Doom For the Dollar???

I know what you are all thinking but afraid to say out loud.   With all that is happening in our financial markets, Is the colapse of the dollar next?  And what you really want to know is why the dollar may be declining and if so, how do you protect your own nest egg. 

Okay for the brave one, lets take a good look while many others still have their eyes wide shut.  The dollar declines when it loses value in relationship to other foreign currencies like the euro.  So when this occurs, our good old George Washingtons can buy fewer foreign goods thus increasing the price for imports and causing..you guessed it, Inflation!  Then look out as many investors with U.S. Treasury bonds begin to sell off their good ole American dollar-denominated holdings.

Now, lets look at the current US debt situation.  As of September 18, 2008 the current US debt is $9,648,940,304,081.74.  Yes, that’s 9 trillion dollars!  So if you take the US population of 304,752,209 and do the math, that means that each Americans share of that debt is currently $31,661.59!  That may not seem like a lot to you but the cause for concern is that the National Debt has continued to increase an average of $1.80 billion per day since September 28, 2007!

Okay for those of you not on your cells to your brokers, are you ready for this! Over half of the current account deficit is owed to foreign countries and hedge funds!  That’s right, we are borrowing money from abroad to finance our debt.  Japan, China, the UK, Brazil and the oil exporting countries account for over a trillion dollars in holdings of US Treasury marketable and non-marketable bills, bonds, and notes.  Meanwhile, the George has decline 40% in the last six years.  Again, why you say?  It is because creditor
nations believe that the U.S government is not supporting the value of dollar. A weaker dollar folks means that the deficit will not cost the government as much to pay back.  As these creditor nations realize this, they have been gradually changing their assets to other currencies to stem their losses. Many fear that this could turn into a run on the dollar.  Again in this panic mode, (and it takes very little for Wall Street) we would see the quick erosion of the value of your American investments. And again, increased inflation. 

There has been vast speculation that the euro could replace the dollar as an international currency. For example, Iran and Venezuela are proposing oil-trading markets denominate in euros instead of dollars. Japan is the largest investor in dollars and, if its economy improves, it could sell off its holdings. During 2007, the Bank of Japan was increasing its prime lending rate, strengthening the yen against the dollar. However, Japan’s economy has since stagnated but interest rates have continued to remained stable.

Okay, now I’m going to enlighten a lot of folks.  The real reason for war in my opinion was to prevent
OPEC from moving toward using the euro as an oil transaction currency standard.  In order to derail OPEC the US needed to gain strategic control over the Country with the 2nd largest oil reserve, IRAQ.   By the way, remember Saddam Hussein, the world’s original bad boy?  Well, we all thought that Hussain became Public Enemy #1 when he decided to invade Iran ot flex his muscles and destroy Kuwait.  Nope.  Hussein became a marked man when he decided to switch to the euro back in November of 2000.  He later converted his $10 billion dollar reserve fund at the UN to euros.  Can you figured out what happened next.  That’s right, the Gulf war! But just think what would have happened if Saddam would have convinced some of the other OPEC nations to join him in adopting the eruo conversion plan.  We could have likely seen the crash of the dollar probably months prior to 9/11/2001. 

The steady depreciation of the dollar vs the euro since the latter part of 2001 translates to the fact that IRAQ has more gold to add to those lavish palaces as they have raked it in from the switch in their reserves and transaction currencies.  

Didn’t expect this twist.  Neither did I.  I just didn’t want you to get it twisted when you went to vote this November.  You do plan to vote, right?  If not, get registered!  Anyway, regardless of the outcome, be prepared.  The best way to do this is to keep your investments well diversified.  Oh yeah, pray for a little divine intervention my friends!