The Coming Failure of the Federal Reserve and the U.S. Dollar

The United States prints about 60% of the money the Federal Government spends each week.

Just so everyone is clear: The United States prints about 60% of the money the Federal Government spends each week.

In fact, the U.S. government does not print the money. This “money” appears out of thin air, by the Federal Reserve “loaning” the money to the U.S. Treasury.

Where does the Federal Reserve get the money?

Oh, it prints it, no it keystrokes it into existence, really, just types it into existence on a computer — sort of like writing a novel.

The Federal Reserve believes the power to type U.S. currency into existence will last forever. It will not.

Two things will happen that will act like a explosion in the basement of the Federal Reserve, dropping the whole fake-type-money-into-existence power:

First, the Chinese, who have been beavering away for more than a decade buying every stray piece of gold either in the ground or above it, have been doing it for a specific and powerfully disruptive reason, they want to shoot the U.S. dollar in the head. The Chinese have concluded it would be a mercy killing, that would ultimately allow them to actually be paid back in a new currency worth something.

The Chinese, once they switch to the gold standard, will then they float the Yuan (which they loosened a little in a baby-float recently, perhaps their hoard of gold is nearing the magic amount to make the switch to a hard currency) — and the results will be astounding.

The global elite rapidly begin buying the new hard currency Yuan — but with what? With U.S. dollars and Euros, leaving them undesired on the market in mass, dropping their value. Quickly, the Yuan will become the world’s reserve currency.

The main cause of all of this is that Obama and the U.S. Congress refuse to radically alter their spending. The underlying action that is creating the-type-in-the-money to pay our bills phenomenon will not change because the U.S. government, lead by Obama, will not stop spending.

Once Greece leaves the Euro, and begins printing its own currency, we will have a real preview of what is going to happen here in the U.S., once those with debts to the U.S. government, start calling them.

It does not even have to be a foreign country that calls our debts due. These debts can and will be called by the baby-boomers wanting Medicare and Social Security, which they were promised by Republicans and Democrats alike.

Actually, Obama’s refusal to radically cut spending, in fact, instead to massively increase it, is what is really calling our debt due. It’s Obama’s trillions in new debt, because of trillions in new spending.

This is what is pushing the Federal Reserve into the territory where a political intervention to remove their money printing power is a certainty, after the collapse of the U.S. dollar and rise of the post-gold standard Yuan. So, Obama’s refusal to act to radically cut spending is making this day closer and closer.

How can you restrain spending when you create the money you spend? It’s not possible to have that self-discipline when the decisions are being made by a committee of people who just want to keep spending, and who refuse — over and over and over — to stop spending or even decrease it. ObamaCare is a perfect example. Trillions of new spending — er, of typing money into existence.

The question of when the dollar collapse happens is a reasonable question, and one only God can answer. The Federal Reserve obviously thinks it can keep typing the U.S. government spending into existence for some time. I have my doubts.

The external triggering event will be the Chinese switching to the gold standard.

That event will occur once they amass enough gold, or their domestic economy starts to decline to the point that the ruling Communist party needs to make the change for domestic political reasons, to flood it’s economy with global cash seeking to buy the Yuan. This will obviously allow the ruling Communist party to rule for a much longer time.

This is the true strategic economic posture of the United States. It is a top heavy building sitting on a corroded, rotting foundation of an institution that types dollars into existence.

My best guess is that after the collapse of the American dollar, real goods (commodities like oil, natural gas, rice, corn, coffee, etc.) and real estate will appreciate, as Americans and others try and store value in something other than their U.S. currency.

But do not expect a word about this — right up until it starts to happen. Greece is a perfect model. The ruling elite in Europe refused to consider Greece leaving the European Union, or that Greece would leave the Euro or return to printing the Drachma.

Now, the news of the day is as if the return of the Drachma was always going to happen.

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