Financial Times: "World Is Doomed To An Endless Cycle Of Bubble, Financial Crisis And Currency Collapse

This is why I've been an avid reader of zero hedge.  They are always years ahead of mainstream media outlets in exposing the truth.

http://www.zerohedge.com/news/2013-08-28/financial-times-world-doomed-endless-cycle-bubble-financial-crisis-and-currency-coll

This is what crisis feels like

Here's a pretext, in case some of you doubters don't believe a currency collapse can happen here in the US.  Argentina was the most economically developed (if unstable) country in South America.  Rhodesia (now Zimbabwe) was the second most developed economy in Africa (behind South Africa).

And if you really want to take it further, the US itself has experienced two currency collapses in its history:  after the Revolutionary War and after the Civil War, both due to high indebtedness and the resultant destruction of its currency.

Sovereign defaults have occurred throughout history.  What's so special about the next one?  Because the country possessing the global reserve currency has never defaulted before.  The problem lays in the fact that every country in the world possesses USDollars (black market or otherwise), and when the dollar does collapse, the interconnected global financial system would descend into meltdown in cascading manner.  There will be few safe havens to hide out in. 

http://www.sovereignman.com/trends/this-is-what-crisis-feels-like-a-personal-story-12018/

On December 1, 2001, Argentina’s economy was in trouble. Unemployment was high, debt was high, and recession had taken hold. But life was somewhat ‘normal’.

Basic services still functioned. And no one had to really worry about… food. Or water. Then it all changed. Literally within a day. 

On December 2nd, our bankrupt government imposed measures that essentially froze everyone’s bank accounts. You can just imagine– one day having access to your funds, and the next day being completely cut off.

Within a matter of days, people were out in the streets doing battle with the police. The government soon defaulted on its debt, and the currency went into freefall.

Life becomes hell because you do not know whether you are going to be able to put food on the table the next day. 

And in such a state of despair, you’re not in a position to make good decisions. It’s all about survival.

Of course, we kept thinking, “why didn’t we see this coming? Why didn’t we do something sooner?”

If only we had moved some money out of the country before, or taken steps to safeguard his pension, life would have turned out much differently.

It’s like that old saying– better to be a year (or decade) too early than a day too late. Because one should never underestimate the speed with which things can unravel.

The Ongoing War In Gold & A Coming Currency Collapse

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/6/10_The_Ongoing_War_In_Gold_%26_A_Coming_Currency_Collapse.html

Iranian students feel the pain as currency collapses

Thanks to Kitty for finding this one.  Economic sanctions against Iran are working, but unfortunately, it also hurts many innocent people.  We are engaged in war with Iran already--a trade and currency war--without a single shot fired.  Let's hope it doesn't escalate into military conflict.

http://news.yahoo.com/iranian-students-feel-pain-currency-collapses-140417420.html

The Swiss National Bank Gives Up

http://www.fgmr.com/swiss-national-bank-gives-up.html

The Swiss National Bank finally gave up.  For months it tried standing alone against all of the bad monetary policies being pursued by the ECB, the Federal Reserve, the Bank of England and indeed, nearly all of the central banks of the world, but it was a losing battle.  So last week the Swiss National Bank succumbed to these pressures and pegged the Swiss franc to the euro.

Consequently, as the euro is debased, the Swiss franc will head south with it.  The world’s last safe-haven national currency has finally disappeared, making the ownership of physical gold and silver all the more important.

That the pattern of the Swiss franc in the above chart is similar to those of the other three currencies may surprise some people.  The obvious conclusion though is that the Swiss franc has not been a safe haven for at least a decade.  All currencies are being debased against the world’s time-tested and trustworthy numéraire – gold.

As I wrote last March, “the gold price is rising at an accelerating rate” meaning that national currencies are “losing purchasing power at an accelerating rate.”  These quotes accurately describe what happens to national currencies moving toward hyperinflation and collapse, which is where the above four currencies are headed.

The Year America Dissolved

http://onlinejournal.com/artman/publish/article_6153.shtml

Paul Craig Roberts wrote this futuristic fictional vision of how he sees America in a few years due to a currency collapse. It sounds like a few scenes out of a post-apocalyptic Mad Max movie, so it's easy to assume he's just a right-wing, gun-slinging, anti-government nutjob...until you read his resume.

Dr. Roberts was Assistant Secretary U.S. Treasury, Associate Editor Wall Street Journal, Columnist for Business Week, Senior Research Fellow Hoover Institution Stanford University, and William E. Simon Chair of Political Economy in the Center for Strategic and International Studies, Washington, D.C.

Sovereign Alchemy Will Fail

http://matterhornassetmanagement.com/2010/02/11/sovereign-alchemy-will-fail/

When we look at the world economy today, wherever we turn we see a wall of risk. And sadly this is an insurmountable wall with risks that are totally unprecedented in history. There has never before been a potentially catastrophic combination of so many virtually bankrupt major sovereign states (US, UK, Spain, Italy Greece, Japan and many more) and a financial system which is bankrupt but is temporarily kept alive with phoney valuations and unlimited money printing. But governments will soon realise that they are not alchemists who can turn printed paper into gold. The consequences of the global financial crisis are potentially catastrophic.

As the Austrian economist von Mises said: “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency involved.”

In our view, governments like the US and the UK and many others will not abandon further credit expansion. They are committed to printing increasing amounts of worthless paper money in order to finance the growing deficits and the rotten financial system. Therefore there is no chance of Quantitative Easing ending but instead it will accelerate in 2010 and after. The consequence of this will be a hyperinflationary depression in many countries due to many currencies becoming worthless. No economy in the world, including China, will avoid this severe economic downturn which is likely to have a major impact on the world economy for many, many years to come.

The USDollar's decline

This economist sounds like an Elliott Wave loonie until you find out he's the Chief Strategist for the trading desk at Japan's 3rd largest bank, Sumitomo Mitsui (ed. I've have business transactions with Sumitomo before). He also has credibility as he correctly called the Dow Jones Industrials decline to the 6500 level, and the decline of the USDollar relative to the yen.

http://www.bloomberg.com/apps/news?pid=20601109&sid=a_A5nqmw9Dq8

The tragedy becomes comedic when fringe politicians like Ron Paul end up prescient, despite being marginalized by mainstream economists.

The Mommy Indicator

I've been planning my mom's finances, and despite a mother's undying love for her children, I figured it would take some persuasion, as my ideas on the economy are somewhat unconventional. As it turns out, it didn't take any arm-twisting at all. I was always curious about it, but it really didn't hit me until we had a long conversation yesterday as we have been tweaking her portfolio.

First, I will preface this with a quote from George Soros, billionaire hedge fund manager and a legendary investor. He is 78 years of age, which is significant, as he was born during the depths of the Great Depression, and his father survived anti-Semitic persecution after World War I and of course, World War II.

He got his start in finance by trading Hungarian currency during the hyperinflationary period in 1946 as a teenager.

His latest quote: “We’re in a crisis I think that’s really the most serious since the 1930s and is different from all the other crises we have experienced in our lifetime,” Soros said.

Fast forward to my Mom, age 81, and her willingness to invest in "unconventional" investments, and lack of resistance for my ideas on wealth preservation. After all, family and friends can be your biggest skeptics, because they all remember you as a pipsqueak with a runny nose. Without knowing the details, my mother has experienced countries losing their sovereign power, national security compromised, imperialist invasions, and not surprisingly, a run on local currencies. She recalled one day using currency, and then the very next day, that currency being declared worthless, losing all purchasing power. This is exactly what happened in Iceland last November, and is occuring around the world as I post this blog. This is what happens when a currency collapses. It's happened in Ecuador, Argentina, Hungary, Russia, Thailand, pre-Hitler Germany, pre-Napoleonic France, and is a threat to many eastern and central European countries today. Even the UK, Ireland, Greece, Italy, Poland,and Spain are at risk, as their country's credit ratings have been downgraded, or are about to be.

My mom remembers stocking up on foodstuffs, grains and rice. In other words, all bets were off, and survival meant horse trading. The irony is that my mother has aristocratic roots, as her mother's portrait is hung up in Vietnam's National Museum, with the title heading "Laotian Princess".

Many members of my immediately family went on a family pilgrimage to Vietnam, Laos, and Cambodia 3 summers ago, and we actually got to see the portrait. For security reasons, I won't post them. I learned a lot about my heritage on that trip and I am so glad I applied for a last minute passport after the Cambodian Consulate "lost" mine--I will never forget that trip with my family. As an aside, I have recently retraced my roots to other parts of America, where I have grown up, including trips to the midwest and east coast. I recommend it to anybody, especially if it includes reconnecting with old schoolmates. Your past is a function of who you are, and so are old friends and family. Anecdotally, I have also created social networking sites for family and alumni, which has been a real hit. Readers of this blog are members, in fact.

I'm digressing--back to my mother. She totally understood the concept of gold and its value as a hedge against fiat currencies. This was no academic exercise in the theory of how a hard asset retains its value. She actually lived through it. Gold serves as a storage of wealth outside a financial system composed of debt and IOU's. Gold has no counterparty risk. Translation: it is not dependent on someone else's ability to keep their promise of paying you back, which is what a paper currency is, including the dollar. "In God We Trust". Trust whatever God you worship, but faith in the US Government's ability to responsibly manage our currency is being severely tested. This trust is always violated in times of financial crisis. Printing dollars begets printing more dollars.

I'd rather depend on the other mantra: "it's as good as gold." Only "it" is not necessarily a paper currency. "It" is gold itself.