The year is the not too distant future. It could be 2010 or 2015. You wake up, turn the coffee machine on and sit down to watch the morning news. The anchorperson is interviewing the Secretary of the U.S. Treasury. At first it isn't clear what they are talking about, but then it hits you: The U.S. Government was forced into declaring bankruptcy. Your first reaction is to think so what, but then: What you hear next is one of those jaw dropping moments of shock. The dollars in your wallet or purse are now officially worthless! All stocks, bonds, IRA's, and 401 is Gone!
This is the scenario Americans and the rest of the world will wake up to one day. It is not a fable or work of fiction. A report published by the Federal Reserve Bank of St. Louis, July/August 2006, states; "Unless the United States moves quickly to fundamentally change and restrain its fiscal behavior, its bankruptcy will become a foregone conclusion."
The Report list three reforms needed to restrain fiscal behavior. They are:
1) Eliminating the current income tax system and moving to a national retail sales tax of 33 percent.
2) Privatizing social security so that workers own their savings accounts and the federal government can no longer swipe funds from Social Security.
3) Launching a national health insurance program that covers everyone and relies on a system of government-issued vouchers that citizens can spend with health insurance companies.
However, these reforms are not likely to happen. Our politicians do not have the spine to make it happen. Instead they will do what virtually every government has done on the way to bankruptcy and collapse since recorded history: The U.S. government will hyperinflate the economy by printing more paper currency to escape the financial consequences of their unbridled spending. The Federal Reserve Bank Report flatly states this will happen. It says:
"Given the reluctance of our politicians to raise taxes, cut benefits, or even limit the growth in benefits, the most likely scenario is that the government will start printing money to pay its bills. This could arise in the context of the Federal Reserve "being forced" to buy Treasury bills and bonds to reduce interest rates. Specifically, once the financial markets begin to understand the depth and extent of the country's financial insolvency, they will start worrying about inflation and about being paid back in watered-down dollars. This concern will lead them to start dumping their holdings of U.S. Treasuries. In so doing, they'll drive up interest rates, which will lead the Fed to print money to buy up those bonds. The consequence will be more money creation exactly what the bond traders will have come to fear. This could lead to spiraling expectations of higher inflation, with the process eventuating in hyperinflation."
At some point in this process, foreign Central banks and governments will lose whatever faith they have left in the dollar and say, Enough is enough. We will no longer accept U.S dollars. When that happens, the U.S. government will be forced to declare bankruptcy, making all paper dollars and paper investments worthless.
So how could this mess possibly happen?
All this time our government was telling us lies. They said inflation was under control, in spite of prices going through the roof on groceries, gasoline and all kinds of goods. In spite of many people being out of work, our President said the best thing we can do to keep the economy going is to spend more money. And many people did. The average credit debt in 2007 was over $9,000 per cardholder.
In 2007, millions of high credit risk people who couldn't afford a traditional mortgage were given little or no money down, adjustable rate mortgages with low, front-end teaser rates. When the initial low payment schedule expired and these mortgage holders had to increase their payments, they didn't have the money.
The mortgage industry also lured millions of homeowners into refinancing their mortgages, so they could have money to pay off loans, go on vacations, etc. Their selling point was your home owes it to you. After all, the home market was hot and home prices were marching upward. Mind you, this was being done BEFORE the sub-prime mortgage mess hit the fan and home prices begin to plummet. So when home prices began to fall, many homeowners who did a "refi" suddenly found they owed more money than their homes were worth. Many homeowners doing a "refi,"tied to an Adjustable Rate Mortgage, could not meet the higher adjusted rate and lost their homes as well.
When the home market was booming, foreign investors were busy purchasing all these sub-prime and "refi" home mortgages as securities. When their investment went south along with home prices, foreign central banks and governments decided the U.S. dollar was no longer a good investment. OPEC soon dropped the dollar as the currency for its oil in favor of euros.
As a result of the so-called "sub-prime" mortgage crisis, cities begin losing property tax revenues. Many city, county and state employees began losing their jobs, and services had to be cut back. All the time this was happening, stagflation set in. Even as prices continued to climb, millions of people lost their jobs and thousands of businesses went out of existence. They simply lost their ability to compete in the new global economy.
To keep the economy growing, the Federal Reserve lowered its prime interest rate, which fueled more and more money being printed. The net result was the dollar continued to lose its foreign exchange rate value even as prices for goods and services increased at home. As the value of the dollar measured against the value of foreign currencies continued to sink, foreigners found they could fly to the United Sates and buy things here cheaper than they could at home with euros. For a while, business in the U.S. boomed. Large foreign investment companies began buying up U.S. businesses and property with cheaper U.S. dollars.
The U.S. government did all it could to stave off more home foreclosures and to prompt up failing businesses. But it was too little to late. The damage to the credibility of the U.S. dollar was already done.
As your sitting there listening to all of this on the news, the reality of what you've just heard begins to sink in. The dollar is worthless. It means whatever cash you have in your wallet or purse is useless. No one will be willing to accept your money if they cannot use it to pay what they need. Panic sets in.
What to do?
It's then that you realize you will have to rely on whatever possessions you have to live on. For example: If you have four size A batteries, you could use them as trade for what you need. If not, you may have to go without. This is how millions of people will learn to live until a new monetary standard is created.
On the other hand, there are a small number of suburbanites and groups of people who saw this day coming and did what they could to prepare for it. They will suffer less because they:
1) Researched the facts. They did not believe the media or government reports about the economy.
2) Stock piled all manner of durable goods, which would be in demand in a time of crisis. These goods they used for trade.
3) Purchased U.S. silver coins dated 1964 and earlier. These coins contain 90% silver, a form of money, which never loses its value. In time of crisis, just one silver dime could well buy a month's supply of groceries for four people.
4) Turned part of their lawn into a vegetable garden.
5) Learned how to can and preserve food without freezing.
6) Put up a small chicken house in their back yard to produce fresh meat and eggs.
7) Learned a trade or craft that would be in demand in a time of crisis.
8) Installed a generator and wood stove in their home.
9) Stock piled wood.
10) Purchased oil lamps and stock piled oil for lighting.
11) Installed a solar water heater.
12) Found a local bartering group to exchange goods and services, or started one.
This does not mean this group of people have stepped back in time to the era of their great grandparents. But it does mean they took steps to insure their independence and provide for their welfare. These are the people who will forge a new prosperity.
Most people do not live in rural areas with large plots of ground. Most people live in the suburbs of our cities. But even here suburbanites have some land, though small in size it may be. Begin now to think of what land you have available and how to make it productive. Unless there is a local ordinance preventing it, keeping a few chickens in your back yard will lift your spirits: Not to mention the fresh eggs and meat they provide. To learn more go to: My Pet Chicken
Purchase a tiller and begin a vegetable garden. Depending on where you live, you will enjoy wholesome fresh vegetables several months of the year. Learn how to dehydrate and can the excess vegetables you grow. There are lots of websites to help you get started. Just four tomato plants can provide you with all the fresh and dehydrated tomatoes you will ever eat. Greens are also to grow. In most climates you can raise two or more crops.
Now if doing these things seem strange to you and your wondering if these things can be done, I want to introduce you to a family in Pasadena California. These folks live on one fifth of an acre. Yet look at what they have done. Watch this video: Ckick Here
Set aside a portion of your income to invest in U.S. silver coins (dimes, quarters, half dollars) dated 1964 and earlier. These coins contain 90% silver and were the coins of the realm until the government debased U.S. coinage by eliminating their silver content starting in 1965. They did so because the silver content became worth more than the denomination the coins were minted in.
Used silver coins make a good investment because silver is still affordable and will never lose its value. Buy a few dollars worth at a time if your budget does not allow buying more and squirrel these coins away. Buy more as you can. I know this sounds crazy now, but a silver dime costing $1.15 today may one day be worth a whole month's wages.
At the time of this writing (December 2007), silver sells for under $15 an ounce. Because the price of silver has been suppressed for years, many economists believe silver is due to climb to its true value in the near future. Those who study the dollar crisis and know metals say silver could reach as high as $2,000 an ounce in the coming years. Whatever the case may be, taking physical possession of "junk" silver coins now will help you in the years ahead. It is interesting to note there is no tax on silver. It is off the grid. Watch this video: Click Here
A good place to buy "junk" silver coins are in coin shops. Most every coin dealer has junk silver coins they are willing to sell for at or near the spot price of silver. Check this website for the current bid price of silver and gold coins: Coin Info
You may also consider buying silver rounds and bars of silver. However should you trade these at some future date, the person you trade with may not accept them, exactly because the silver content is not verifiable without an assay. Silver coins, on the other hand, are universally known and accepted without an assay.
Help Others
This is not a political or religious issue. The fall of the dollar affects every man, woman and child all over the world. The more people who get involved now, the better it will be for everyone. We need to protect our immediate families, but even more, we also have a moral obligation to help others.
If you belong to a Church, make copies of this letter and hand them to your elders, pastors and priests. Ask them to carefully consider ways they can help the Church community.
Talk to the neighbors around you and tell them what you intend to do. Discuss the issue with them. What are their feelings about the dollar? If two or three families next to each other all decide to prepare together, it can turn into a fun project and draw neighbors closer together.
If you belong to a Volunteer Fire Association, are a member of the local PTA, or any group which meets together, introduce the subject to them and ask them to consider ways they may act collectively to be of help to others.
Organize a suburban homestead group. Place an ad in the paper and set an organizational meeting date. Learn all you can about how to prepare and share what you know with the group. Set up a secretary who will keep the names and addresses of members, along with a list of everyone's skills. Here's a link to help you get started: Click Here
Just remember: Many people are turned off by the term "survivalist." The term conjures up living in the backwoods and isolation. If you begin a group, its focus should be on helping urban dwellers to be prepared for disasters, be they natural or man-made. We all want to survive disasters, so plan your game plan around the term preparing for disaster.
Just remember you will encounter people who would rather stick their head in the sand then face reality. They will poo hoo your message. If this happens to you, kindly smile and move on.
Get the Facts
I believe it is good stewardship of your time and money to get the facts and begin thinking of alternatives to the way we are accustomed of doing business. I shudder to think how drastic our lives would be changed, in the face of a dollar collapse. Some who read this letter may shrug their shoulders in disbelief. All anyone can ask is that you do your own research and then begin a discussion of the issue with one another, pro or con.
My belief is that it is better to be informed, than it is not to know and wish later we had known. Here are some facts I've gleaned from reputable sources:
1) The dollar today is only worth two cents, versus the buying power of the dollar in 1919.
2) Today it takes 5 times more dollars to buy the same amount of goods and services that $1 bought in 1971.
3) The purchasing power of the dollar has lost 36%, just since 2003.
4) U.S. government debt has grown to $44 trillion dollars in 2007 (The biggest debt explosion in history).
5) Private and corporate debt in the U.S. is also near $44 trillion dollars (This puts total government, corporate and private debt at $88 trillion dollars).
6) During the first 204 years, U.S. government debt rose from 0 to $1 trillion dollars in 1980. During the next 27 years, federal and private debt rose 880% (8.8 times) to $88 trillion dollars.
7) Every single day the U.S.A. government must borrow $3 billion dollars to keep the U.S. economy growing. Until recently, foreign governments and central banks bought this mounting debt. So as it now stands, foreign governments and central banks hold the most dollars. They also stand to lose the most.
8) The U.S. Government is unable to pay off this mounting debt without printing more money, which only increases inflation and lowers the purchasing power of the dollar.
As the U.S. dollar loses value against the euro and other currencies, foreign governments and central banks are unloading a percentage of their dollar holdings. They do so at discounted prices. The more they do, the more the dollar loses value.
Right now the price of oil is set in U.S. dollars. Were OPEC to set the price of oil in euros, the value of the dollar would fall even more rapidly than it is now. Many experts believe changing from dollars to euros is likely to occur in the near future.
According to Dr. Paul A. Samuelson, a Noble Peace Prize winner in economics, The U.S. balance of payments deficits is so strong and irreversible, that we must accept that at some future date there will be a run against the dollar, probably the kind of disorderly run that precipitates a global financial crisis.
Our government tells us our economy is doing well, that inflation is very low, but the facts do not support their story. The Federal Reserve stopped sharing information about the total dollars in circulation (M3) last year. Why would they do that? I believe our government is purposely not being truthful when it comes to our economy and money.
If you do a word search on Google or YouTube using the search terms, "dollar collapse," "coming dollar collapse," or "death of the dollar," you will find a wealth of documented information. There are also two worthwhile books for your reading:
1) Crash Proof: How to Profit From the Coming Economic Collapse, by Peter Schiff
2) The Coming Economic Collapse, by Stephen Leeb
Of course, you can also find economists who dispute the demise of the dollar. The thing is, you must decide for yourself.
Have you ever considered the ramifications of a dollar collapse? Even should there not be a sudden collapse, inflation will continue at increasing rates, while more and more people lose their jobs. Living will become harder than anything we have known.
Globally, the result of a dollar collapse will mean a re-organization of the world's wealth. Many third world countries will thrive while America becomes poor. Here are some other personal observations:
Material possessions will be used more and more for barter and exchange as the dollar continues to lose its value. Those with the most possessions will fair the best.
Those who have stored silver and gold will suffer less than those who have not.
Should the dollar not suddenly collapse but continue to lose value due to inflation, economists say the price of gold could rise to over $8,000 an ounce and silver as high as $2,000 an ounce. This increase will reflect the loss in purchasing power of the paper dollar.
Within the next 18 months, $1.7 trillion dollars in balloon mortgages will come due. The housing mortgage crisis will not get better than it is now, and more and more people will be without a home
More and more jobs will be lost as inflation destroys the ability of employers to pay their workers a living wage.
Americans will no longer be able to compete to produce goods and services.
Beginning in 2008, millions of baby boomers will begin to retire, forcing the government to print more money to pay social security benefits. This will increase government debt and the rate of inflation.
A National Emergency could permanently eradicate our freedoms. A repressive new government may replace our Republic, all for the good and safety of the people of course.
Do Your Due Diligence: Watch these videos
The Ultimate American Dollar Collapse
Click Here
U.S. Economy and Financial System Bankrupt --What's next?
Click Here
U.S. Economy and Financial System Bankrupt What's Next part 2
Click Here
Economic implications of the real estate bubble
Click Here
Inevitable Collapse Of The Dollar
Click Here
Jones on Gold and Silver
Click Here
Peter Schiff
Click Here
The Real Story of Money
Click Here
Join The Surviving Chaos Forum
To learn more about the coming collapse of the dollar and how to prepare your family, join Surviving Chaos, a Yahoo Group Forum. Join with others who share the same concerns and what they are doing to prepare.
The purpose of Surviving Chaos is to educate and provide members with vital information that can minimize the effects of a recession, depression, hyperinflation, or the total collapse of the U.S. dollar. Membership is free and open to anyone interested in the welfare of his or her family. There is no charge, and you are welcome to participate in the forum. To become a member visit: Surviving Chaos
About the author
Jim Lynn is a minister and director of Gods Healing Word ministry. Subscribe to Godms Healing Word free Newsletter and receive a copy of E.M. Bounds book, The Essentials of Prayer. Visit http://GodsHealingWord.org
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