.

It Is Exit Time For Your Gold, Wealth & Family

Although you may have some time, nothing else has to happen before a big collapse could take place, even within days. Consequently, after 30 years of watching, writing and creating protective retirement planning and financial strategies, today I’m finally going to yell “FIRE” inside the closed ‘financial iron curtain” which is America.

If you have failed to store your precious metals outside the US, diversify out of the dollar or reduce or terminate your private retirement plan, there is now a clear danger of a Washington dollar and sovereign debt crisis which could sweep away most of your remaining wealth and financial security.

I do not have a crystal ball or inside political information on a specific imminent threat, only the observation that the sovereign debt crisis from Europe, a debt ceiling misstep from the clowns in Washington or a Middle East event could suddenly trigger the collapse. Actually any major political or economic shock could bring the Madoff style Ponzi scheme, which Greenspan and Bernanke have created, down almost overnight on top of us.

This will likely happen over a weekend and the following Monday morning you could wake up to Presidential Executive Orders “means testing” you out of Social Security benefits if you still have substantial retirement benefits or personal savings. You’ll likely discover an end to your home interest deductions, new confiscatory taxes and restrictions on US gold and silver, controls on moving private wealth and funds to safety offshore and dramatic hikes in taxes and cuts in government programs. In addition, spiking inflation rates, violence and massive protests will immediately follow these confiscatory actions and cutbacks. You can also expect severe banking and stock market liquidity restrictions, or closures, and this will only be the beginning. In short your wealth will be trapped in dollars and locked up for the duration of the emergency inside the American jurisdiction.

Therefore if you haven’t already prepared for this type of crisis contingency ahead of time, I’m telling you there will be little you can do after the fact. Washington will simply take and throw your wealth and promised benefits at the problem thus buying them more time with your wealth.

The Central Banks, City of London & Wall Street Have Looted America and the World

Back in 2007, did the Federal Reserve or your politicians or financial experts predict a collapse in housing prices of 30 to 50 percent? Remember, Bernanke, George Bush and Barack Obama all promised this was a temporary blip in the long-term upward trend in housing values. All advised you to “stay the course.”

Today, Tim Geithner claims we have a “strong dollar policy” but have you observed the 35% plus appreciation in the currencies of Brazil and Switzerland to the dollar in the last year? The EU establishment has repeatedly claimed over the last few months that the Greek problems are solved but these fake solutions usually only last a few days at best.

Back here in the US, there is talk about deficit reduction, cutting programs and tax increases but nothing really happens because solving the problem is political suicide. The American and European elites are buying time knowing that only a crash or war will give them the opportunity to act as they did in the 2008 meltdown. They only wait for a cataclysmic event to provide the fear, excuse and public support for government action needed to grab our private wealth and to delay their problems.

The mainstream American press doesn’t cover it, however the rest of the world knows that Wall Street banks and their central banking buddies in London and New York created the sovereign debt crisis. They then sold their profitable template, or imposed it on the end of a gun, for debt democracy to politicians around the world as a means to buy votes and maintain political control. The scam is now over and no one has a solution to the tens of trillions in debt already spent.

While many millions of poor people overseas are going hungry because of our exported inflation on food costs, now the foreign middle classes are being impoverished just to pay interest on the sovereign debts to our banking elites. Although, much of the world correctly blames their thieving politicians who’ve been bought off by our banking elites as the problem, our nation is also a target for their outrage.

Foreign politicians will attempt to shift the blame to America and this will speed the end of our American free ride from the fiat dollar and our reserve currency status. The world is just waiting for the spark to start the run out of the dollar and our Treasury debt. No nation will really help us when the collapse comes.

What If You Have More Time?

Maybe we have months instead of weeks – or at most a couple of years before the event takes place. Allow our politicians “buying time” to work for your benefit instead of theirs:

1. Educate Yourself With Free Subscriptions: First, to protect yourself, you must assume the balance of establishment news coverage and opinion is all disinformation designed to delay panic and create actions which will benefit the establishment probably to the detriment of your best interests. Therefore I suggest you subscribe to the following free e-mail publications:

* Follow what the elites are planning ahead of time with The Daily Bell.
* Keep up with the real freedom news and philosophy by going to LewRockwell.com
* Get an Austrian economics view on the markets and gold with Mountain Vision – Subscribe.

2. Maintain Liquidity & Reduce Political Risk: Legally and following all reporting requirements, move your private wealth outside the US into safe secure investments which will remain liquid and trading should US markets close as they did following 9/11.

3. Create A Domestic Safe-Haven Location: The potential for violence, theft and property destruction in the US dwarfs what could happen in Greece. If you can afford a safe-haven second home away from major cities and high crime locations, then do so. Consider taking advantage of the real estate collapse and buying something you can enjoy in good times and have as insurance for bad times.

4. You Will Likely Be Safer Outside the US: In a serious crisis, most of the criminals out to steal your property and do harm to you will come with official government sanction and not from traditional criminal elements. Consider a more secure safe-haven jurisdiction where the rule of law might still prevail with a condo, second citizenship or residency in a nation outside the United States for the duration of the domestic disorder and economic collapse. Remember, currency and government debt collapse is common throughout the world and history shows the difficulties don’t last forever. My fear is we haven’t seen a world reserve currency collapse before and the aftermath is uncharted waters. I would expect a scenario several magnitudes worse than the 1991 Russian collapse.

5. Secure Your Gold: Finally move most of your gold or silver offshore where it will remain secure rather than become a tempting target for confiscation from parasitical groups and individuals. Washington will need your gold as I doubt there has been substantial gold at Fort Knox since Nixon closed the gold window. The eventual outcome of the crisis may well be some fake gold backing for the dollar. Why else would anyone use a collapsed currency?

6. Don’t Trust Washington With Your Retirement Benefits: Consider closing and taking a withdrawal from your retirement plans to avoid new taxes and penalties at withdrawal, the means testing and loss of your Social Security benefits or the forced investment into collapsing Treasury obligations.

You can read all about the gold and retirement threats in my Lew Rockwell archive. Pay specific attention to the following essays:

* The Greek Tragedy
* There’s Gold In Fort Knox?
* Retire In Poverty-Retirement Plan Nationalization
* The Obama Retirement Trap

The debt crisis is here and I promise you only that you will not hear the truth on cable financial news or from your establishment investment firm or professional. To avoid a panic, neither the government, the Federal Reserve or Wall Street will be honest with you about the risks we face, just like they all lied and covered-up before the market meltdown in 2008.

If you are an American, the last place you should keep most of your wealth now is in the dollar or your home country. You might personally get out but your wealth will be trapped for the duration and probably lost during the disruption.

Reprinted with permission from The Daily Bell.

Ron Holland is a contributing editor to the Swiss Mountain Vision Newsletter and Chairman of the Advisory Board of the Foundation for the Advancement of Free-Market Thinking (FAFMT) in Vaduz, Liechtenstein.

Copyright © 2011 The Daily Bell


Robert Kiyosaki: Rich Dad Author Is Now a Prepper

June 29, 2011

from Economic Collapse Blog

Are you familiar with Robert Kiyosaki? He is best known for the “Rich Dad, Poor Dad” series of books. Over 26 million books authored by Kiyosaki have been sold and he is recognized as a financial expert by millions of people across the globe. Well, guess what? Even Robert Kiyosaki is warning that an economic collapse is coming. In fact, Kiyosaki and his team of financial experts are encouraging Americans to stock up on food, guns and precious metals. This is yet another sign of just how close we are to the total collapse of the U.S. Economy. Kiyosaki, who once co-authored a book with Donald Trump entitled Why We Want You To Be Rich is now a full-fledged prepper. As even more prominent Americans start warning that an “economic collapse” is coming do you think that the American people will finally wake up and start paying attention?

The statements that Robert Kiyosaki makes in the video posted below are absolutely jaw-dropping. Once upon a time he was all about teaching people how they could get rich, but now he is talking about storing food, buying guns, investing in precious metals and preparing for the coming crash.

The following are 11 of the best Kiyosaki “sound bites” from the video below….

#1 “when the economy crashes as we predict”

#2 “the crowds come rushing in to buy gold and silver”

#3 “we could either go into a depression or we go to hyperinflation”

#4 “or we could also go to war”

#5 “buy a gun”

#6 “I’m preparing”

#7 “I’m prepared for the worst”

#8 “so come to my house and I’m armed and dangerous and I’ll welcome you”

#9 “we have food, we have water, we have guns, gold and silver, and cash”

#10 “the credit card system shuts down, the world shuts down”

#11 “the supermarkets have less than 3 days supply”

If you have not seen this video yet, it is definitely worth the 8 minutes that it takes to watch it. Robert Kiyosaki seems to be extremely alarmed about the future of the U.S. economy….

It certainly seems as though the entire financial culture in America is changing.

Once upon a time everyone wanted to know how to get rich.

Now everyone wants to know how to survive the collapse that is coming.

As I have written about previously, even people like Tony Robbins and Donald Trump are warning that an economic collapse is coming.

Economic pessimism is seemingly everywhere and almost every recent survey indicates that the American people are losing faith in the U.S. economy.

For example, in a recent article I noted that 48 percent of Americans believe that it is likely that another great Depression will begin within the next 12 months.

According to Gallup, the percentage of Americans that lack confidence in U.S. banks is now at an all-time high of 36%. Back in 2007, just 14% of Americans lacked confidence in U.S. banks.

In order for society to function correctly, people need to be able to trust each other and they need to be able to trust the major institutions that hold society together.

Once confidence in our major societal institutions is gone, it is going to be incredibly difficult to get it back.

Sadly, the reality is that many of our major financial institutions have been untrustworthy for a very long time. It is just that the American people are only just now starting to wake up to that fact.

For example, the Federal Reserve has been at the heart of our economic problems for decades but most Americans have not realized it.

But now that is starting to change. According to one recent poll, only 30% of Americans currently view Federal Reserve Chairman Ben Bernanke favorably.

The American people are becoming increasingly dissatisfied with an economic system where the vast majority of the rewards flow to Wall Street, the big banks, the biggest corporations and the ultra-wealthy.

According to the Washington Post, the top 0.1% of all income earners in the United States took home 2.6% of the nation’s earnings in 1975. By 2008, the top 0.1% were taking home 10.4% of the nation’s earnings.

The Washington Post also says that after adjusting for inflation, the average income of the top 0.1% of all Americans jumped by 385 percent between 1970 and 2008 while the average income for the bottom 90 percent of all Americans actually fell by one percent.

The sad truth is that income inequality in the United States has become a major problem. A very small sliver of the population is reaping almost all of the rewards and the middle class is being ripped to shreds. Conservatives, liberals, Democrats, Republicans and libertarians should all be alarmed by this.

Meanwhile, the national debt continues to explode. Right now, U.S. government debt is expanding at a rate of $40,000 per second.

Every single minute we steal another 2 million dollars away from our children and our grandchildren.

But if we stop this theft it would throw the U.S. economy into a horrible economic crisis that would be far worse than what we are experiencing right now.

That is why the vast majority of our politicians do not have the guts to do it.

We truly are caught between a rock and a hard place.

But people like Robert Kiyosaki can see what is coming, and they are getting prepared.

Are you prepared?

Many of our young people have come up with their own versions of an “economic stimulus plan”. In past articles I have documented many of the signs that society is collapsing, including the disturbing rise of the “mob robbery” phenomenon.

Well, just the other day there was another very shocking mob robbery in the city of Philadelphia.

On Thursday, a mob of 40 teens and young adults invaded a Sears department store on 69th Street, grabbed all of the merchandise that they could carry, and stormed right back out again.

We are starting to see these kinds of large scale crimes happen from coast to coast.

So what is going to happen to America if the economy experiences the kind of full out collapse that Robert Kiyosaki is talking about?

We live in very interesting times.

I hope that you are getting prepared.

Copyright © 2011 Economic Collapse Blog


10 Tipping Points

June 11, 2011

Could Potentially Plunge the World Into a Horrific Economic Nightmare

from Economic Collapse Blog

The global economy has become so incredibly unstable at this point that it is not going to take much to plunge the world into a horrific economic nightmare. The foundations of the world economic system are so decayed and so corrupted that even a stiff breeze could potentially topple the entire structure over. Over the past couple of months a constant parade of bad economic news has come streaming in from Europe, Asia and the United States. Signs of an impending economic slowdown are everywhere. So what “tipping point” will trigger the next global economic downturn? Nobody knows for sure, but potential tipping points are all around us.

Today, the global economic system is even more vulnerable than it was back in 2008. Virtually none of the systemic problems that contributed to the 2008 collapse have been fixed.

Mark Mobius, the head of the emerging markets desk at Templeton Asset Management, was recently was quoted in Forbes as saying the following….

“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis.”

The “financial reform” law that Barack Obama and the Congress passed a while back was a complete and total joke. They might as well have written the law on toilet paper for all the good that it is doing.

We did not learn from our mistakes and our future economic lessons are going to be even more painful.

The world is drowning in a mountain of debt, the global financial system is packed to the gills with toxic derivatives, everyone is leveraged to the hilt and the dominoes could start falling at any time.

I am not the only one that is warning that another financial collapse is coming. In fact, a whole lot of people have been warning about the next financial collapse lately.

So what will the tipping point for the next collapse be?

The following are some potential nominees….

Tipping Point #1: Syria

Syria is a situation to watch very, very closely. The Syrian government is in a lot of trouble right now. Sadly, the instability inside Syria probably makes war with Israel even more likely.

Make no mistake – a war between Israel and Syria has been brewing for a long, long time and at some point it will happen. When it happens, the entire Middle East may erupt in warfare.

Just the other day, a very troubling incident happened in the area around the Golan Heights. The following is an excerpt from a report by The Daily Mail about the incident….

“About 20 pro-Palestinian demonstrators were killed and 325 injured yesterday when Israeli forces opened fire on them as they crossed the border from Syria into occupied territories, according to reports.”

At this point, the Syrian government is probably glad that the attention has been taken off of them at least for a while. The Syrian government has been getting a lot of bad press lately. The following is an excerpt from a recent report by Human Rights Watch about the treatment of protesters inside Syria….

“The methods of torture included prolonged beatings with sticks, twisted wires, and other devices; electric shocks administered with Tasers and electric batons; use of improvised metal and wooden ‘racks'; and, in at least one case documented by Human Rights Watch, the rape of a male detainee with a baton.

“Interrogators and guards also subjected detainees to various forms of humiliating treatment, such as urinating on the detainees, stepping on their faces, and making them kiss the officers’ shoes. Several detainees said they were repeatedly threatened with imminent execution.”

So in light of the “precedent” that we recently set in Libya, does this mean that we will be “forced” to conduct a “humanitarian mission” inside Syria as well?

Syria is one tipping point that we all need to keep a close eye on.

Tipping Point #2: Iran

The Iranian nuclear program is in the news again. A new report by RAND Corporation researcher Gregory S. Jones claims that Iran could have a nuclear weapon within 2 months. His report is based on recent findings by the International Atomic Energy Agency. According to Jones, airstrikes alone would be incapable of stopping Iran’s nuclear weapons program at this point. Instead, Jones says that a “military occupation” would be required.

It is a minor miracle that a war with Iran has not erupted yet. It seems almost inevitable that at some point either the United States or Israel will use military force to try to stop Iran’s nuclear program.

When that happens, it is going to cause a major shock to the global economy.

Tipping Point #3: Libya

NATO has made it abundantly clear that Moammar Gadhafi will no longer be tolerated. In fact, NATO apparently plans to reduce Tripoli to a heap of smoking ruins if that is what it takes to bring about the fall of Gadhafi.

What a “humanitarian mission” we have going in Libya, eh? It turns out that NATO believes that the United Nations gave it permission to bomb television stations and to make attack runs with helicopters.

Russian Deputy Prime Minister Sergei Ivanov recently said that by using attack helicopters, NATO has moved dangerously close to turning the Libya operation into a ground invasion….

“Using attack helicopters, in my view, is the last but one step before the land operation.”

So why is Libya a potential tipping point?

It isn’t because Gadhafi is a threat. He is toast.

It is because the rest of the world is watching what is happening in Libya, and that is raising global tensions.

Even if Gadhafi falls, the Libyan operation will still be a failure because it has brought us all significantly closer to World War III.

Tipping Point #4: More Revolutions In The Middle East

The revolutions throughout the Middle East earlier this year sent oil prices absolutely skyrocketing and they have remained at elevated levels.

And in case you haven’t noticed, revolutions continue to sweep the Middle East.

Have you seen what has been happening in Yemen lately?

Yemeni President Ali Abdullah Saleh has burns over 40% of his body and he has suffered a collapsed lung as a result of a recent attack.

If violence and protests throughout the Middle East become even more intense as the weather warms up this summer that could have a very significant impact on world financial markets.

Tipping Point #5: Fukushima

The mainstream news has gotten a bit tired of covering it, but the situation at Fukushima is still a complete and total disaster.

Japan’s Nuclear Emergency Response Headquarters admitted on Monday that three reactors experienced “full meltdowns” in the aftermath of the earthquake and tsunami in March.

Did it really take them nearly three months to figure this out, or were they lying to the rest of the world all of this time?

The truth is that the nuclear disaster at Fukushima is far worse than the mainstream media has been telling us. If you doubt this, just check out this excellent article or this article by Natural News: “Land around Fukushima now radioactive dead zone; resembles target struck by atomic bomb”.

The economic impact of the Fukushima disaster is going to continue to unfold over an extended period of time. It turns out that Japan is now officially in a recession. Their economy contracted at a 3.7 percent annualized rate during the first quarter.

Look for more bad economic numbers to come out of Japan for the rest of the year. Considering the fact that the Japanese economy is the third largest economy in the world, the fact that they are struggling so badly right now is not a good sign for the rest of us.

Tipping Point #6: Oil Prices

The price of oil is going to continue to be one of the biggest economic stories for the rest of this year and for 2012 as well.

The last time U.S. energy expenditures were over 9 percent of GDP was in 2008 and we quickly plunged into the deepest economic downturn since the Great Depression.

Well, we have reached the significant 9 percent figure once again in 2011, and many fear that once again high oil prices will cause another major economic decline.

Tipping Point #7: Government Austerity

In the United States, it is not just the federal government that is drowning in debt.

All over America, there are state and local governments that are financial basket cases.

I don’t always agree with the time frames that Meredith Whitney puts out there, but she is absolutely correct that we are going to see a massive municipal bond crisis. The following is an excerpt from a recent report about Whitney’s predictions on CNN….

“Meredith Whitney is issuing a fresh warning to mutual funds, banks, and politicians: The state of state finances is far worse than what you think, or at least than what you’ve been willing to tell the investors and taxpayers who will eventually carry the burden.”

Many state and local governments are attempting to get their budgets balanced by making huge budget cuts. But most of the time these austerity programs also include the elimination of a lot of government jobs.

UBS Investment Research is projecting that state and local governments will combine to slash a whopping 450,000 jobs by the end of next year.

So where will the half a million good jobs come from to replace all of those lost jobs?

Tipping Point #8: The European Sovereign Debt Crisis

Greece is just the tip of the iceberg in Europe.

Moody’s downgraded Greek debt again last Wednesday. This time Moody’s downgraded Greek debt by three levels all the way down to Caa1. At this point, the yield on 10-year Greek bonds is over 15 percent.

The EU has been going crazy trying to deal with the Greek debt crisis. The truth is that a default by the Greek government would be absolutely catastrophic. If you do not understand the kind of chaos a Greek default would set off on world financial markets, just read this editorial.

But Greece is not the only major European nation with a massive debt problem.

The government of Ireland is already indicating that they may need another bailout.

Portugal, Spain and Italy are also on the verge of collapse.

So will the EU bail all of these nations out for years and years to come?

At some point will the whole house of cards come crashing down?

Everyone needs to keep watching what is going on in Europe. The status quo is not sustainable and it cannot go on forever.

Tipping Point #9: The Dying U.S. Dollar

The euro is not the only major currency that is in trouble.

The U.S. dollar is also slowly dying.

On April 18th, Standard & Poor’s altered its outlook on U.S. government debt from “stable” to “negative” and warned that the U.S. could soon lose its prized AAA rating.

The sad truth is that faith in the U.S. dollar and in U.S. Treasuries is rapidly declining. The mainstream news is not reporting on it much, but right now the Chinese are rapidly dumping U.S. government debt.

As the dollar declines, so will the purchasing power of average Americans. We are already seeing a tremendous amount of inflation in 2011.

But this is just the beginning.

A lot worse is going to be coming down the road.

Tipping Point #10: Drought

A lot of people that read my articles doubt that we will ever see a major global food crisis.

But one is coming.

It is just a matter of time.

Even now, many areas of the world are experiencing very serious droughts. The following is from a recent Bloomberg article….

“Parts of China, the biggest grower, had the least rain in a century, some European regions are the driest in 50 years and almost half the winter-wheat crop in the U.S., the largest exporter, is rated poor or worse. Inventory is dropping 8.8 percent, the most in five years, Rabobank International says. Prices will advance 20 percent to as high as $9.25 a bushel by Dec. 31, a Bloomberg survey of 14 analysts and traders shows.”

Are you concerned yet?

You should be.

But if you prefer some mindless pablum that will make you feel better, we have some of that for you too.

Larry Summers, the former director of the National Economic Council under Barack Obama, recently told CNBC the following….

“We definitely hit a slower patch, but I think the basic fact that the terrible financial strains we had are abating, remains in place, and I expect this recovery to continue for a substantial period of time.”

Does that make you feel better?

Larry Summers says that everything is going to be okay.

It would be great if Summers was actually right, but sadly he is not.

In fact, the worst economic times that America has ever seen are ahead.

The following is a brief excerpt from a recent interview with Dmitry Orlov about the coming economic collapse that was posted on shtfplan.com….

“First you have financial collapse, which is basically the volume of debt that has to be taken on in order for the economy to continue functioning, cannot continue. We’re seeing that right now in Greece, we’re probably going to see that in Japan, we’re definitely at a point now in the United States where even if you raised the income tax to 100 percent, there’s absolutely no way of covering the liabilities of the U.S. federal government. So, we’re at that point now but the workout of the financial collapse is not all quite there. We don’t quite have a worthless currency but that’s in the works.

That, of course, is followed by commercial collapse especially in a country like the United States that imports two thirds of its oil. A lot of that is on credit and if a little bit of that oil goes missing then the economy starts to fall apart because nothing moves unless you burn oil in the United States and, of course, a lot of goods that are sold everywhere are imported again, on credit.”

When the U.S. dollar dies and our financial system collapses we are not going to be able to get all of the things that we need from the rest of the world so cheaply any longer.

That is going to cause fundamental changes inside the United States.

Right now, the economic news just seems to get worse and worse, but this is just the beginning.

What is eventually going to happen in this country is going to be so nightmarish that most Americans could not even imagine it right now.

So are our leaders doing anything to prepare for the coming economic crisis?

No, they are too busy with other things.

The big political news of the day was U.S. Representative Anthony Weiner finally admitting that he sent out lewd photos of himself over Twitter to women that he was not married to.

We have become the laughingstock of the world and the economic collapse has not even happened yet.

Copyright © 2011 Economic Collapse Blog


A Review and Discussion of “Patriots”

June 4, 2011

A novel by James Wesley Rawles

Reviewed by Russell D. Longcore and Linda Brady Traynham (Part Two)

This book was released by Ulysses Press in its most recent revision in 2009, having been first released in 2000 as “Patriots: Surviving The Coming Collapse.” So, I’m guessing that when Rawles wrote this, he was looking ahead a decade to a likely scenario. Here we are, eleven years later, and the collapse could happen literally overnight.

My friend, Chuck Donovan, a Senior Captain for Delta and a Libertarian, strongly recommended that I read this book. I was already very familiar with Jim Rawles, since he hosts a very popular and valuable website at www.SurvivalBlog.com. So, I had Amazon send me a copy. It took me about four days to finish it.

The story is set in today’s America, as the economic collapse has already taken place. America descends quickly into lawlessness. Looting, robbery, rape and murder are standard operating procedure. And a few couples from the Chicago area relocate to Idaho, where they hunker down and try to survive and stay alive in the Mad Max world they find themselves in. The main characters are Todd and Mary Gray, who had relocated to Idaho earlier and had established a rural stronghold, and had spent nine years in preparation for the collapse.

If you like the writing style of Tom Clancy, you will enjoy this book. Rawles goes into minute detail on each page about survival equipment, tactical weapons, communications procedures, military strategy, military training, cooking, survivalist preparations, 4th Generation Warfare…and just about every other thing that could be discussed in such a book as this. If nothing else, this book is a treasure trove of “prepper” procedure and life in a post-apocalyptic America.

The book’s climax comes as a newly self-appointed Federal government in the East tries to regain control of the United States through the use of UN troops and repression of dissent. Which side wins? Read the book.

I cannot imagine a scenario in which you would consider your time reading this book wasted. I say that because the very people that would spend money on this sort of book are already predisposed toward survivalist topics. Seldom does a novel do more than entertain. This one also educates.

Rawles takes the story into the scenario in which Washington and the internationalists fight hard to regain order, even if that “order” is as totalitarian as the USSR at its zenith. And I believe that is a reasonable scenario. The author does not broach the subject of secession, and the possibility that some individual states leave the Union to plot their own courses in the world. In Patriots, all 50 states remain serf states.

We here at DumpDC are of a different mindset. We entirely concur with the author that the economic collapse will occur, and that hyperinflation will be the result. But we believe that after the collapse, some states of the Union will secede and become new nations. We believe that Texas, the second most populous state in America, is likely to be the first to leave the Union. America needs Texas, but Texas does not need America. Texas can be entirely self-sufficient living cheek-by-jowl with America and Mexico. Texas is still a Republic and Texans revere their culture and heritage. Other states may secede, but they will not do it in an effort to preserve their culture and heritage. The other states might secede simply because depending upon Washington is no longer a viable option.

Another thing of which I concur with the author is how desperate and dangerous America will become in only a few days following the collapse. Over 150 million Americans die of starvation, crime and disease in the short span of years of this story. Even in states that secede, it’s going to get real ugly before anything resembling a real economy is restored. And the deaths will occur in the new nations also, as the numbers of people actually prepared for economic catastrophe are so few.

I continually look back to the collapse of the Soviet Union as an example of another totalitarian, authoritarian superpower that died in a whimper, not in a bang…and did it less than 25 years ago. The Kremlin had no ability to muster the mighty Red Army to stop the secessions of their states. Moscow stood by and watched as the fifteen former nations broke away and resumed nationhood.

The fact that the US Dollar is the world reserve currency turns the American collapse into a global collapse. The collapse of the USSR did not send the world into a tailspin…but the collapse of America will. There will be no nation on earth that is not negatively affected by this collapse. Who knows what nation will be the first domino to topple over, taking the rest of the world with it? Only time will tell. What is certain is that nobody gets out of this whole and intact.

Only fifteen American states ever enjoyed nationhood status…the original thirteen nations of the post-Revolutionary War of 1776…Texas and Hawai’i. All the rest of the states of the Union were territories that eventually earned statehood. You may not consider that to be a big deal. And it may not be a big deal in the states of the Eastern Seaboard. But I promise you that returning to nationhood is a HUGE deal for Texans and Hawaiians.

Read Patriots as soon as you can. The clock is ticking, and there is no time to waste.

* * * * * *

(Editor’s note: My buddy Linda Brady Traynham wrote such a terrific comment about this book that I pulled her comments OUT of the comments and placed them here as a “Part Two” of the review of the book. Enjoy!!

I concur. Well, mostly. James-Wesley-Comma-Rawles’ “Patriot” contains a few glaring (and I think extremely funny) errors (which I may tell you about), but basically it is a splendid book, and very useful. Well, it is a splendid half book. Even I can’t come up with the “willing suspension of disbelief” sufficient to believe the heroes manage to defeat UN forces, but if you’ll just slog through the first half you’ll be glad you did.

“Patriots” is a VERY information-dense work which I wouldn’t call a light read, and I taught myself to read at three and have rarely gone to bed without finishing my current book in the 68 years since. It isn’t nearly as bad as Thomas Dewey, but it isn’t USA Today, either.

A bunch of college kids in 2000 become convinced (reasonably sensibly) that we’re going to have TEOTWAWKI, so they decide to set up a redoubt in the west and one couple agrees to live there and begin the preparations. You may not have any problems with what I consider a major flaw, how the 8 or so left not only buy the place and support Todd and Mary during their first decade out of college but come up with staggering sums for supplies, but hey, we can accept that they did, somehow, if they wanted to enough. Money is always a problem, and my site will begin publishing a fine new work of apocalyptic fiction in the next couple of weeks, and our author’s solution was making his hero an expert in finance and the market so he makes the fortune he needs in gold options. Whatever, everybody’s got to have money. (Russell, dear, I really cannot write quickly, fluently, and easily, when stuffed into a box this size.) We’ll forget how they paid for all that barbed wire, zillions of rounds of ammo, and steel doors and shutters while accumulating their own individual food supplies.

The value of this work lies in showing what is likely to happen and how to offset it. As I remarked to Russell yesterday in private correspondence, “They dig great spider holes!” If you don’t know what a spider hole is…see? You’ve already got a useful fact from the book. They do well in reconnaisance, guard duty, and cooperating with neighbors for patrols. They will lead you to the site cited above which would probably take twenty years to cover adequately. The book really, really is a major work and well worth your money and time.

I will stipulate gladly that the author covers some of his goofs by pointing out that he has discussed better practices endlessly in his writing and that I only manage eight to a dozen articles a week, not popular works of instructive fiction. Even so, I think it is worth your time and mine to consider where the illustrious Mr. Rawles and the insignificant Mrs. Traynham disagree on principles. Some things we need to decide for ourselves because there are arguments on both sides.

Let’s start with…calibers. JW,R is quite correct that it is easier if combatants/defenders (however you chose to think of them) can swap ammo. From that viewpoint, his characters’ decisions to stick to .45, .223, and some .22 for trade goods is very sensible. On the other hand, .45 and .223 are very expensive rounds (something most of us have to consider), and females do not usually do as well with miniature cannons. Even under the conditions envisioned, the goal isn’t going to be shooting Big Bertha across the English Channel. Out to 300 yards, maybe, but basically home defense and close infighting. Suit yourself. If the lady in your life can handle the recoil of a shotty gun or is happy with a big wheel gun, it’s your money. Chuckle. Who was it who annoyed me recently, not an easy thing to do–ah. Darling Fred Reed; his article up here on girly men and manly men–that I very nearly challenged him to come visit and we’d have a little shooting match, me with my cute little .22 and him with his weapon of choice. I couldn’t lose, because either I can take him or (riotous laughter) my mate is such a splendid shot that if we only had one gun in an emergency and it were mine, I’d hand it to him, although we would have a serious discussion about preparations later. Morals: Females attract males to handle such things, and gun control is a steady hand and careful shot placement. Put a nice little .22 slug through an eyesocket or sinus cavity so it can racket around cheerfully…I think having reloading supplies is important, too, and I’m so obsessive I police up useless .22 brass. Good habits are good habits, including not leaving trash on the range or in the pastures.

You’ll have fun checking out if I’m right! Okay, the deal is that each couple is responsible for their own food supplies, but that–in turn–each will feed the whole group. Breakfast, universally, is the ever-popular wheat berries. (Whatever those are. Sort of like groats, I think, dried, reconstituted [in water] hunks of wheat.) With nothing on them. No butter, milk, sugar. Lunch, without variation is a nice, big pot of plain rice. (I’m really not up to this.) Dinner is the MRE or the elk/deer du jour. This is ridiculous–no matter if JW,R stresses variety and nutrition on his site. All of them are coffee drinkers…and within three weeks they’re out of coffee. My dear Charles and I are always on the lookout for new ingredients, spices, recipes, and substitutes. You cannot provide adequate nutrition on the sort of diet given and you certainly cannot hold on to the comfort and civilization of eating well.

Again, Rawles points out that he has been discussing food preparations since who flunk th’ chunk. My question is, other than keeping nesters away and putting up stainless steel shutters…what were Mary and Todd doing? Okay, about a third of the way through the book the author adds they had put in a few little fruit and nut trees to supplement what was on the place. They have NEVER started a garden other than a few herbs. Three years into TEOTWAWKI there STILL isn’t a garden. To the best of my memory–it’s been a couple of years–they don’t even have a tractor. Tractors are very useful, and so is other big machinery, like bucket trucks and bulldozers.

There is NO livestock, although they finally get around to thinking about buying a dairy goat (they don’t) at the first swap fair to be held, about the same time. Uh…the FIRST thing I bought was French Alpines to assure my supplies of milk and cheese. It would upset me badly if you behaved as stupidly.

I raise two kinds of cattle–and I started with Black Dexters, charming little cows from Ireland that stand only 4′ at the withers (shoulders) instead of five or more. They are placid, sweet-natured, calve easily, prefer a diet high in brush and tree limbs (extremely handy in drought), dress out significantly higher than their long-legged kin, AND can be milked! With cream and butter, which goats don’t give you. True, they don’t produce as much as Guernseys or Jerseys, but they cost less and (as I say with possibly tedious frequency) if you had two that you bred six months apart you could pretty much count on all the beef, milk, cream, butter, and cheese even a moderately large family could use. Cows (and goats, for that matter) can be milked 300 days a year.

They don’t even have any chickens laying an egg each every 26 hours and providing meat to go in the dam’ boring rice every noon. No swine. No sheep, even. (Sheep are very low priority. They’re hard on pastures, don’t produce much milk–good cheese, though–and a lamb isn’t dinner for 10.)

There are two imperatives: to be able to protect the colony from raiders (government or private) and to be self-sufficient.

What really drove me around the bend was their habit of VOTING on things that are not candidates. Well, one problem is that they don’t have a military expert, but even so. Votes are fine for “what’s for dinner?” (subject to availability) but we do NOT vote on plans to rescue the little town overrun by bikers. By the time they get around to agreeing, being overly cautious, and implementing the plan there is one traumatized six-year-old left alive.

So far as I’m concerned, this isn’t going to be a representative republic of a colony and it most certainly is not going to be a democracy. We will have a benign dictatorship. Why? Because this is MY land and these are MY preparations and I have enough sense to know that (a) we need rules and (b) when I am She Who Stands On The Right Hand Of God and when I am scut labor, a warm body, suitable for peeling potatoes. Anyone allowed in has to be worth what he/she consumes AND be an ethical, cheerful, reliable, and so on individual. My husband is the military expert, engineer, and problem solver because he IS competent to do all those things. This isn’t a dude ranch, and first principles: if you don’t work, you don’t eat. Four people can run everything fine, but they can’t do that and stand guard duty, too.

Oh…when they trade off to go to the first fair? Three of them come across a fellow who has supplies to trade that are really needed, and he wants something they have already learned to make. Does anyone bother to tell this to the rest going in to visit the next day, far less the guy who makes the widjets? No. Fortunately, they shoot pretty well and have lots of ammo, and innumerable miles of barbed wire. Bought a mile of it myself this week; cost me $125.

No…I couldn’t have written that book. Yes, it has good technical information. No, I would not be part of such a colony, because they haven’t planned a lot of things well, the food is lousy, and they don’t have any fun. They pray a lot. They don’t read cribbage, converse, or have a library.

We all have our funny little notions, and one of mine was that I may have to live through TEOTWAWKI, but I refuse to do so without butter and cheese and I have GOT to get the spores ordered to grow mushrooms. In theory I can grow/process tobacco with what I have, although I haven’t solved the menthol problem yet. We have older vehicles that are EMP proof, just in case. I don’t have any steel shutters, but we picked up older motor homes and RVs so that there are “guest suites” and a little privacy for everyone. I’m up to a big kitchen/family room, but I’m not up to being surrounded by noise all the time.

You’ll have to make your own call on something else I doubt I would do. The young people are…they have scruples and would really be happier being liberals, I think. They have to kill some people who are a threat and need killing, but they can’t bear the thought of being “thieves.” Their solution is to bury the bodies and set aside anything of value, which they give to refugees they decide are worthy. THEY decide. That is not only not sensible, but it is a very “progressive” idea, that it isn’t really “theft” if you do not profit personally but pass on what you took to someone else.

Otherwise, Patriots is probably the best book written on the subject. William Forstschein’s “One Second After” is entirely different and just as scary. “The Day the Dollar Died” and “Lights Out” by “Half Fast” can be accessed for free on the ‘net, and C. S. Stirling has written a gorgeous half dozen volumes on how the US might break up and what sort of governments could emerge (religious, mafia, feudal, and so forth) after a disaster.

Makes secession sound even better and far simpler if it is possible to defend your borders, doesn’t it?

Regards, Linda
* * * * * * * * *
Secession is the Hope For Mankind. Who will be first?

DumpDC. Six Letters That Can Change History.

© Copyright 2011, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.


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