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Jim Willie and How the Loss of the US Dollar as Reserve Currency Affects You Personally
In the following video, Dr. Jim Willie is a guest on the Turdville Metals Report before a three day weekend to talk about the turmoil in the financial markets. This particular interview consists of questions from listeners, and 2.5 hours of non-stop Jim Willie. When asked what his biggest and most pressing concern was, anyone who listens to Dr. Willie will not be surprised to learn that he says the big pink elephant in the room as we begin 2016 is the permanence and the apparent infinite volume of QE, which is precisely why countries like Russia and China are angling so hard to finally do away with the the US Dollar as the World Reserve Currency.
As was discussed in, Dr. Jim Willie: Financial Deals Happening Behind Closed Doors; But the US Not Invited, a growing number of countries have been transitioning out of US Dollar based commodity and inventory supply systems, because of monetary inflation being caused by the Fed on the World Reserve Currency. It’s not rocket science here; as Dr. Willie puts it, “When you have over 100 countries with their savings accounts denominated in US Dollars, you just cannot keep printing more dollars… You CAN’T do that he says… YOU CAN’T DO THAT!”
To dumb it down for folks at home, Dr. Willie uses the analogy of two squirrels that are neighbors and one squirrel sells nuts. He says, the other squirrel couldn’t make fake nuts and then start spreading them around town?!?!? Again he yells, “YOU CAN’T DO THAT,” but that’s precisely what the U.S. doing, and the world is fed up with us, so the “squirrels have determined it’s time for an alternate nut in the kingdom,” one that won’t be used to monetize the absurd levels of debt the U.S. has reached.
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When people refer to “monetizing the debt,” they are generally referring to the two-step process where the government issues debt to finance its spending, and the central bank purchases the debt, holding it until it comes due, and leaving the system with an increased supply of money.
Said another way, “monetizing the debt,” is the use of money creation (otherwise known as QE, printing money out of thin air, etc.) as a permanent source of financing for government spending. Therefore, whether the Fed is truly monetizing government debt depends on what the Fed intends to do with its portfolio in the long run. In the case of the U.S., we keep printing money and paying back our debts after we’ve printed massive amounts of money out of thin air.
The overall effect of the process is paying back the loans we’ve taken out with Dollars that are worth less than the Dollars we borrowed, and understandably, the rest of the world is tired of it. After all, we are the biggest debtor nation on earth. After the interview with Dr. Willie, I found an old post by Michael Snyder that does an EXCELLENT job of explaining why the US Dollar is so important to US citizens as the Reserve Currency, and why it is guaranteed to implode.
NEW: THE FOLLOWING TWO POSTS FEATURE BOTH PETER SCHIFF AND DR. JIM WILLIE:
Dr. Willie and Peter Schiff Together: Total Currency Collapse and Reset Coming
Peter Schiff and Dr. Jim Willie Warn Investors About Timing Fed Market Rally
Dr. Willie and How Loss of Dollar as Reserve Currency Affects You
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ARE YOU ASKING YOURSELF, “WHAT IS ALL THIS TALK ABOUT THE GLOBAL RESERVE CURRENCY AND HOW DOES IT AFFECT ME PERSONALLY?”
In order for our current level of debt-fueled prosperity to continue, the rest of the world must continue to use our dollars to trade with one another and must continue to buy our debt at ridiculously low interest rates. Of course the number one foreign nation that we depend on to participate in our system is China. China accounts for more global trade than anyone else on the planet (including the United States), and most of that trade is conducted in U.S. dollars (or at least it WAS when this was written).
This keeps demand for our dollars very high, and it ensures that we can import massive quantities of goods from overseas at very low cost. As a major exporting nation, China ends up with gigantic piles of our dollars. They lend many of those dollars back to us at ridiculously low interest rates. At this point, China owns more of our national debt than any other country does. But if China was to decide to quit playing our game and started moving away from U.S. dollars and U.S. debt, our economic prosperity could disappear very rapidly. Demand for the U.S. dollar would fall and prices would go up. And interest rates on our debt and everything else in our financial system would go up to crippling levels. So it is absolutely critical to our financial future that China continues to play our game.
NOTE: CHINA HAS ALREADY STOPPED PLAYING OUR GAME SINCE THIS WAS WRITTEN:
China Issues Warning to Washington Confirming It’s Been Liquidating U.S. Treasuries
China Knocking on the Door of Global Reserve-Currency; World Teeters on Collapse
Jim Willie Explains U.S. Nuclear War Threats to China and Russia Over Challenging Dollar Supremacy
Unfortunately, there are signs that China has now decided to start looking for a smooth exit from the game. In November, I wrote about how the central bank of China has announced that it is “no longer in China’s favor to accumulate foreign-exchange reserves”. That means that the pile of U.S. dollars that China is sitting on is not going to get any higher.
In addition, China has signed a whole host of international currency agreements with other nations during the past couple of years which are going to result in less U.S. dollars being used in international trade. You can read about many of these agreements in this article.
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So if China is not going to stockpile U.S. dollars or U.S. debt any longer, what is it going to stockpile?
It is going to stockpile gold of course. In fact, China has been voraciously stockpiling gold for quite some time, and their hunger for gold appears to be growing.
NOTE: China Discovers Underwater Goldmine Worth Over $16.4 Billion
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As China (and eventually the rest of the world) moves away from a U.S.-based financial system, the consequences are going to be dramatic. When that day arrives, interest rates are going to rise dramatically. And if the average rate of interest on U.S. government debt rises to just 6 percent (and it has been much higher than that in the past), we will be paying out more than a trillion dollars a year just in interest on the national debt.
What happens to the U.S. Dollars or Treasuries when Russia, China, and other major economic players no longer need to stockpile them? As countries continue moving away from U.S. dollars and U.S. debt, our economic prosperity is going to vanish overnight. What happens to the U.S. Dollars or Treasuries when Russia, China, and other major economic players no longer need to stockpile them? They dump them. What happens when everyone all goes to sell all their U.S. Dollars or Treasuries? The same thing that happens ANY TIME supply way exceeds demand? The U.S. dollar would drop like a rock, and prices for goods and services are then going to skyrocket. Don’t forget that interest rates on our debt and everything else in our financial system will go up to CRIPPLING levels.
Losing the reserve will be like getting catapulted back to a third would nation overnight. Americans have no idea what is coming, and it’s really scary.
FOR MORE GREAT MATERIAL FROM JIM WILLIE:
Dr. Jim Willie: Financial Deals Happening Behind Closed Doors; US Not Invited
Jim Willie: Putin, the Gulf Emirates, Iran, and Saudi Arabia Plan Death of US Dollar
Dr. Jim Willie: US Dollar is Being Surrounded By All Sides; It’s Tragically Comical
Dr. Jim Willie: We’re in the Bottom of the 9th; The US Dollar is Dying (2/28)
Dr. Jim Willie: Economic Collapse is On Our Doorstep
Jim Willie: “The Quickening” is Approaching Global Economic Markets
Jim Willie: When Deutsche Bank Fails, Barclays, Citigroup, and More Will Fall
Dr. Jim Willie and How To Simplify Your Finances To Survive Economic Collapse
Jim Willie: Global Banking Cabal and Their Satanic Rules Are Ready to Strike
Jim Willie: Both Our Allies and the American People Absolutely Hate Our Government
Jim Willie: U.S. Dollar is Now a Matter of National Security Due to Poor Decisions
Jim Willie: Armageddon Coming to U.S. With Trillions Exposed In Derivatives
Jim Willie, The Fed’s Week of Reckoning, and an Isolated United States
Jim Willie: After Banks Fail, Government Seizes IRA’s, 401k’s, and Pensions
Jim Willie, the Crumbling Global Economy, and the Dollar Crisis
FOR MORE GREAT MATERIAL FROM PETER SCHIFF:
Peter Schiff: Newest Recession Hiding in Plain View; American Dream Is Dead
Peter Schiff: Dollar Collapse Will Be the Single Biggest Event In Human History
Peter Schiff: Federal Reserve Only Delaying Total Financial Collapse of U.S. Economy
Peter Schiff: Obama “Peddling Fiction” As Unemployed Tops 100 Million People
Peter Schiff: Recovery Fantasy Persists Despite Recession Evidence
Peter Schiff: Here Comes the Great, Great, Great, Great Recession!
Peter Schiff: “Whatever Obama Was Calling Recovery… is OVER!”
CNBC Actually Admits Peter Schiff Was Right… Again (Video)
Peter Schiff: Due to the Feds Antics, the Market is Very Dangerous Now
Peter Schiff and “If The Economy Is Fine, Why Are So Many Large Retailers Imploding?”
Peter Schiff: Take a Good Look at the “New” American Dream!
Peter Schiff and Reagan Advisor: Complete Economic Collapse Immediately Ahead
Peter Schiff: Warning! Economic Storm Clouds Ready to Rain
Peter Schiff: Death of the US Dollar Is Imminent; Fed Out of Options
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