Lots of things go bust quickly. Enron and various other stocks have gone down the tubes instantly, as soon as their nefarious goings on were exposed. One rumor or newspaper story, can finish a stock quickly, costing stock holders many millions of paper dollars. Auto accidents can happen quickly, and with no advance notice. Trains running off tracks and airplane crashes, usually have no advance warnings. Lots of things do though, and when we see circumstances which are indicating something, we must act to prevent ourselves from being part of a collapse of anything.
Uncle Santa, has been acting like Santa Claus for many decades now, and to me, the situation may be indicative of an action needing to be taken. When Iraq was invaded, soldiers found tractor trailer loads of hundred dollar bills, and when Saddam was captured, he had $750,000 in cash on him. That war alone, is costing tens of billions a month, and shows no sign of letting up. The latest “omnibus” spending bill, which will be passed by Congress, has so much bacon and fat in it, that it amounts to hundreds of millions of dollars. There are literally hundreds of bureaucracies in existence, with hundreds of thousands of employees. The US government supposedly is the largest employer in America. True or not, the published deficit between taxes collected and dollars spent, is in the hundreds of billions of dollars. Know what a billion dollars is? Each billion, is over $30 for each and every man, woman and child in the US. So, hundreds of billions can be easily extrapolated to mean that the US government is printing up maybe a thousand dollars for each and every man, woman, and child in the US, each year. Scare you? It should!
The above, of course, is not including the missing figures of the “black budget,” which is all the losses and nonsense that is not on the official, published budget. The amount Uncle Santa spends, is literally almost unfathomable, it is so vast. Does anyone know how to balance the books of the IRS, Army, Navy, or Air Force? No one has yet figured out how to do it, because they are all impossible to audit. Yes, the IRS, who hounds taxpayers, cannot balance its own books, or figure out how it spends money. The military has billions and billions unaccounted for, plus billions in lost inventory, which no one can find. Did the US government build for the Ruskies a huge tank manufacturing plant, as some say they can prove? How was that accounted for on the books? When something bad happens, such as an earthquake, tsunami, or other disaster, millions and billions of dollars are instantly dispatched to the affected area. Uncle Santa gives to everyone and everything, both at home and abroad.
Millions of Americans have their credit cards maxed out, and their homes are in foreclosure. Bankruptcies are at all time highs. It is very sad, because these people allowed their spending to get out of control or lost their jobs, and they will suffer from it by possibly losing everything they have. Uncle Santa won’t allow this to happen to himself! Why not? Because he can “print,” as one of the Governors of the Federal Reserve recently said. They will, and are now doing just that. Does this mean the Fed can’t go bankrupt? That’s exactly what it means! It can’t, because it can get all of us to pay for its defaults, and we are currently now doing just that, with no end in sight. How? By watching our dollars lose purchasing power, or INFLATION. As they print to pay, what they print, becomes worth less and less.
How then, does the possibility of a sudden collapse happen, like a gas explosion? It can happen, just like a stock losing confidence, with everyone selling, and no one buying. Dollars can go that way too. If everyone wants to get out of dollars, because there are so many around, and their purchasing power is going down quickly, obviously few will be buying dollars, and a lot of people, governments, or banks, will be selling. Just like a stock, if there are multitudes of sellers and few buyers, the buck will collapse. It is now happening on a gradual basis. Foreign governments and central banks are scared out of their wits at the irresponsible actions by the US government. These actions, which means spending far more than they are taking in, and by billions of dollars per year, makes governments, central banks, and even individuals, get out of dollars. The big holders, are doing it as quietly and unobtrusively as possible, so as not to cause a crash. When a situation gets so precarious as to make people try to get out at a slow rate, so as not to cause it to collapse quickly, there is a real problem.
If you were the CEO, of say Enron, and you knew it was all going down, would you sell off your stock as quietly and also as quickly as possible, so as to get out, but not have it crash till you were out and safe? Damned right, and the CEO’s of most corporations are now doing just that, it is rumored. If you ran the central bank of a nation, or were its treasurer, and were charged with investing in things to give a nice return, would you buy dollars? Of course not! If you had them, would you try to dispose of them slowly enough, so as not to cause a panic, but fast enough to get out before Armageddon arrived, and everyone was dumping as fast as they could? Yup.
Look at a stock market crash, be it 1929 0r 2001. Those that got out early, did so before a panic set in, and saved themselves. Those who didn’t, all tried to sell at once, and $5 trillion was lost. Everyone was selling, and no one was buying. This is now happening to the dollar, but there is no panic yet. With a stock collapses, there are all sellers, and few or no buyers. Currencies can act in exactly the same manner, and not only can, but always have. All paper currencies in history, have eventually died a miserable death, becoming absolutely worthless. Three times in America. A paper currency, is merely a piece of paper. It is a trading device, which is forced upon the citizenry by the issuing government. The device which forces it, is known as a “legal tender law.”
The signs are there. The currency is fading. It has rebounded a bit of late, but it is fading because it is impossible to defeat laws of supply and demand, economics, and just plain common sense. When a currency has gone down 40% against other currencies, as has the dollar, it indeed does make exports cheaper overseas, and imports more expensive domestically. No question about that, but it is a sign of impending doom to me anyway. When? I don’t know, but if the room smells of gas, your brakes are bad, or there are termite queens flying about in spring, you should do something to protect yourself, your life, your home, car, or net worth. If the stock market is gone through the roof, the P/E ratios are astronomical, and there are no dividends, sell them before others get the idea to do so. Open the windows and get out if you smell gas. Fix the brakes and call the exterminator. Get out of dollars, if you have more than you need for expenses. Get into something not denominated in dollars, be it ounces, tons, gallons, square feet, acres, or any measuring device or figure, which is not dollars. The devices may be, and even have to be priced in dollars, but not actual dollars, such as are savings accounts and bonds.
When a currency or a stock collapses, those heavily invested in the collapsing entity, are in trouble. They watch their net worth go away. They watch their investments go down, sometimes to zero. Watch for the indices, and act accordingly.
Picture those who got stuck in the NASDAQ when it collapsed. They never knew what hit them. Boom, and their investment was virtually all gone in a virtual instant. Everyone wanted out, and no one wanted in. Down, down it went. Imagine those Germans after WW I. They had life insurance policies, savings accounts, and bonds, all denominated in Reichsmarks. Finally, they were worth less than actual toilet paper. Wheelbarrows of them were required to buy a loaf of bread. All lost, except for those, who perhaps bought tangible things when the decline began, and had enough foresight to know what the eventual result would be. Not to bore you, but a nickel cup of coffee, when I was a kid can go for $3 at a coffee shop, and half that in a restaurant. It takes 30 nickels to buy a restaurant cup of coffee now, as opposed to one when I was younger. Does this tell you anything? It does me! Are the dollar presses slowing down? Are they writing fewer checks? Are foreigners champing at the bit to buy dollars? Has any declining currency ever been resurrected? The answer is a plain and simple NO, to all of the above. Protect yourself.