When The Buck Stops Here
This article was written by Tom Chatham and originally published at Project Chesapeake
The U.S. dollar is the world reserve currency, for now. That means everybody that trades in major commodities around the world needs dollars in hand to purchase what they want. In the 1970’s Saudi Arabia agreed to sell oil in dollars only and the petrodollar was born. As a major oil producer this forced everyone else to price their oil in dollars. Everyone needs energy to grow their economy so this created a huge demand for dollars around the world to pay for this oil.
As the economies of the world grew the demand on the dollar grew. The U.S. found itself in a position that allowed it to merely print money to pay for anything it needed around the world. America became wealthy by becoming the greatest manufacturing center in the world but as our manufacturing declined it was replaced with the ability to produce dollars for world consumption. This gave Americans the greatest prosperity the world has ever seen. That is beginning to change with the bilateral agreements now taking place around the world.
Many of the countries around the world have become disenchanted with the dollar over the last decade due to the Feds massive creation of dollars flooding the world. This creation of dollars has devalued the dollars already in circulation and the dollar is no longer seen as a good store of value.
The bilateral agreements being orchestrated now will eventually unseat the dollar as a needed mechanism of world trade and when that happens everyone will dump the dollars they are now holding. Every fiat dollar is a claim on real goods. When these dollars are liquidated from overseas vaults, they will be converted into hard assets. It is estimated that about 80% of all existing dollars are held outside the U.S. When this liquidation takes place all of these dollars will eventually go back to where they came from, meaning the U.S.
All of these dollars were created far in excess of any real goods to back them in the U.S. As these dollars are sent home they will be converted into hard assets from the U.S. This will turn the U.S into a giant garage sale as dollar holders attempt to get whatever assets they can before inflation eats up their purchasing power. The people in the U.S will find themselves bidding against foreigners with about four times as much money and the goods will go to the highest bidder.
When this happens the price of goods will skyrocket putting basic necessities out of reach for most Americans. This is the nightmare hyperinflation that many fear will come in the waning days of the dollar. If this happens America will be stripped of anything of value and many fear the government will simply turn over public lands for these fiat debt instruments created by the private Federal Reserve System.
A day of reckoning is coming for the citizens of the U.S. and it will be pandemonium as everyone tries to grab and hold on to anything they can to preserve their wealth and property. The day the buck finally stops in the U.S. will truly be the end of the line for most Americans.