OT: Countdown: Three Weeks to Chaos

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Submitted by partypup on September 17, 2008 - 10:37pm

I know that I have been characterized as "alarmist" and a "doomsayer" by many on this board in the past, but I would be remiss if I did not pass along some information to you all that I have learned from a very knowledgeable and well-placed source in the finance industry who has guided me for the past two years as I have attempted to navigate this crisis.

This source predicted, four (4) months ago, that the market would enter a heart-pounding phase in mid-late September. It would be as though, in his words, "the world would hold its breath" in anticipation of what would follow.

And then, on or about the first week of October, the dam would suddenly burst and the ride to hell would begin -- for months. He predicted that the system would experience a massive seizure, such that all electronic forms of trade (stocks, banks, ATMS) would simply fail. And the much-delayed death of the dollar would begin in earnest.

This coincides almost exactly with what the think tank at LEAP (http://leap2020.eu/GEAB-in-English_r25.html) has been predicting for the past 18 months. I have studied each of their reports, in which they have consistently labeled Fall 2008 as the point in which the world in general, and the U.S. in particular, would enter the heart of the system crisis. The only variation I note is that LEAP estimates that the dollar's role as the world's reserve currency will cease around the end of the 2nd quarter of 2009. My source believes that it will happen sooner. Or perhaps it is the case that the process begins in October and culminates in June. In any event,
the Fall and Winter are going to be extraordinarily brutal.

I am hoping that all who read this will understand the message that I am trying to relay to you: time is short. Many of us have been expecting what is coming from months or years. Some have only awaken to what is coming a few months ago. Others still don't understand what is coming. But as Wall St literally disintegrates before our eyes, I don't think there can be any question at this point that we are on the verge of something unprecedented and catastrophic.

If you have money in the markets, you need to get it out NOW.

If you have a 401K and are fearful of a withdrawal penalty and taxes, keep in mind that 60% of something is better than 100% of nothing.

If you have more funds in your bank than the absolute minimum necessary to pay your expenses, then you're playing Vegas odds. FDIC is technically insolvent as I write this, and one more major bank failure will trigger an unstoppable run on our retail banking system.

Buy a safe. Keep as much cash at home as you feel comfortable storing. BUY METALS. They will be volatile in the near term, but they are truly your best bet for asset protection in a world that is about to implode in a derivatives supernova.

The Chinese did something astounding today: they effectively broadcast to the world that a new world reserve currency is needed. The world heard them. And gold soared almost $100 today. I think that any thinking person can see that the unthinkable is now about to happen. The dollar is about to become irrelevant.

http://us.mobile.reuters.com/mobile/m/An...

And lastly, at the risk of sounding completely alarmist, I would advise you all to begin stocking up on goods that you will need to keep your household functioning in the near (and possibly long) term. When the system fails, there will be massive supply disruptions for a variety of reasons, not the least of which will be that panic will trigger a hoarding mentality, gas will be in short supply and inventories will be easily wiped off of store shelves. Can we buy enough food and supplies to last the rest of our lives? Of course not. The goal here is simply not to be a casualty in the first wave of the tsunami that will wipe out millions. Once the first wave has passed, we can pick ourselves up, look around for a place of safety and start moving.

I'm not advising anyone to buy a gun or any form of protection, although I think civil unrest is entirely possible, particularly in large metropolitan areas.

I am simply advising that, at a minimum, we all be prudent in preparing for what now seems inevitable. An ounce of prevention in these times is easily worth a ton of cure.

For those who may disagree with my post, I respect your opinion and would only ask that you not denigrate mine and simply move on to the next thread. I share this information with you all solely out of a concern for my fellow citizens.

I am hoping this thread will allow like-minded individuals to share practical information and advice as we all move into a grim and unchartered period in our nation's history.

Good luck to us all.

Submitted by Enorah on September 17, 2008 - 10:46pm.

I will just add, that a shift is indeed occurring. It is one that has been talked about for ages. And as we enter the age of Aquarius there is a need for a letting go of what no longer supports and sustains and a creation of something new that does support and sustain.

I feel it is up to each of us how we wish to experience this ride (for we are on the ride). Please remember, how powerful you are and wield that power with love and generosity.

Submitted by Eugene on September 17, 2008 - 11:20pm.

I liked the part about FDIC being technically insolvent.

By the way, we're also going to run out of air, so I suggest to stock up on compressed oxygen.

Submitted by TheBreeze on September 17, 2008 - 11:25pm.

How does one go about buying metals? I've traded the GLD ETF occassionally, but I've never tried to buy any gold coins or anything. Is there some place you can go to actually buy a bar of gold at face value?

I read the other day that people who had given their gold coins to some type of organization for storage were having trouble retrieving them. The speculation was that the gold coins had been loaned out or something or over several times over and the original owners were having trouble getting them back.

By the way, what do you think will emerge as a global currency? The Euro? Gold? I don't think Europe is in much better shape than we are and I can't imagine that anyone would trust the Russian Ruble or the Chinese Yuan more than the dollar.

It is scary to think about how quickly grocery stores can run out of stuff. Supposedly they only stock about five days' worth of goods.

Submitted by partypup on September 17, 2008 - 11:53pm.

"How does one go about buying metals? I've traded the GLD ETF occassionally, but I've never tried to buy any gold coins or anything. Is there some place you can go to actually buy a bar of gold at face value?"

I buy most of my metals through my broker, but he charges a 1-1/2% commission. Unless you're buying large quantities, I wouldn't advise this route. Kitco and apmex.com are very reliable, but know that there are now lengthy days in delivery -- so I would place an order sooner rather than later.

"I read the other day that people who had given their gold coins to some type of organization for storage were having trouble retrieving them. The speculation was that the gold coins had been loaned out or something or over several times over and the original owners were having trouble getting them back."

Morgan Stanley is currently embroiled in a class action over this very issue. I stored metals with them and am part of the litigation. As it turns out (and this should hardly be a surprise for anyone who has been following the banking/credit crisis), MS was leveraging metals and *selling* more than it physically held. It's not practical to store large quantities (thousands of ounces) of silver in your home (storage is kind of necessary), but gold is extremely easy to keep in a home safe.

Stay away from ETFs! I think the entire paper-debt-derivative nonsense is going to go up in smoke. If you can't hold it in your hands, it will be meaningless.

"By the way, what do you think will emerge as a global currency? The Euro? Gold? I don't think Europe is in much better shape than we are and I can't imagine that anyone would trust the Russian Ruble or the Chinese Yuan more than the dollar."

I think the entire global financial system is now in grave peril. The U.S. has infected the entire world. We are the financial equivalent of Patient Zero. I used to hold a large quantity of Euros but have now greatly reduced my exposure. The Chinese have been advocating recently for a gold-backed *global* currency. I highly doubt that the world's next reserve currency (assuming the world hitches its wagon to another reserve currency) will be fiat. And for some period of time, gold, itself, may be the reserve currency. Because no one really trusts anyone anymore.

"It is scary to think about how quickly grocery stores can run out of stuff. Supposedly they only stock about five days' worth of goods."

Every time we see the havoc wrought by a hurricane, I think the same thing. People seem to take for granted that goods will always be available and that the worst will never happen. But Katrina and Ike are living proof that the balance can tip in an instance. Last week, thousands of people were literally stranded on the highways in Texas in their attempts to flee. People were fighting over limited supplies of gas at the pumps.

I have read repeatedly that the U.S. has only a two (2) day supply of food on shelves. When the trucks stop running, it's going to get hairy.

Submitted by 4plexowner on September 18, 2008 - 5:12am.

Everything in the Universe seems to run in cycles

"A time to build up, a time to break down" as it says in Ecclesiastes and in the Simon and Garfunkle song

The existence of precious metals-backed currencies is another cycle

At this time, there are NO currencies on planet earth that are backed by precious metals (no, the Euro is not backed or even partially backed by gold)

In my book, having NO precious metals-backed currencies on planet Earth represents one extreme of the cycle

The other extreme would be having ALL currencies on planet Earth backed by the precious metals

To reach that extreme, somebody has to introduce the first PM-backed currency - most likely, the country to introduce this PM-backed currency will create the next reserve currency on planet Earth

IMO it will be China that will introduce the first PM-backed currency - other nations will be forced to follow the trend as their citizens move out of their fiat currencies and into a currency that is actually backed by something besides BS and spin

Smart money has been accumulating the precious metals since 2001 - have you?

Submitted by Nor-LA-SD-guy on September 18, 2008 - 6:31am.

Isn’t it obvious, nothing going to stabilize until housing does.

Submitted by Eugene on September 18, 2008 - 8:05am.

Answer this: if the currency is backed by precious metals, what backs PMs?

Submitted by kev374 on September 18, 2008 - 8:07am.

esmith wrote:
Answer this: if the currency is backed by precious metals, what backs PMs?

nothing needs to back it since PMs are finite..you can't just generate it from thin air.

Submitted by hipmatt on September 18, 2008 - 8:14am.

http://www.philly.com/philly/blogs/phill...
Wednesday, September 17, 2008
Households should prepare to hunker down

As bad as the events in the financial markets have been over the last few weeks, the risk that the credit markets will spiral downward has increased.

That’s what Nigel Gault, Global Insight’s chief U.S. economist, said on a conference call yesterday. You may wonder how things could get worse. Welcome to the “negative feedback loop”:

As lenders worry about their prospects, they lend less. With fewer loans, the economy slows down. That results in more job losses and higher unemployment rates. Mortgage delinquencies and foreclosures rise, while housing prices fall. Lenders become less likely to lend and on it goes.

Still many readers are probably more concerned about their own household finances in the near term. Let me retreat to the proverb “Hope for the best, but prepare for the worst.”

Take a deep breath before opening your next quarterly statement from 401(k) plan administrator. The value of those assets is bound to be lower. You’re going to feel less wealthy.

As for your house - the other major asset many of us have - it’s not appreciating as it once did. For some, it may be worth less than you think, especially should you put it up for sale right now.

Borrowers are going to find it harder to get credit. Mortgage rates have fallen a bit, but lenders have been tightening the terms to qualify.

Maybe a new job with a better salary could cure your financial straits. But the job market is trending down.

Employers have eliminated jobs every month this year for a total of 605,000 jobs. According to Global Insight, we may not even be halfway through the job destruction cycle. The firm has raised its forecast for jobs losses to 1.5 million from 1 million compared with the December 2007 employment peak of 138.1 million jobs.

Also, don’t count on another federal tax rebate check this fall. The latest $50 billion plan being discussed in Washington would be aimed at the nation’s infrastructure, not at individuals.

The bottom line: Save up and prepare for lean times because the credit crunch is bigger than the experts thought.

Submitted by peterb on September 18, 2008 - 8:56am.

The next two jobs reports from the BLS will put the final nails in the coffin. When the unemployment fall-out from this carnage is recorded, the markets will capitulate big time as it will signal that there's a system melt-down that cannot be saved by throwing money at the problem. And they will probably keep throwing money at it anyway. When you're a hammer, everyting looks like a nail.

Gold rockets in a panic. And that's what's happening right now. The world is losing faith in the fiat money system. There's every indication that gold will climb both in real and nominal terms for the next two years. Valuations on RE and equities has to come back down to reality. Homes at 3 to 4 times income and equities at 10 to 12 P/E's. There's a reason these historical norms exist. But look for over corrections as that's normal for markets as well.

Submitted by kewp on September 18, 2008 - 9:18am.

To reach that extreme, somebody has to introduce the first PM-backed currency - most likely, the country to introduce this PM-backed currency will create the next reserve currency on planet Earth

Guess which country in the world has the largest reserve of gold bullion?

I'll give you a hint:

It ain't China!

Submitted by seattle-relo on September 18, 2008 - 9:24am.

Okay, so I'm not usually a tin foil hat wearer, usually I like to read conspiracy theory for entertainment...but I ran across this blog post that I thought was a little uncanny for what's going on right now. Now this guy is a total nut job and his fellow bloggers rip him apart for his doomsdayer post back in March. However he correctly predicted that a economic crisis would happen in mid September (what's today? Sept 18th?) And he also talks about some interesting (however unproven) infastructure in Alaska - hmmm, maybe that's why McCain picked Sarah Pallin????

Here it is:
http://www.city-data.com/forum/politics-...

Enjoy!

Submitted by Allan from Fallbrook on September 18, 2008 - 9:36am.

seattle: Please tell me you're kidding. This guy is a complete wingnut.

Say for the sake of argument he is right about the mid-September date. That doesn't make him right about everything else. The "Amero"? Death camps? I still have friends in the military, including SOF, and I haven't heard word one about any of this. If something like this was going on, it would leak. Trust me. No one in the military or intel community knows how to keep their mouth shut. Especially with media outlets willing to pay millions for this kind of scoop.

Submitted by Eugene on September 18, 2008 - 9:57am.

nothing needs to back it since PMs are finite..you can't just generate it from thin air.

I propose a currency that's backed by empty beer bottles. You can't generate those from thin air, either. We'll set the exchange rate equal to $100 for one empty beer bottle.

(sarcasm off)

The fact that PMs are finite, does not instantly make them valuable. There's not much intrinsic value in PMs. Also, unless you live in Zimbabwe, being able to generate money out of thin air is not a problem. In fact, 99 out of 100 economists will tell you that it's a good thing.

Submitted by peterb on September 18, 2008 - 10:04am.

Gold is no panacrea and you cant eat it or run your car on it. But, the world seems to like it when fiat currency weakens. And that's what's starting to happen. Or at least the faith in it.
Austrian school seems to be playing out.

Submitted by cr on September 18, 2008 - 10:07am.

Okay, I'm not the most optimistic person I know, nor the most optimistic on here, but I do think things have a ways to go before they rebound.

However you guys are starting to sound very dire to me.

I think I'll invest in food, water, and a bomb shelter instead of gold.

Then again, we're now socialist. The government will bail everything out whether they have the money or not.

Submitted by seattle-relo on September 18, 2008 - 10:09am.

Allan from Fallbrook wrote:
seattle: Please tell me you're kidding. This guy is a complete wingnut.

Say for the sake of argument he is right about the mid-September date. That doesn't make him right about everything else. The "Amero"? Death camps? I still have friends in the military, including SOF, and I haven't heard word one about any of this. If something like this was going on, it would leak. Trust me. No one in the military or intel community knows how to keep their mouth shut. Especially with media outlets willing to pay millions for this kind of scoop.

Of course I was kidding. :) I found that blog when I was reading more about the LEAP group that party pup was talking about in her post. I did however think the mid-September date was uncanny.
Though I have to admit I am a little concerned about where things are going...but not the extreme level that that guy was predicting.

Submitted by stockstradr on September 18, 2008 - 10:28am.

I'm a die-hard pessimist, but even I couldn't believe it when an hour ago I just saw the markets trade down another 2% lower in only 30 min. I would have expected the bargain hunters would be dominating by now, but apparently not.

Submitted by Arty on September 18, 2008 - 11:58am.

Answer this: if the currency is backed by precious metals, what backs PMs?

Weapons, guns, and a military that we have. Don't think us been the high and mighty nation of good well. The reason US dollar is THE "reserve currency" is mainly due to that we in theory could go into any country and kill whoever we want, and take their gold while we are at it.

Submitted by stockstradr on September 18, 2008 - 12:13pm.

Half the thread's original post was reasonable doomsday scenario, which we should prepare for. The other half of the post was paranoid delusions.

When posting you should really censor out the alarmist fantasy garbage, then people will have more respect for the remaining, more rational content of your post.

I'm amused how you think use of the dollar as the world's reserve currency will "cease around the end of the 2nd quarter of 2009" - AS IF on cue the millions of existing dollar holders (including countless nations' foreign reserves) will all dump their dollars in the 2nd quarter of '09.

Pure nonsense.

It will take years, probably even a decade for the dollar to be fully unseated as the de-facto reserve currency, but you are CORRECT that it will happen eventually. It certainly started this week.

About 75% of my portfolio is now straight GOLD. I cannot believe how much my portfolio has gone up in 48 hours on the back of gold price increases. WOW! Yes, I know it breaks all rules of conservative financial portfolio management to have 3/4 of my money in gold, but hey I understand the risks and accept those risks.

Submitted by DWCAP on September 18, 2008 - 12:20pm.

The biggest thing backing precious metals is a more world wide belief that are a store of value. Meaning that the dollar is linked to the US economy and so will rise and fall with it. Gold is linked to the world economy, and will rise or fall with it.

Also Gold has some intrinsic demand from industrial and personal uses. Be it jewlery, cell phones, certain electronic devices or whatever. Silver was used for a long time in film development and is still used in other industrial processes. What is a dollar bill used for, other than to buy something? Wall art at cheap resturants?

Submitted by partypup on September 18, 2008 - 1:58pm.

"Half the thread's original post was reasonable doomsday scenario, which we should prepare for. The other half of the post was paranoid delusions.

When posting you should really censor out the alarmist fantasy garbage, then people will have more respect for the remaining, more rational content of your post.

I'm amused how you think use of the dollar as the world's reserve currency will "cease around the end of the 2nd quarter of 2009" - AS IF on cue the millions of existing dollar holders (including countless nations' foreign reserves) will all dump their dollars in the 2nd quarter of '09."

Stockstradr, you're entitled to your opinion. If you read all of my post, I only asked that you not denigrate my opinion. Clearly you are incapable of doing that. So be it.

In any event, while we are "amusing" ourselves, I am entertained by your distinction between "reasonable doomsday scenarios" and "paranoid delusions". I'm curious as to how you distinguish the two. What information in my original post was part of a "reasonable doomsday scenario" and what was "paranoid delusion"? Do you realize how...well, strange that sounds?

Where is the "fantasy garbage"? Please be specific in your response.

Is it unreasonable to acquire a food and supply buffer in anticipation of a systemic breakdown? Or should just eat and drink the gold in our portfolio? Why on earth do you even HAVE gold if you think the scenario I laid out was "delusional"?

Or perhaps it is the 2nd quarter 2009 timeframe that is "delusional"? It seems to me that when virtually all of the independent brokerages on Wall Street have disappeared in less than a year, the housing market is in free fall and the markets are gyrating 300-400 points in some sessions, we are no longer in a place where it is clear what is rational and what is "delusional". And by the way, nowhere in my post did I indicate that all dollar holders would "on cue" dump all of their dollars on a particular date. So please drop the sarcasm and think more clearly for a moment. I merely surmised that the process of dollar dumping would begin now (the story in the People's Daily yesterday clearly got the attention of major investors and was commented on several times on the financial news channels), continue over the next 8 months and possibly culminate next Spring. I'm frankly baffled as to why you would take that to mean that there is a *magic* date in 2009 on which investors would hold hands and sell their dollars.

Having said that, stocktradr, since 75% of your portfolio is in gold -- as is mine -- I must conclude that you are just as "delusional" as I am. Welcome to the world of the whackos. Sit down, pull up a chair and make yourself at home.

Submitted by 4plexowner on September 18, 2008 - 4:06pm.

Whacko nutjobs of the world unite!!!

Submitted by Aecetia on September 18, 2008 - 4:57pm.

Trends for Downsizing the US: The Bright Side of the Panic of ‘08

Now in his Report for 2008, issued in mid-December, he carried the news every thinking American already knows. “The United States of America,” Celente pronounced, “has gone from first class to third rate.” It’s a “nation on the skids and heading down.” Celente projects economic and political crisis in the coming year. “In 2008, Americans will wake up to the worst economic times that anyone alive has ever seen,” he wrote on December 17. “Just as they didn’t see 9/11 coming and were frozen in shock when terror struck, [Americans] will be frozen in shock when terror strikes again.” He predicts “failing banks, busted brokerages, toppled corporate giants, bankrupt cities, states in default, foreign creditors cashing out of US securities…the stage is set, the big one is on its way.”

http://www.atlanticfreepress.com/content...

Submitted by underdose on September 18, 2008 - 6:50pm.

partypup, thank you for the link to the story about China calling for a new reserve currency. That little tidbit of course didn't show up in the usual US news channels. It strikes me as about the most relevent piece of news out there. I have long thought that China was just waiting until after the Olympics. They took 50% of the cars off the road in Beijing to try to cut down on the smog. Now that the camera crews are gone, back to business as usual with their need for oil (and other commodities) back on the upswing. And it served to play the nice guy politically while taking lots of money from tourists attending the games. Now, they can give us the big middle finger if they want.

stockstradr, your scenario of an orderly transition from the dollar as reserve currency is certainly possible. But it is also possible that it would happen very suddenly, without all involved parties holding hands. People do not coordinate their withdrawls from a bank when there is a run on that bank. It's panic behavior. Likewise, there could be a "run" on the dollar, with all holders of dollars panicking to exchange them for something else before they become worthless. A simple, and likely catalyst might be China unpegging its currency. Since commodities are currently priced in dollars, China could swiftly move to buy all the oil, steel, copper, etc. that they might want to continue expanding their industrialization, divesting themselves of their dollar reserves to let their own currency float freely. All other holders of dollars would see commodity prices spiking, and commodity supplies running out, and would run for the exits as well. Such a scenario could force the adoption of another currency almost overnight. It would also trigger hyper-inflation here in the US. Although this doomsday scenario is not a complete certainty, and trying to guess the timing would involving reading the minds of the Chinese officials, it is definitely plausible, and at any moment, tomorrow or 5 years from now.

I hope for an orderly unwinding of this situation, but it would be silly to ignore the possibility that it will be sudden and violent.

Submitted by CA renter on September 18, 2008 - 7:29pm.

My mother lived in Vienna, Austria during WWII. She always told me that bad things happen very quickly; otherwise, the populace could try to intervene and stop it.

A friend of mine is a "conspiracy theorist" and told me that a friend of his checked out one of the "camps" that were being built a couple of years ago...purportedly as a prison or training camp of some sort. They are there. Question is...what are they going to be used for?

The concept of the Amero and "united Americas" have been around for a while. Many think this is part of the plan laid out by the SPP. Here is the government (not tin-foil hat) site:

SPP Background

The Security and Prosperity Partnership of North America (SPP) was launched in March of 2005 as a trilateral effort to increase security and enhance prosperity among the United States, Canada and Mexico through greater cooperation and information sharing.

This trilateral initiative is premised on our security and our economic prosperity being mutually reinforcing. The SPP recognizes that our three great nations are bound by a shared belief in freedom, economic opportunity, and strong democratic institutions.

http://www.spp.gov/

Submitted by NotCranky on September 18, 2008 - 7:50pm.

CA renter,
Very interesting.
Tres interesant.
Muy interesante.

It is an interesting idea. A region with unequivocally mutual vital stake in affairs, that is bordered by the Arctic, various oceans and perhaps a tiny land strip border, in the vicinity of Costa Rica.Probably at least inclusive of the Panama canal.( I imagine a few more Latin American countries would comply with the conspiracy).

If you are reading, what do you think Allan from Fallbrook?

Submitted by stockstradr on September 18, 2008 - 8:29pm.

But it is also possible that it would happen very suddenly, without all involved parties holding hands.

I agree. Good point. The dollar could become unseated very suddenly, losing its stance as the world's currency.

Here is a question I have been pondering for years:

A typical nation can generally manage the value of its currency because the vast majority of its currency is within its own borders, or at least under its control. However, with the Dollar, the situation is more complex.

In other words, if the trillions of dollars floating around the world are suddenly dumped by foreigners and traded into Euros/Gold/RMB/Swiss Francs....then WHAT CAN the Fed do to prevent the collapse of the dollar?

It seems to be that in that scenario, the value of the dollar would collapse. What am I missing?

Submitted by Arraya on September 18, 2008 - 9:02pm.

"It seems to be that in that scenario, the value of the dollar would collapse. What am I missing?"

You hit the nail right on the head.

IMO, one of the most important financial pieces done in a while. This is why Cheney said "Deficits don't matter", unfortunately for us the world is starting to think otherwise.

http://www.atimes.com/atimes/China_Busin...

Page 1 of 4
CHINA'S DOLLAR MILLSTONE, Part 1
Breaking free from dollar hegemony
By Henry C K Liu

The vast expansion of US-led globalized trade since the Cold War ended in 1991 had been fueled by unsustainable serial debt bubbles built on dollar hegemony, which came into existence on a global scale with the emergence of deregulated global financial markets that made cross-border flow of funds routine since the 1990s.

Dollar hegemony is a geopolitically constructed peculiarity through which critical commodities, the most notable being oil, are denominated in fiat dollars, not backed by gold or other species since then president Richard Nixon took the US dollar off gold in 1971. The recycling of petro-dollars into other dollar assets is the price the US has extracted from oil-producing countries for US tolerance of the oil-exporting cartel since 1973. After that, everyone accepts dollars because dollars can buy oil, and every

economy needs oil. Dollar hegemony separates the trade value of every currency from direct connection to the productivity of the issuing economy to link it directly to the size of dollar reserves held by the issuing central bank. Dollar hegemony enables the US to own indirectly but essentially the entire global economy by requiring its wealth to be denominated in fiat dollars that the US can print at will with little in the way of monetary penalties.

Submitted by partypup on September 18, 2008 - 9:07pm.

"In other words, if the trillions of dollars floating around the world are suddenly dumped by foreigners and traded into Euros/Gold/RMB/Swiss Francs....then WHAT CAN the Fed do to prevent the collapse of the dollar?
It seems to be that in that scenario, the value of the dollar would collapse. What am I missing?"

Exactly. You're not missing anything. That scenario is entirely plausible. How likely it is, we just don't know. But it's certainly possible.

Guys, I think what's important to keep in mind is that we are in UNCHARTED TERRITORY now. Our recent (and distant) history no longer apply. The "rules" no longer apply. So it is virtually impossible to scoff at any scenario under these circumstances. As we move forward in the days and weeks ahead, we will almost certainly become roadkill if we act based upon our prior experiences and the rules we have observed for most of our lives. I think a Black Swan moment is at hand, and new rules for a new world are about to be laid down.

CA Renter, I wholeheartedly subscribe to your mother's philosophy: bad things happen very quickly -- or at least, too quickly for most to act in order to avoid the unfortunate consequences.

On a side note, I read something very interesting today by Jim Cramer, of all people, that tapped into something I've been gnawing on for months now. Can it really be the case that so many *intelligent*, *skilled* and experienced professionals in our government did not see the tsunami that was brewing in the unregulated world of derivatives and mortgage backed securities? I acknowledge that greed and political expediency can compel men (to do horrible things, but if I were a prosecutor I think a strong case could be made that the stewards who were placed in charge of our government to guide and protect the citizenry acted with extreme recklessness bordering on...intent to harm.

I don't know if there are forces at work that are intent on destroying our financial system. But I am almost certain that destruction is unavoidable at this point.

Cramer: Feels like Financial Terrorism to Me

"It almost feels like financial terrorism. It feels like we are in a moment where there are institutions that are willing the destruction of our banks, institutions that want the nation's financial system to fail."

http://www.thestreet.com/story/10438230/...

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