by LARRY EDELSON on SEPTEMBER 16, 2009
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This morning, we awakened to the news that the U.S. dollar has now fallen to its lowest levels in about a year — in freefall against the euro, the British pound and many other major currencies.
This is precisely the danger I’ve been warning you about.
Just yesterday, I showed you how Washington’s massive debt and entitlement obligations have grown to well over $100 trillion — far more than our nation could ever hope to service — let alone ever repay.
We took a look at Bernanke’s secret solution to our massive, record-shattering debt: That only by destroying the value of the U.S. dollar can Washington ever even hope to service our skyrocketing debt — by satisfying its Social Security, Medicare and Medicaid obligations with ever-cheaper dollars.
We saw how this strategy is already being implemented … how it has already begun to crush the dollar’s value on world markets …
And we’ve seen how, by destroying your buying power, it can only drive your cost of living through the roof … push retirees living on fixed incomes into abject poverty … and trigger massive new waves of bankruptcies from coast to coast.
The simple truth is, if Bernanke’s secret debt solution was the ONLY threat to the U.S. dollar, it would be enough to crush the greenback’s value.
But this intentional destruction of the dollar by our leaders is only ONE of FOUR factors that are about to crush the value of your income, savings, investments and retirement in what will go down in the history books as the single greatest confiscation of personal wealth in world history.
Today, we’re going to examine a second crucial reason why I am convinced that the U.S. dollar is doomed:
Foreign investors are abandoning the dollar in droves.
Anyone who buys long-term U.S. treasuries these days is virtually begging to get his head handed to him for three very simple reasons:
FIRST, long-term treasuries are paying bupkis. To many, tying up money for 30, long years in return for a paltry 4.2% yield isn’t an investment decision; it’s an IQ test.
SECOND, foreign investors aren’t blind, deaf or dumb: They know full well that U.S. deficits and debt are exploding. And they’re also keenly aware that Bernanke’s secret debt solution means the yield they earn in those treasuries will be worth much less with each passing year — as the dollar continues to fall in value.
AND THIRD, the sheer size of Washington’s debt has many foreign investors wondering if long-term U.S. treasuries really are a prudent investment in the first place. As our national debt continues to explode, so does the risk that at some point, Washington may have no choice but to default on that debt.
Put simply, foreign investors are disgusted with Washington’s unprecedented spending binge. They’re haunted by Bernanke’s seemingly intentional failure to defend the dollar. They’re sick and tired of footing the bill for our spendthrift ways. And they’re increasingly skeptical of our ability to pay what we owe them.
And now, they’re beginning to recoil in horror; snapping their checkbooks SHUT.
This is serious: Overseas investors fund fully 50% of our borrowing addiction, holding $6.2 trillion in U.S. securities — including almost $4.6 trillion in bonds.
But over the last year, central banks have been actively replacing portions of their dollar reserves with the euro, the Canadian and Australian dollars, and most of all gold. China alone recently announced it has quietly increased its gold reserves by more than 75% over the last seven years!
All this has enormous implications for the value of your money, your buying power and your standard of living: As demand for U.S. treasuries wanes, so does demand for dollars to buy them. And as worldwide demand for dollars declines, so does the value and spending power of every dollar in your pocket.
Worse: As more foreign central banks, overseas fund managers and investors flee the dollar, Washington has no choice but to pump out more and more unbacked paper dollars and dump them into the economy — further eroding your buying power.
It’s a perpetual cycle that can only lead to one thing: Printing presses blazing on overdrive … a collapse of bond prices … a massive surge in interest rates … an explosion of inflation … and the total destruction of our standard of living — at least, for those who aren’t aware or prepared for what is happening.
That’s why I believe it is absolutely essential that we pull out all the stops to help you weather the greenback’s ultimate collapse.
So please be sure to watch your inbox tomorrow and over the next few days for the next installments of this series — and to discover what we’re doing to help you protect your wealth and profit.
In the meantime, I stand ready to help any way I can. Just click this link to leave a comment and give me your comments. Ask anything you like and we’ll do our best to get you the answers you need to shield your wealth.
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Larry Edelson, a financial analyst specializing in international macro-economics, and the precious metals and natural resources markets, is the editor of Weiss Research’s Resource Options Alert, Energy Windfall Trader, and the monthly newsletter Real Wealth Report.
Mr. Edelson is a co-editor of The Foundation Alliance as well as managing editor and a regular contributor to Weiss Research’s daily investment e-newsletter, Uncommon Wisdom.
Mr. Edelson also serves as an Executive Director of the prestigious Foundation for the Study of Cycles — a non-profit organization established 78 years ago at the behest of President Herbert Hoover and Edward R. Dewey, Hoover’s Chief Economic Analyst, to conduct ongoing research into the science of cycles, with an emphasis on economic cycles and the financial markets.