Wednesday, March 5, 2014

The US Dollar remains the biggest key to major change

We noted in our recent post that the US Dollar is the biggest key we can watch that could lead to major monetary system change. So you can expect we will be posting numerous articles on this topic. Especially if there are events that could impact the dollar in a sudden way. This interview by Greg Hunter with John Williams of discusses such events. 

The interview talks about a recent threat by a Russian official to retaliate for any sanctions the West might place on Russia. While it is not unusual for both sides to "talk tough" and perhaps bluff in something like this, you also have to take it seriously. Just imagine if this did happen. Russia (and possibly China in sympathy) suddenly dumping large sums of US Bonds and US dollars onto the market. We assume these kinds of threats won't be carried out. But if they were, obviously it would have immediate impact and could lead very quickly to monetary system disruption. 

An event like this could lead to some kind of global emergency conference. Since there are some sources calling for a global currency reset led by the IMF as soon as this year, we have to keep an eye on these events (further explanation below).

Various sources are calling for a sharp drop in the US dollar under different possible scenarios.

1- A slow and steady (controlled) drop in the dollar over the next 2-3 years done intentionally by the FED to inflate away the debt to GDP ratio over time (to buy time and pay debt back with cheaper dollars). Jim Rickards suggests this as most likely.

2- A drop in the dollar that could come at any time over the next 2-3 years just due to market forces recognizing the US debt problem will not be solved and the US  FED is somewhat powerless to solve the problem. Jim Sinclair has suggested this idea.

3- A sudden, planned event that will take everyone by surprise. This is the type of thing you usually see in 3rd world nations where banks close over a weekend. When they reopen the currency has been devalued. A version of this scenario being talked about is that there is a planned "global currency reset" by the IMF where over 200 nations will agree to reset currencies all at once. The US dollar is predicted to lose 30-50% in this reset process because it is said the relative value of the currencies would be "reset" based on the assets of each country. (note: I have not found any public evidence that the IMF is ready to go forward with a plan like this. If it exists, it would have to be something that is secret).

The Greg Hunter interview linked above could tie in to #3 above if events were to go quickly downhill over the Ukraine situation. That is the kind of event that could lead to a global crisis and therefore a global conference to address it. At that point, something like a global currency reset becomes more realistic. If things were perceived to be really bad (total systemic collapse in view), who knows what nations might agree to?  Who knows what the US Congress might agree to?

This is why we have to keep an eye on all this and keep an open mind. Any of the above scenarios is possible given where we are. Or another scenario we don't even see today might arise. We don't make specific predictions hereAll we can do is try to stay informed and keep watching. That is what we do here. If you see something that we need to post here that we miss, please feel free to email us and let us know.

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