What Will Happen to You When the Dollar Collapses?

What Will Happen to You When the Dollar Collapses?

By Jeff Thomas

Historically, when a nation’s debt exceeds its ability to repay even the interest, it can be assumed that the currency will collapse. Typically, governments exacerbate the situation by printing large amounts of currency notes in an effort to inflate the problem away, or at least postpone it.

The greater the level of debt, the more dramatic the inflation must be to counter it. The more dramatic the inflation, the greater the danger that hyperinflation will take place. No government has ever been able to control hyperinflation. If it occurs, it does so quickly and always ends with a crash.

Although there are observers (myself included) who frequently discuss what a reserve-currency crash would mean to the world, there is little or no discussion as to how this would impact people on the street level, and perhaps that discussion should begin.

When currencies crash, the state often tries to float a new currency. Sometimes, it’s accepted, sometimes not. Generally, the people of the country (and those trading within the country) move immediately to “the next best thing.” In 2009, when the Zimbabwe dollar crashed, several currencies were used, but the US dollar was the clear favourite, as it was the world’s reserve currency and therefore the most “spendable” currency.

Not surprisingly, the Zimbabwean government fought the use of the dollar, as they wanted to retain control of the economy and the people. People were therefore penalized for using the US dollar and other currencies.

And that’s what most governments do, but here’s where that idea usually falls down: First, the “black-market” currency is so desired by the now-jaded citizens that they do all they can to avoid the new official currency. Soon, most transactions, although illegal, are undertaken in the black-market currency. Second, since no one really wants the new currency, even the political leaders are soon using the black-market currency.

Ultimately, the black-market currency is legalised (since it’s the only truly workable solution), and it often becomes the unofficial currency, if not actually the official one.

First, the Euro Crash

It’s safe to say that the EU, the US, and quite a few other jurisdictions are nearing currency crashes, and in all likelihood, the euro will go before the dollar. So, unless the EU has already prearranged a new euro, the US dollar might well be chosen as an immediate solution to the problem, as the US dollar is presently recognised and traded throughout Europe. Therefore, a relatively painless transfer could be made.

Then, the Dollar Crash

However, the dollar, which is presently praised as being a sound currency, is really only sound in relation to the euro (and some other lesser currencies). Once its less stable brother, the euro, collapses, the dollar will be exposed.

As the US dollar is a fiat currency and is on the ropes, the US (and any other country that is using the dollar as its primary currency when the time comes) will experience a currency emergency at the street level that will be unprecedented.

The big question that is generally not being discussed is: The day after the crash (and thereafter), what will be the currency that is used to buy a bag of groceries, a tank of petrol, a meal at a restaurant? Certainly, the need will be immediate and will be on a national level in each impacted country, affecting everyone.

And Then…

I have discussed for some time that the US will be prepared ahead of time with a new, electronic currency. This will serve three purposes:

  1. It will allow the US government to blame paper currencies for the crash, in order to distract the public from recognising that the government itself is the culprit.
  1. It will allow the US government to create a currency system that disallows the holding of tradable currency by the population—that is, a debit card would be created by banks through which all transactions must pass, assuring that all transactions are processed by (and thereby subject to the control of) a bank.
  1. It will allow the US government to have knowledge of every penny earned and spent by any individual or organization, allowing for direct-debit income taxation.

If the US does institute such a system, US citizens will then become the most economically controlled people in the world, overnight.

It’s likely that a black-market system would spontaneously be created by US citizens in order to bypass the new government system. A portion of daily trade would occur under the table. It would unquestionably be made illegal, and we can only speculate as to how prevalent it would become: 10% of all transactions? 30%? Anyone’s guess. Certainly, the government would crack down, and penalties might become severe.

Elsewhere in the world, there would be greater freedom, but what would their currencies be? There are many countries that presently use the US dollar as one of their official currencies. After a crash, the greater the link to the US dollar, the greater the loss of economic freedom, although, in most such countries, the government is likely to be less efficient than in the US, which would work in favour of the individual.

Such countries would also have the option of switching from the dollar to another dominant currency. With the euro and dollar gone, that currency might be the Chinese yuan. The difficulty with this possibility is that, presently, the yuan is not in common use on the street.

Adoption of a currency such as the yuan would require a sudden switch in monetary policy, complete with teething problems. However, recent developments amongst the BRICS and others indicate that many countries are already seeing the writing on the wall and are readying themselves for the use of the yuan as an alternate.

A Return to Precious Metals as Currency?

A further possibility is taking place in Mexico today. Mexico is remonetising silver. A one-ounce pure silver Libertad coin will function in parallel to (and be interchangeable with) the existing paper peso. Banks will value the Libertad daily, based upon the silver price. Thus, Mexico will create a legal way for its citizens to protect themselves against devaluation of the peso, whilst creating an internal protection against currency crashes in other countries.

If the Mexican government remains consistent in its plan, it will do more than simply help stabilise Mexico economically; it will serve as an example to other countries that when the Goliaths of the euro and US dollar fall, there is a very sound alternative.

Further, the more countries that follow this policy, the more silver (and for that matter, gold) would become an international currency. It would matter little to a petrol station owner in Canada, Australia, or Chile whether his till was filled with coins marked, “Mexico,” or whether they said “Iceland,” “New Zealand,” or “South Africa.” After all, an ounce of silver is an ounce of silver, no matter what the issuing country is.

As the Great Unravelling proceeds, we would be wise to monitor what happens with the Libertad in Mexico and watch for a similar return to precious metals in other jurisdictions. As this development progresses, we might wish to consider that, whatever jurisdictions are the most forceful in demanding the continued use of doomed paper currencies (or, worse, transferring into electronic currencies), we may choose to store our wealth, no matter how great or small, in a safer jurisdiction. Further, we may choose to reside in a jurisdiction where a currency crisis will be less likely to occur; to live under a government that does not seek to monitor and tax our every economic transaction.

Editor’s note: To help you protect your life savings from a drop in the dollar, and depending on one currency and the whims of one government, we’ve prepared a free, in-depth video presentation called, “Internationalizing Your Assets.”

You’ll discover how easy, and essential, it is to move a portion of your savings overseas and protect yourself from rising taxes, capital controls, asset forfeiture, and even predatory lawsuits. Doug Casey and Peter Schiff round out our all-star panel of experts. Click here to watch this insightful webinar, it’s completely free. 

The article was originally published at internationalman.com.

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Rise Up
Rise Up

The big question is how much will the dollar be devalued? 30-50%? or more?

NickelthroweR
NickelthroweR

Predictions, much like a great plan, do not survive past first contact with the enemy. I’ve been around for 48 years and I have yet to see anyone’s prediction about anything unfold in a manner that anyone thought possible. For all any of us know, we could be entering some kind of crazy golden age where it is all rainbows, unicorns and free love.

Each prediction of doom can be met with a prediction of utopia. Why, just yesterday I heard I.B.M. make the argument that their super computer Watson is the logical replacement for doctors given that medical knowledge is expected to double every 72 days by 2020. As of today, medical knowledge is doubling every three years. No human can possibly keep track of it all. Goodbye human doctors, hello Dr. Watson.

The collapse of make believe money shouldn’t be the thing that destroys our civilization. It is nothing now but fantasy digital 1’s & 0’s and it will look stupid if humans ever claw their way back to a place where they have history books and historians. As puzzled as we are when we look at, say, Sparta, people will look back at us and wonder why such an advanced people starved to death in their own homes when something that didn’t exist was taken away from them.

Billah's wife
Billah's wife

Oh mah gawd. I guarantee me n Billah are gonna go absolutely turd lickin crazy. We know the drill. No more dollar bein the world reserve means no more SNAP benefits means no more fried moon pies means I am super pissed. We’re Nordic royalty but durin zombie time that ain’t gonna mean much. Shitballs! Hold me billah.

Dutchman
Dutchman

Nothing is going to happen. All the countries are flat broke. They will just keep printing money, and buying each others debt. Japan has been broke for 20 years.

bb

Nickel Thrower , here is a prediction.Some guy like me shows up with an M1a and takes your sailboat and everything else you got.Then throws you in the ocean.Your thinking that would never happen to me.I ask…but why not ?

Phil from Oz
Phil from Oz

BB – “some guy like you shows up with some sort of gun” – in the meantime NT has long sailed, and is some nautical miles away, having “kept his ear to the ground” and decided the time was up for you landlubbers.

Those of us who do “live aboard” tend to value our privacy and security. In “interesting times” or times when boisterous activity may be expected ashore, we just cast off and relocate to a swinging mooring, with a single (so quick-release) mooring line. You planning to “outswim” at 56 footer? (our twin Perkins inboards can get us to hull speed of 11.5kts in literally 30 seconds . . . . ).

Llpoh

No paper or coin currency sounds like the Mark of the Beast. Not good, not good at all.

Stucky

“No paper or coin currency sounds like the Mark of the Beast. Not good, not good at all.” — Llpoh

“And the Lord said to him, Therefore, whoever kills Cain, vengeance shall be taken on him sevenfold. And the Lord SET A MARK on Cain, lest anyone finding him should kill him.”

It could be that kind of mark.

OTOH, maybe the apostle John in around 90AD was able to look 2,000 years into the future and see Bank Of America, computers, and zombie looking folks staring at an ATM with no cash in it.

Llpoh

“He causes all, both small and great, rich and poor, free and slave, to receive a mark on their right hand or on their foreheads, and that no one may buy or sell except one who has the mark or the name of the beast, or the number of his name.” Revelation 13:16-17

Sounds like what is coming, right?

And if a person accepts the mark, God is going to smite him/her.

Stucky

Llpoh

I thought you had enough of religious talk … and here you are talking about marks, beasts, smiting …. :mrgreen:

Any ideas on who the anti-Christ might be? (other than bb or BW).

Llpoh

My dad was not a religious man. The only thing he ever told me relating to religion was to watch for the mark of the beast, and to fight it, as he believed it would indicate catastrophic events were about to unfold.

I suspect he was right, and I suspect requiring all purchases and sales be made via a card, and the elimination of money/trade/barter may well be the mark foretelling catastrophe.

Zarathustra

Speaking of the Anti-Christ, what ever happened to NonAnonymous?

Llpoh

Stuck – I think this is more prophecy than religion. Also, I think I said I do not tend to comment. There are exceptions.

Stucky

Here’s the thing about the mark of the beast …. EVERYONE in the world — “small and great, rich and poor, free and slave” … except a tiny tiny minority who believe … will get the mark.

Now I wonder how one goes about convincing a billion plus Chinese and a billion Indians to receive this mark. And the quarter of a billion or so who live in really remote parts of the earth; Eskimos, rain forest folk, and your new neighbors Outback Aborigines, not to mention Neegrows in Camden …. if “all” really means all, that is.

Zarathustra

Stucky says:

Here’s the thing about the mark of the beast …. EVERYONE in the world — “small and great, rich and poor, free and slave” … except a tiny tiny minority who believe … will get the mark.

Now I wonder how one goes about convincing a billion plus Chinese and a billion Indians to receive this mark. And the quarter of a billion or so who live in really remote parts of the earth; Eskimos, rain forest folk, and your new neighbors Outback Aborigines, not to mention Neegrows in Camden …. if “all” really means all, that is.
____________________________________

All joos. God is an anti-semite.

indialantic
indialantic

Interesting article. I was just thinking about this very topic a few minutes before I read this TBP article. If we allow “Link” cards to be forced on us all, then we deserve what we temporarily get. In the long run, methinks this banker ruse will fail miserably also.

Mexico monetizing 1 oz silver coins is wise and practical, BUT won’t this interfere with the future North American Union (NAU) of Canada, Mexico, and the United States that the elites have planned for us? (No country borders anymore and all that. Just one big, happy family.) Everybody gets a “link” card then? Even the Canucks and the “beaners?”

http://www.thenewamerican.com/usnews/constitution/item/17705-obama-presses-north-american-union-with-mexico-canada

bb aka bb

Phil from oz , wasn’t talking to you Meathead . I couldn’t out swim your boat but 40 rds of 308 would destroy your boat engine.Then someone like me would come aboard and throw you in the ocean.

taxSlave
taxSlave

Lead is the only precious metal that counts.

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