Jim Willie: The Birth of the New 3rd World Dollar

February 10, 2014

The United States is fast racking up characteristics of a Third World nation. Its finances are Third World. Its president is Third World. Its banking integrity is Third World. Its absent industry is Third World. Its decaying cities are Third World. It urgently begs for a Third World currency, but that is soon to be remedied. The nation has been a freeloader on the global reserve currency for too long. That is about to end. For the last three years, the United States has been living in a fairy tale with bailouts from the vast bond monetization. The Quantitative Easing with its amplified bond purchases and hidden channels to disguise higher volumes has been operating as an historically unprecedented Wall Street bailout and Fannie Mae fraud recycle room. Pressures are building. The USDollar held in foreign jurisdictions is beyond the legal authority of the USGovt, which cannot continue covering its debts with inflation spew in the grandest heretic experiment in history. The solution within the global currency reset is the launch of the new American Dollar, for its own usage, no longer a global reserve currency.

Given its wretched fundamentals, it earns the name of Scheiss Dollar. Those familiar with the German language recognize it as the Shit Dollar. It will be stowed high in transit, true to the colonial application of shipping manure that gave off gas. S.H.I.T. was a warning to beware of gas explosions from lanterns on ships transporting the fertilizer agent. The current USDollar is not just giving off excess gas for global banking system flatulence. Its gas has produced vast insolvency in the banking systems of many nations. The air pockets in circulatory systems have caused widespread cardiac arrest. The higher cost structure, primarily felt in food prices and energy prices, but also in material prices, has resulted in diminished profitability and a ruinous retirement of capital. The capital destruction must be halted, going hand in hand with global recession. Foreign nations demand a new solution and quickly. Thus the Global Currency Reset, within which the new Scheiss Dollar will be launched.


INSURMOUNTABLE PRESSURES BUILD
As the world moves away from the USDollar, it will avoid the USTreasury Bond in banking reserve function. The world will settle trade outside the USDollar on a rapidly growing basis. The result will be a shock to the USeconomy with fast rising prices. Alternative systems will move toward other currencies in trade settlement, like the Chinese Yuan and Gold bullion. The USFed will compensate by printing money to cover the USTBond selloff, dumping, divestiture, and indirect exchange. Only when the foreign suppliers do not want USDollars will the problem hit the United States like a financial hurricane.

The USFed response will trigger two events: a separate dollar from a split, and the ravage of price inflation. Not monetary inflation but rather a currency crisis will slam the United States. Powerful dynamics inside the United States and outside the United States will result in split birth of a new Scheiss Dollar for domestic usage, but also a flood of foreign USDollars converted to Gold bullion. The Scheiss Dollar will suffer from a sequence of devaluations. The conversion of USTBonds and other sovereign bonds to gold will gain momentum to change the face of the world. The Gold Standard lies directly ahead. In fact, the Global Currency Reset has a more appropriate name in the Return to the Gold Standard.

The pressures internal and external to the United States will force drastic action. The USGovt must defend against a growing tide of USTreasury Bond dumping and absent demand for USTreasury Bonds, both hitting simultaneously. The USFed cannot solve the imbalance and fill the gaps, by means of endless monetary hyper inflation. The USGovt must make a new Domestic Dollar, and devalue it in order to assure supply to the import dependent USEconomy. Neither the financial so-called experts nor the US maestros will not anticipate how deeply they will have to devalue the New Scheiss Dollar. The Jackass estimates between 50% and 60% in at least two steps, probably more. The result will be well over 100% price inflation. See Venezuela for an example that made up for two decades of abuse. Also, the US maestros have misjudged the oil supply from the Bakken region, misjudged the natural gas supply from Shale projects, while contaminating the US-based water supply table.

The USFed must halt its hyper monetary inflation, since it is wrecking the global financial markets and ruining capital on a grand scale. No more can the central bank cover the sold and dumped USTreasury Bonds with newly printed money. So they lie about tapering, after a failed experiment last year. The QE volume is increasing, not decreasing. Monetary inflation is a cancer, always has been, always will be. To call it the New Normal is national suicide. The three years of QE bond monetization have created the high pressure factor in the massive vortex. As the global trade is settled more outside the USDollar, far fewer USTreasury Bonds will be accumulated by foreign trade players. In fact, a whirlwind of USTBonds will be sold off during a grand divestiture, often called diversification. As the USDollar goes out of favor in trade, the United States will have a tremendous new challenge.

Being a massive importer, the USEconomy must find a means of paying for the huge volume of incoming supply. This is precisely how the USDollar will undergo its crisis. Events will go out of control. The USGovt must find a way to devalue its USDollar currency, and stop printing new USDollars. During the next chapter, foreigners will begin refusing USD in trade while selling its USTBond shelves from their banking systems. The sales dump will form the low pressure factor of the massive vortex. The hurricane is gathering force from the high pressure of central bank monetary growth, combined simultaneously with the low pressure of foreign dumping. Add to the intense pressures the economic damage from capital destruction, which raises sovereign government deficits that must be financed.

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Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at  www.GoldenJackass.com. For personal questions about subscriptions, contact him at  JimWillieCB@aol.com