The Dollar and world economy crash
Posted: Tue Nov 20, 2012 2:14 am
All countries before 1944 used gold as the exchanging or standard money in all trading and economical operations between each others and which is covering and powering their currencies , which means the more gold you have , the more valuable your currency and national wealth you have but after the world war II , there was a desperate need to a financial and economical stability in the world , and here came the 1944's United Nations Monetary and financial conference in Breton Woods , creating a new Worldly financial system based on connecting the currencies of the ally nations "allies" with the U.S dollar currency and making Dollar the standard exchanging money in stead of the gold but in the same time the Dollar stays connected to , powered or covered by the Gold so that any country could convert it's currency into dollars and convert it's dollars into Gold . During the Sixties The U.S expanded it's spending on the Vietnam war preparations , space discovering journeys and social programs , the thing that made several countries and foreign creditors feel that the U.S government prints amounts of dollars much more than it's coverage of the gold reserves . Creditors started to convert their Dollars into gold and demand their money and benefits to be paid into gold in stead of the federal paper money . That crisis pushed president Richard Nixon to make a decision in 1971 to cut off the connection between the Dollar currency and the gold . He said it would just be a temporary procedure but that was not true , from that date on there was no longer connection between the Dollar and the gold . By cutting that connection Nixon has made all currencies connected to or powered by printed paper called Dollar , which basically means powered by nothing touchable , just nothing .
Since 1971 , the U.S used to suffer trade and fiscal deficit which means the U.S used to buy more than it sells , in other words it used to import more than it export . The U.S was demanded to pay it's bills deserved to creditors , so it started to issue governmental bonds with encouraging interests for investors who wish to invest their money in the U.S to bring money to cover it's bills and financial deficit and here started the fraudulent game or circle , the game which made this clock start working http://www.usdebtclock.org/ . For example the American Ministry of Finance issues a billion dollars value of governmental bonds (a bond is an instrument of indebtedness of the bond issuer to the holders) , and gives them to the federal reserve who offers them in Wall street stock market and transmits the billion dollars to treasury department for the government to pay it's bills , hungry investors start to mechanically buy them . Now the government owes a billion dollars of Debts + their interests and they all are added to counting clock . And here the circle goes again and again and again with increasing interests that make the treasury in need to borrow bigger cash each time .
Ponzi Scheme
Let's assume that Mr, Red is Ponzi (The project owner) , he offers investment opportunity with 50% profit , two yellow primary investors contracted and each one gave him 100$ to be invested , Ponzi now have 200$ , by the end of the month or dated period , he gave each yellow investors 50$ as profits and put the rest in his pocket , the thing that encouraged green investors to come to capture that incredible opportunity with extraordinary profit . He made the same thing he had done with the primary yellow investors again with the secondary green investors and expected blue investors to come to make another round with that fraudulent and deceitful game or system . That fraudulent system is doomed to failure and collapse cause it's built on cheat maybe when no more investors join the system or when the whole trick is exposed and primary investors start to demand their money .
This is the same system or relationship between treasury department , Federal Reserve Bank and Wall Street that started in 1971 till this moment which is borrow another billion to pay bills and some of the old deserved loans that had been borrowed before that's beside continual increasing interests on all loans which we shouldn't forget , and the U.S is always demanded to borrow bigger number every time to be able to pay the increasing interests . The Loans and all interests hits 16 trillion today as you can see through the U.s debt clock .
If we assume that the U.S buys Cars and Laptops from Japan and south Korea , Oil from Arab countries and China gives it almost 80% of what you can find on super markets' racks there . Those countries are paid with dollars and everyone is happy but if they convert their earnings of dollars into their national currencies , that would make their currencies highly rises in it's value and lead to reduce the macro demand on their products or desire to buy their products and services . In stead they go to invest their billions in that American Ponzi system , and what happened in 2008 was the scenario's end according to economists which had been delayed for some few years with some procedures but it's just a matter of time for that system to collapse and fail . The dollar then will crash as the trust in paper money will be lost and details of the disaster are hard to be expected according to economists , but everything is going to be affected market , other currencies , prices of gas , food , all products and industries will be harmed and there will be crazy rates of inflation , the crash of many countries' currencies , increasing rates of unemployment , losses of jobs , , big political conflicts and widespread demonstrations and poverty rates all over the world .
But there is nothing to worry about , listen to this song and relax .
http://www.youtube.com/watch?v=6gf30DJvsGA
Since 1971 , the U.S used to suffer trade and fiscal deficit which means the U.S used to buy more than it sells , in other words it used to import more than it export . The U.S was demanded to pay it's bills deserved to creditors , so it started to issue governmental bonds with encouraging interests for investors who wish to invest their money in the U.S to bring money to cover it's bills and financial deficit and here started the fraudulent game or circle , the game which made this clock start working http://www.usdebtclock.org/ . For example the American Ministry of Finance issues a billion dollars value of governmental bonds (a bond is an instrument of indebtedness of the bond issuer to the holders) , and gives them to the federal reserve who offers them in Wall street stock market and transmits the billion dollars to treasury department for the government to pay it's bills , hungry investors start to mechanically buy them . Now the government owes a billion dollars of Debts + their interests and they all are added to counting clock . And here the circle goes again and again and again with increasing interests that make the treasury in need to borrow bigger cash each time .
Ponzi Scheme
Let's assume that Mr, Red is Ponzi (The project owner) , he offers investment opportunity with 50% profit , two yellow primary investors contracted and each one gave him 100$ to be invested , Ponzi now have 200$ , by the end of the month or dated period , he gave each yellow investors 50$ as profits and put the rest in his pocket , the thing that encouraged green investors to come to capture that incredible opportunity with extraordinary profit . He made the same thing he had done with the primary yellow investors again with the secondary green investors and expected blue investors to come to make another round with that fraudulent and deceitful game or system . That fraudulent system is doomed to failure and collapse cause it's built on cheat maybe when no more investors join the system or when the whole trick is exposed and primary investors start to demand their money .
This is the same system or relationship between treasury department , Federal Reserve Bank and Wall Street that started in 1971 till this moment which is borrow another billion to pay bills and some of the old deserved loans that had been borrowed before that's beside continual increasing interests on all loans which we shouldn't forget , and the U.S is always demanded to borrow bigger number every time to be able to pay the increasing interests . The Loans and all interests hits 16 trillion today as you can see through the U.s debt clock .
If we assume that the U.S buys Cars and Laptops from Japan and south Korea , Oil from Arab countries and China gives it almost 80% of what you can find on super markets' racks there . Those countries are paid with dollars and everyone is happy but if they convert their earnings of dollars into their national currencies , that would make their currencies highly rises in it's value and lead to reduce the macro demand on their products or desire to buy their products and services . In stead they go to invest their billions in that American Ponzi system , and what happened in 2008 was the scenario's end according to economists which had been delayed for some few years with some procedures but it's just a matter of time for that system to collapse and fail . The dollar then will crash as the trust in paper money will be lost and details of the disaster are hard to be expected according to economists , but everything is going to be affected market , other currencies , prices of gas , food , all products and industries will be harmed and there will be crazy rates of inflation , the crash of many countries' currencies , increasing rates of unemployment , losses of jobs , , big political conflicts and widespread demonstrations and poverty rates all over the world .
But there is nothing to worry about , listen to this song and relax .
http://www.youtube.com/watch?v=6gf30DJvsGA