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A Look Into the Collapse Of the US Dollar

A Look Into the Collapse Of the US Dollar

Historically, silver has been about 1/10 the price of gold, right up until the end of the silver certificate and when instead of having real, valuable items that your dollar was "worth", it simply became trust in the United States economy that gives your dollar "value" (you can thank Nixon for "nixing" the gold standard - a move I regard as quite idiotic).  If that trust in the US dollar were to ever falter or fail, you would see the currency of the United States collapse as well.

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The GDP of the United States is 18.57 trillion dollars according to the World Bank.  Our national debt is a tick over 20 trillion.  Which means that if every good and service the US created in an entire year were used to pay off our debt, we still would be left with a bill of over a trillion dollars.  For the workforce, that means every working person in America (157 million) owes about $130,000.  This amount of debt is insurmountable, it's unmanageable, and the United States is going to default on it eventually.  The only way to reasonably pay it off is to artificially inflate the US dollar so high that it essentially becomes valueless, in which case our entire national debt equates to practically nothing.  What this means as well is that all debt, public and private, originally established in US dollars, now becomes null and void.  Paid $200,000 for your house?  The Bank is out of luck and you have yourself a domicile for nothing.  You no longer have to pay your credit cards, vehicles, or anything else.  No one owes you anything either - it's a two way street.

US Debt to GDP ratio. Notice where the line crosses.  It isn't where horsepower and torque meet.

US Debt to GDP ratio. Notice where the line crosses.  It isn't where horsepower and torque meet.

Pandemonium ensues.

In the event of such  collapse, what would be the alternatives in the short term? Life goes on after all, and in the hours and days immediately following the widespread news of the US dollar being worth nothing, what will people exchange for goods and services?

Barter system will immediately take hold and will be fundamental until a new standard currency with real value is established.  You want some of my stuff?  I'm not taking any of your paper with old dead guys on it.  You need to give me something I can use to either trade with someone else, or actually does me some good.  If you don't have an item to exchange for my goods, you need to provide me with a service.

It is going to be a cold and hungry world for people that don't have practical skills that can assist strangers you meet at what was once called the "supermarket" and give them something of value in exchange for their goods.  In the week and month following, food is going to be the #1 most valuable commodity, so you need to have a pair of hard hands in order to help those out in some way that have all the food.

Every kid who grew up and wanted to pursue liberal arts and social justice is going to find themselves without a voice or a cry to be heard, as they are going to need some practical skills that actually help people in order to survive.  This means fixing things with your hands.  It means building things people can use.  It means providing services that people actually want.

Perhaps with the advances of technology, bitcoin or a digital alternative takes hold and becomes the new standard.  There is no longer any physical exchange in any transaction.  Perhaps we return to exchanging flakes of gold and silver, and copper, since those resources have a limit, they have value.  Paper and trust will never again be the basis for a currency, so long as the world remember the collapse.

Untraceable, finite and no country specific central bank!  Sounds like a good recipe for a world currency.

Untraceable, finite and no country specific central bank!  Sounds like a good recipe for a world currency.

Each world currency will topple one by one, either preceding the US dollar or following it, and there will be the necessity for a unified system that the connected world can adhere to. As the world economy is now so deeply integrated with the internet, the currency will have to be digitally transferrable.  Whether this means a cryptocurrency or the precious metal in your bank to back up a transaction, we can only speculate, but it will happen eventually.

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It's Time to Re-visit your Dollar Cost Averaging Scheme

It's Time to Re-visit your Dollar Cost Averaging Scheme

Go Racing - Drive Your Financial Portfolio

Go Racing - Drive Your Financial Portfolio