A faith - based greenback - slipping away?

You can count on one thing – the coming crisis is not being manufactured under the watchful eyes of the Pentagon planners.

It is slowly and quietly, for right now, slipping into a cyclical economic crisis and the question is will it fall by a “controlled demolition” or tailspin into a free fall.

Mike Whitney writes:

Even if the administration’s plans in the Middle East succeed, there are
stormy times ahead for the greenback. The United States has reached an
unsustainable level of debt in government, business and personal finances.
Personal savings are down, mortgage payments are up, and credit card debt is
higher than ever. The entire country is mired in swamp of red ink for which
there is no easy remedy.

James Shepherd, President of JAS
MTS Inc. puts it this way:
“A perfect storm is
developing and much of this danger has to do with debt. …When a
saturation point of debt and leverage is reached, even a minor dislocation can
cause a dramatic collapse….Debtors are always punished more severely in a
declining economy because, as activity subsides, they are less able to service
their debt and the value of the assets that have collateralized are also
falling. Once those that own real estate realize that their neighbors cannot
service their mortgages and are forced to sell at almost any price, thereby
driving down the perceived value of their own property, the conditions necessary
for a full-fledged debt-driven meltdown will be in place… a severe
recession - is about to sweep over the landscape and blow away those who are not
prepared.”


The predictions of Warren Buffett,
Chairman of Berkshire Hathaway, are equally sobering:


“There are deep-rooted structural problems that
will cause America to continue to run a huge current-account deficit unless
trade policies either change materially or the dollar declines by a degree that
could prove unsettling to financial markets. Indeed, without policy changes, currency markets could become disorderly and generate spill-over
effects, both political and financial.” (Quotes form Dudley Baker,
“Ominous Warnings and Dire Predictions of World’s Financial
Experts”)

“Could the falling dollar lead to “political turmoil”, as
Buffett suggests?

The Organization for Economic
Cooperation (O.E.C.D.) has joined skeptics at the IMF in predicting that the
dollar will fall by 35% to 50% in order to balance current account deficits.
These are modest predictions given the enormous amount of debt the US has
accumulated in just the last 6 years. ($3 trillion) Consider how life for the
average American will change when gas is $6 per gallon rather than $3; when
groceries skyrocket to twice their normal price, and when life-savings are cut
in half overnight.

Whitney’s complete article is located at: Requiem for the Faith-based Greenback