IS THE DOLLAR REALLY READY TO CRASH?

Dene McGriff, co-author of THE FINAL BABYLON, caught this factoid, about the shrinking U.S. Federal Budget Deficit, that confirms one key thesis in our book, The Final Babylon. That is… the optics of the US economy are going to start looking much more positive primarily due to revenue increases from taxing new sources of energy, and the availability of cheaper energy literally fueling business growth across America. The US has already been declared the world’s leading energy EXPORTER – greater than Russia or Saudi Arabia – just in the last couple of weeks.

Here is the analysis from TIME (WASHINGTON):

“For the first time in five years, the U.S. government has run a budget deficit below $1 trillion.  The government says the deficit for the 2013 budget year totaled $680.3 billion, down from $1.09 trillion in 2012. That’s the smallest imbalance since 2008, when the government ran a $458.6 billion deficit.  The deficit is the gap between the government’s tax revenue and its spending. It narrowed for the budget year that ended on Sept. 30 because revenue rose while spending fell.  Revenue jumped 13.3 percent to $2.77 trillion, reflecting a slightly better economy and higher tax rates. And government spending declined 2.4 percent to $3.45 trillion, in part because of across-the-board spending cuts that took effect in March.”

Then there is the issue of whether we are set to experience hyperinflation and the collapse of the dollar.  We argue that economic axioms promise just the opposite.  We live in deflationary times.

According to Greg Hunter’s USAWatchdog.com,

“Renowned gold expert Jim Sinclair says financial calamity is just around the corner for America.  Sinclair contends, ‘We are facing the annihilation of currency.  We are facing the shift of America as the leading and most influential nation of the world to some form of banana republic. . . . If it wasn’t for food stamps, we would be facing long lines of people waiting for free food.’  For gold, everything hinges on the U.S. dollar, and Sinclair says, ‘I think the dollar gets hammered.  I believe we are headed for hyperinflation.’  One of the many black swans, according to Sinclair, is the possible abandonment of the U.S. dollar by Saudi Arabia.  If Saudi Arabia stopped selling oil only in U.S. dollars, what would that do to the buying power of the buck?  Sinclair says gasoline would be ‘$10 a gallon very soon, without a doubt.'”

Here is what friend Dene McGriff had to say about Jim Sinclair’s doomsday argument (that we are on the precipice, ready to fall to our death).

Sinclair is a respected “gold bug” caught in a time warp.  Although technically correct – money should be based on something, there just isn’t enough gold in the world to use it as a basis for money.  Further, all governments and their central banks are hooked on fiat money.  Just as withdrawals are way too painful and possibly fatal for the long term drug addict, they just won’t get off the idea of debasing money until the whole system crashes.

Put this [COMMENT – SEE DENE’S RECENT ARTICLE BY CLICKING HERE] with the article I sent last night about America becoming the number 1 oil producer and exporter in the world – who gives a (darn) what Saudi Arabia does?  Who cares if they stay on the dollar?  We will do just fine, thank you very much and the more they flee from the dollar, the greater will be their own plight.

I honestly don’t know why guys like Sinclair don’t get it.  When money supply and credit are increased, it creates asset bubbles.  (It isn’t just physical money but assets created by derivatives and the like that creates quadrillions out of nothing)  The result of all of this asset creation and manipulation (e.g. take $100 million in mortgages, package them and the derivative value of these “packages” goes into the hundreds of billions!)

In the end you have depression or deflation – loss of asset values, not hyperinflation.   This is what happened in the 1930s and this is what happened in Japan recently, what is going on in the US and Europe.

If you look at the money supply (M1 and M2), you will find that the actual amount of cash in circulation is not going up (that is what hyperinflation is).  The reason it is not going up is because we are in a deflationary era.  The Fed uses QE to pump more and more into the economy but it doesn’t go to the consumer.  It goes to the investor.  It goes to the stock market which is soaring.  It goes back into real estate which is forever blowing bubbles.  Those values will crash – that is deflation, depression – not the hyperinflation Sinclair predicts.

Why doesn’t Sinclair get it and I do?  Beats me.  Who am I?  A nobody. [No Dene, you are a smart, super-experienced financial consultant to governments around the world]  Further the “annihilation of the dollar” doesn’t mean the annihilation of America or its economy.  No doubt our currency is in trouble but so is the currency of every nation on earth!  To go back to the gold standard makes about as much sense as going back to using sea shells!  Ultimately any currency is based on the inherent value of all of the human and natural resources of a nation (which by the way includes their ownership of all assets around the world and  their worldwide network).

And finally getting conspiratorial for a second, guys like Sinclair probably know better, but he would never expose it.  Today we have to look behind the curtain.  National boundaries don’t mean anything any more.  Who really owns the world’s assets (land, resources and production)?  The elite, a network of who knows what (Masons, illuminati, banksters, or some other cabal)?  [Most of them live in the USA and England, with a growing number in select cities in Asia]  Do they care about governments and boundaries?

Ah, what is this?  Do I hear a lion roaring in the distance?  Oh yes, the whole world lies in the [clutches of the] evil one!

I rest my case.  Dene.

THE FINAL BABYLON is not likely to lose her grip on financial and economic leadership and domination.  Not before the judgment of God comes against Babylon.  Look for the USA, despite the wacky management of the current administration in its ill-conceived socialist agenda, to flex its financial position and strengthen its dominance over the rest of the world.  It is THAT GREAT CITY.

Doug Woodward