Business Week magazine in its October 26 issue published an interesting article written by Peter Coy, entitled "What Happens if the Dollar Crashes". The reality is that the dollar is already crashing. The value of the dollar has already fallen 15% since March as investors moved to higher yielding currencies. This is happening as a vote of No Confidence in Obama's economic plan and because of huge deficit spending that is requiring the Federal Reserve to print money. It really is that simple. However, Business Week has taken this a few steps further by postulating what will happen if the value of the dollar drops even further by 25% against each major world currency, roughly parallel to housing's unprecedented 30% decline.
This would mean it would take $2 to buy a single Euro. This would result in cheaper exports so it could be good for American companies that manufacturer in the United States and sell overseas. But, on the bad side, inflation in the US would sky rocket because of rising cost of imported goods, which would negatively impact our standard of living. Americans would have trouble getting loans as foreign buyers stop buying our treasury bills pulling out of our debt market. This means interest rates would go up dramatically. The cheap dollar would make it hard for other countries to export their products to the United States, hurting their growth, which means they would not be in a position to buy American products even at lower prices. China and other countries could face social unrest. Trade wars would break out. Over exposed banks would collapse.
Don't think it can't happen because in history many countries that have gone down the same path we are following of massive deficit spending have faced economic collapse. And, if the dollar crashes further, it will be sudden and markets will react immediately. President Obama and the Democrat Socialists that control Congress continue to act recklessly in failing to properly manage our economy like no other time in American history. If we don't see a significant change in policy and soon, away from all of Obama's Socialist schemes and the Keynesian economics that has never succeeded in history, we will see the economic collapse of the United States.
It is a frightening thought and if it happens all bets are off. We could see civil strife and the dismemberment of the United States. I do not believe that the American people today would tolerate the deprivation that took place during the Great Depression as a result of Franklin Roosevelt's misguided economic policies that are the same as Obama's economic game plan. Believe me, I don't like being alarmist; but as a former history teacher I have seen the end of this story in studying other countries and it is not pretty. History really is our best teacher. If Obama's unsustainable deficit spending does not stop, sadly the United States will become a banana republic.
Just today, I was told by a senior manager of a major US bank that their economists project that Obama's Socialist schemes will result in a $16 Trillion deficit in the next ten years, rather than the $10 Trillion projected by the Obama Administration as though $10 Trillion is not bad enough. Be assured, these numbers do not include the true cost of Obama's HealthScare Plan. And, this is on top of the $44 Trillion in unfunded liability sitting there related to bankrupt Social Security and Medicare because all of that money has been stolen by politicians of both political parties to fund government operating expenses since the Johnson Administration. The so called Social Security and Medicare Trust Funds are just smoke and mirrors. They don't have the money given them for these programs. Instead, the Federal government stole the money that was contributed by all of us for Social Security and Medicare and gave the Trust Funds IOU's that are not worth the paper they are written on. The Federal government will have to print money to fund these programs, which will absolutely cause the collapse of the US Dollar. It is a vicious circle.
In the mean time, while the nation burns, the Obama Administration has developed an "Enemies List" just like Richard Nixon. You are probably on it if you are in the 53% of people who pay income taxes. Other Enemies include Tea Bag Protesters, Insurance Companies, the US Chamber of Commerce, Fox News (the Best News Organization in the world), corporate executives, conservative radio talk show hosts, those that support free market capitalism and profit and all of us, that are the majority of the American people that don't support Obama's HealthScare, CAP and TAX and the SwindleUS Plans. The dollar is crashing. Unemployment is at 17%. We could be facing defeat in Afghanistan as a result of Obama's inexperience and indecision. And Obama is focused on developing an Enemies List. What is wrong with this picture?
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