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The Fall of the U.S. Dollar and the U.S. itself
As Americans continue, day-after-day, earning the waning dollar, their leaders continue to mortgage-off their future with out of control spending and reckless policies – both domestically and internationally. From all appearances and from both side of the aisle, it appears they are committed to auctioning off every single asset to the highest bidder, until there is nothing left to sale or until all the bidders dry up. The hotly contested debates over raising the national debt ceiling are perfunctory, at best. Hoping to quiet the growing dread in the hearts of its people and to somehow appease a watching international community, America’s leaders know that this raising of the debt ceiling will not be the last. It is one of many to come.
With a national debt of $14.3 trillion and growing, borrowing from China now at over $1.1 billion a month, and a national current account balance at negative $563 billion, America cannot pay the required interest payments on its debts. If leaders do not raise the debt ceiling, America will default on its debt obligations. If government spending is not reigned-in, America will become junk status. Moody, a major bond rating agency, warned that it might review a possible downgrade of the United States’ triple-A debt rating if a deal is not struck soon to increase the national debt ceiling and cut deficits. According to the Treasury Department, it would begin defaulting on its obligations as soon as August 2nd without a debt-limit increase.
A MOMENT IN HISTORY
Someone may be asking “what does this all mean?” “We’re America, we can’t fail, right?”
Emerging from the devastating Great Depression and in the midst of World War II, leaders from around the global gathered in Bretton Woods, New Hampshire to establish a system of rules, institutions, and procedures to regulate the international monetary system. This system would become known as the Bretton Wood system. The chief features to come out of this system, were an obligation for each country to adopt a monetary policy that ties its currency to the U.S. dollar and the creation of the International Monetary Fund (IMF) that would bridge temporary currency imbalances. As such, countries purchased the U.S. dollar, held large amounts of it in reserve accounts to be used if the value of their currency declined significantly, and they pegged their currency to move up and down on a daily basis with the U.S. dollar.
The willingness of other countries to tie their economic survival to the United States, then and now, hinges on the strength and stability of the United States itself. Backed by nothing but the promise of the federal government, the dollar is (was) considered “as good as gold”. This alone, speaks to the magnitude of America’s greatness, backed by nothing but a promise, nations from around the world purchase trillions of U.S. dollars – in many cases, binding their continued existence to a promise.
It is this promise that has been placed in jeopardy due to out-of-control spending that now places the United States in a precarious predicament. Right now, the United States is unable to meet its debt obligations without the ability to print money that is not backed by economic stability, financial discipline, and strength. Instead, the U.S. dollar is backed by a waning demand that presently allows for the endless printing of “funny-money”.
WHAT WOULD HAPPEN IF AMERICA CAN’T PAY HER BILLS?
The effects of America defaulting on debt obligations would be the same as those resulting from continued out of control spending. That is, calamity. The U.S. is in a catch-22. America finds itself in a no-win situation if the debt ceiling is raised or not and if spending is cut or not. The hole that has been created over many decades is too deep to emerge from completely unscathed. If you think things are tough now, just watch what happens when America cannot pay its bills to an expectant international community. Many of us are acquainted with someone who learned of the consequences of not meeting debt obligations – homes go into foreclosure, cars are repossessed, jobs are lost, and so forth. However, the magnitude of the economic blow that would be felt by America and the world is unquantifiable. For many, the across-the-board scale of such a fall is incomprehensible.
To illustrate the doom and gloom, let us talk exchange rates for a moment. Apart of the Bretton Wood system is the creation of exchange rates. Simply put, exchange rates bring into balance the purchasing power of one nation’s currency with the purchasing power of another nation’s currency. Visualize a balancing scale and this is essentially the purpose of exchange rates. Exchange rates ask the question “how many U.S. dollars are needed to purchase its equivalence in Mexico, for example?” The answer: 1 USD = 11.6 MXN (Mexican Peso). Meaning, it takes 11.6 pesos to equal the purchasing power of 1 U.S. dollar. However, compared to Europe, it only takes 0.69 Euros to equal 1 U.S. dollar, because the U.S. dollar is trading weaker than the Euro.
Many variables are used to determine the exchange rate, culminating in what will eventually be used to judge the riskiness of one nation’s currency compared to another nation. In Finance, we use this “risk” factor to determine the price or value of a nation’s currency. Some of the variables that increases risk and thus decrease the value of a nation’s currency are: risk of defaulting on debt obligations, too much debt, increasing inflation, increasing interest rates, etc. As the existence of any of these variables increases, the riskier a nation is deemed to be, consequentially, the value, price, or worth of that nation’s currency declines. Today, America is drastically plagued by 3 of the 4 risk factors above. So, why haven’t the dollar been significantly reduced in value? Why is there still a demand by the international community for the U.S. dollar? Two words: Bretton Wood. Remember, as of today, many nations have pegged or tied their currency to the ebb and flow of the U.S. dollar. As such, there is a constant and inherent demand for the U.S. dollar. But, this demand is mostly based on nostalgia and not economic reality. The question to be asked is whether the financial markets are willing to continue to finance America’s imbalances? The answer is no.
In fact, China’s central bank chief, Zhou Xiaochuan, has outlined how the dollar could eventually be replaced as the world’s main reserve currency by the Special Drawing Rights (SDRs, an international reserve asset created by the IMF). Zhou comments “spells out in detail China’s dissatisfaction with the primacy of the U.S. currency.” He stated that moving towards the increased use of SDRs instead of the dollar “serves as the light in the tunnel for the reform of the international monetary system”. He also stated that “the price is becoming increasingly high (to peg nations currencies to the U.S. dollar), not only for the users, but also for the issuers of the reserve currencies.”
After the close of the annual Chinese parliament session, Chinese Premier Wen Jiabao said “we lent such huge funds to the United States and of course we are concerned about the security of our assets and, to speak truthfully, I am a little bit worried.”
George Soros: on April 8, 2011, a group he funded with $50 million, held a major economic conference. Soros’ goal to establish new international rules and reform the currency system was the discussion of the day. The event brought together more than 200 academic, business, and government policy thought leaders. Some expected notable attendees were:
• Former Fed Chairman Paul Volcker who is chairman of President Obama’s Economic Advisory Board.
• Soros friend Joseph E. Stiglitz, a former senior vice president and chief economist for the World Bank and Nobel Prize winner in Economics.
• Former U.K. Prime Minister Gordon Brown.
In a 2009 op-ed, Soros lays out his plans for a new world order. This new world order would balance out the flow of power away from America and to one entity that would represent the interests of the world. He goes on to speak of a common source of all currencies, which would permit the international creation of money that could be directed to where it is most needed – in effect, creating a one world currency or a “super-currency” .
IS THEIR A SILVER LINING FOR AMERICA?
In 2008, we heard for the first time the term “too big to fail”. We came to learn that this term is applied to those organizations believed to be too large, too important, and their role in the national and global community is too crucial for them to be allowed not to succeed. Although, their financial woes may be due to misconduct, incompetent management, or fiscal irresponsibility they would not be allowed to truly reap the consequences of their missteps. In short, they would not be allowed to fail. Likewise, America is “too big to fail”. The global community will not allow her to fall completely – although, some rigged patch work will be required.
America will emerge, but she will not be who she once was, strong and mighty. She will become a shadow of herself. She will become something different, something a little more acceptable for the world to bear – a little less dominant.
On several levels, America has truly become a “sleeping giant,” as spending and national policies move impulsively and with reckless abandonment, seemingly unaware of the impending costs. If true “Change” is going to come, then Americans must broaden its scope and vocabulary to include such topics as China’s growing dominance, China’s huge ownership of American assets, quantitative easing, G-20, and growing pressures for China to dump the dollar or abandon its exchange-rate peg to the dollar.
Undeniably, America is the greatest nation on earth. Arguably, it is the greatest nation throughout all of history. What have made America so great, are not so much her people, as it is the values she was established upon. These values have been passed down from one generation to the next generation, and are threatening to culminate with today’s generation. Yet, in spite of her rich legacy and “stronger than gold currency”, the decline of both is ominous.
Perhaps there is something Americans can still do to slowdown the inevitable. Fortunately, it will call for Americans to exhume two traits they embody, but are buried deep within: discipline and critical thinking skills. After that, minds will become unshackled from decades of systematic restraints placed upon it. Political discussions will move beyond party affiliations, the color of one’s skin, and religious backgrounds. Americans will hold leaders accountable for decisions made and will no longer be swayed by crafty spin doctors and liberal “talking-heads”.
http://www.chicagotribune.com/business/breaking/chibrkbus-moodys-warns-of-us-debt-downgrade-20110603,0,2694733.story
http://www.chinadaily.com.cn/business/2009-03/23/content_7607627.htm
http://www.chinadaily.com.cn/business/2009-03/14/content_7579030.htm
: http://www.foxnews.com/opinion/2011/03/23/media-ignoring-plans-george-soros-remake-entire-global-economy/#ixzz1NEsfegDg
http://search.japantimes.co.jp/cgi-bin/eo20091108a1.html
http://www.chinadaily.com.cn/business/2009-03/23/content_7607627.htm
WND EXCLUSIVE
PLANNING FOR ISLAMIC CALIPHATE TO BEGIN
Goals given boost when Obama administration legitimizes ban on criticism
Published: 12 hours ago
by BOB UNRUHEmail | Archive
A senior fellow for a Madrid-based think tank is alerting freedom-loving people about a caliphate-planning conference being held by Muslims soon, a move he said was given a boost of support by the Obama administration recently when it allowed a three-day “Istanbul Process” conference in Washington.
That event, writes Soeren Kern, Senior Fellow for European Politics at Madrid’s Grupo de Estudio, “gave the [Organization of Islamic Cooperation] the political legitimacy it has been seeking to globalize its initiative to ban criticism of Islam.”
The coming event, Caliphate Conference 2012, is being organized by Hizb ut-Tahrir, which Kern describes as a “pan-Islamic extremist group that seeks to establish a global Islamic state, or caliphate, ruled by Islamic Shariah law.”
The 57-member OIC has been proposing a special international law that would make it criminal to speak ill of Muhammad or his followers for years, but it never was successful under its earlier plans that were portrayed as a ban on the “defamation of religions.” Actually, support for the idea had started waning.
But then it proposed Resolution 16/18, a plan for countries to “combat” things like “intolerance, negative stereotyping and stigmatization of … religion and belief.” The idea was adopted in the U.N. General Assembly just a few weeks ago and Kern’s analysis notes that it would be largely ineffectual as long as the West doesn’t jump behind it.
That is why it was a “diplomatic coup,” according to Kern, when Obama held the three-day conference in Washington, where Secretary of State Hillary Clinton committed to the key principal Muslims have been seeking for years: holding people responsible when “free speech” … “results in sectarian clashes.”
The critical question that has been among the reasons the so-called “anti-defamation” plans previously have failed is that such limits suggest, even require, that the blame be placed on the person making a statement if the situation is that someone else reacts to it violently.
Free speech advocates are worried over her comment that, “It’s one thing if people are just disagreeing. That is fair game. That’s free speech. But if it results in sectarian clashes, if it results in the destruction or the defacement or the vandalization of religious sites, if it even results in imprisonment or death, then government must held those – hold those who are responsible accountable.”
In Western civilization, the standard for responsibility would be to hold those accountable who do violence, not those who make statements that those who do violence blame for their actions.
The U.N. strategy, proposed by Pakistan “on behalf of the Organization of the Islamic Conference,” again creates an open door to blame someone for making a statement about Islam to which Muslims would react violently, by raising concerns about “incitement to discrimination, hostility or violence.”
Further, it “condemns any advocacy of religious hatred that constitutes incitement to discrimination, hostility or violence.”
Repeated concerns have been raised by such statements, as they open the door for attacks on people making statements about their own beliefs, which someone else would choose to decry as “hatred.”
In fact, the resolution calls for “measures to criminalize” some related behaviors.
Sharona Schwartz at at the Blaze noted that the German-language promotion video for the conference starts: “The relentless decline of capitalism has begun. The time has come to fight against poverty. Time to obliterate the injustices. Time for the correct system.”
Which is identified as Islam.
In a report published by the Stonegate Institute, Kern said the “explicit aim” of the Istanbul Process is to make it a crime to criticize Islam.
He writes, “According to Steven Emerson, a leading authority on Islamic extremist networks, Hizb ut-Tahrir is emulating the three-stage process by which Muslims established the first Islamic caliphate after the death of the Islamic Prophet, Mohammed, in the year 632.
“During the first stage, Hizb ut-Tahrir builds a party by cultivating a small number of supporters to engage in recruitment and propaganda. In the second stage (which Hizb ut-Tahrir is now entering in Europe and the United States), the group educates Muslims in order to recruit a larger group of people to join Hizb ut-Tahrir and support its revolution. Finally, having won the support of Muslims, Hizb ut-Tahrir moves to establish a Shariah-ruled Islamic government.”
He notes the OIC just two weeks ago sponsored a symposium in Brussels to talk about “anti-Islamophobia.”
“Resolution 16/18, which was adopted at HRC headquarters in Geneva in March 2011, is widely viewed as a significant step forward in OIC efforts to advance the international legal concept of defaming Islam,” he reports.
He cited the report from the International Islamic News Agency, which stated, “The phenomenon of Islamophobia is found in the West in general, but is growing in European countries in particular, in a manner different from that in the U.S., which had contributed to drafting Resolution 16/18. The new European position represents the beginning of the shift from its previous reserve over the years over the attempts by the OIC to counter ‘defamation of religions’ in the Human Rights Council and the General Assembly of the United Nations.”
WND previously has written about the Islamic-led Defamation of Religions proposal in the United Nations. It was “nothing more than an effort to achieve special protections for Islam – a move to stifle religious speech,” according to an analysis by Jay Sekulow of the American Center for Law and Justice.
According to the Human Rights First organization, the plan simply violates fundamental freedom of expression norms.
Tad Stahnke, of Human Rights First said the concept is “unfortunate for both individuals at risk whose rights will surely be violated under the guise of prohibiting ‘defamation of religions,’ as well as for the standards of international norms on freedom of expression.”
The issue also has been addressed by Carl Moeller, chief of Open Doors USA, in an interview with WND at the time, because of the pending threat to the freedoms in America.
“This is a battle for our basic freedoms,” he warned.
“This [U.N. idea] is Orwellian in its deviousness,” he said. “To use language like the anti-defamation of a religion. It sounds like doublespeak worthy of Orwell’s 1984 because of what it really does.”
He said Muslim nations would use it as an endorsement of their attacks on Christians for statements as simple as their belief in the divinity of Jesus Christ, which Muslims consider an affront.
Worse would be the “chilling” effect on language that the U.N. plan would create worldwide, he said.
“This would be a huge blessing to those who would silence dissidents in their countries, Islamic regimes,” he said. “This stands as a monument to the gullibility of the masses in the United States and other places who don’t see this for what it is.”