I love Max Keiser of Karmabanque Radio. His boisterous, outrageous style of financial commentary had him pigeonholed as a kind of conspiracy theory blowhard. However, now that the sky is really falling in the American economy, Max is starting to be touted as a sort of genius prophet. Anyone who has been following his podcast, for the past 3 or 4 years, is only surprised this banking collapse took so long to materialize. This could be the end of America as we know it. A tsunami of inflation is going to hit the US dollar. The tide has left the beach. What are you going do? Stand on the shore scratching your head? Or run for higher ground?
Anyways, here’s a few of Max’s recent tv appearances…
Max says that ultimately it will be good for the developing world who have the savings and resources. End of the US dollar as reserve currency.
Max about the fears that Wall Street’s woes will spread around the world.
Max says that the financial crisis is an aftershock of 9-11.
The following is much better explanation of the coming US dollar inflation tsunami than I’ve ever been able to articulate. This is from a Canadian blog: Critical Brain Candy http://www.thier.ca/cbc.
Here’s a glimpse of the situation:
- The US government has put itself on the hook for an extra $500 billion to possibly $1 trillion in these recent bailouts
- The US federal government is running a deficit of around $400 billion per year
- The US has a lot of debt, both direct (almost $10 trillion) and (scarier) unfunded future liabilities (almost $60 trillion)
- The growing trade deficit is being funded, in large part, by other countries taking on US debt
…the US monetary system is currently built on a bubble of debt.
What’s worse is that the only way to keep the balance going is to feed the beast. We’ve seen the start of the bubble bursting with these financial failures. A bunch of debt in the bubble went bad, so the house started to fall over, but guess how they “fixed” it? Try to deflate the balloon a bit to reduce the effects of the bad debt? Nope. Injected more debt.
The linchpin in this whole thing is the value of the US dollar. Pretty much everyone has an interest in keeping the value of the dollar high. The US wants to keep the value high so, among other things, its credit rating stays high, meaning other countries are willing to loan it more money. The rest of the world wants to keep the value high because they’re currently holding many trillions of dollars of it, and for every percentage point drop in value they lose a heck of a lot of money. Further, they all fear a US economic collapse because their economies are growing due, in large part, to massive US consumer spending fueled by what? You guessed it, debt.
Unfortunately, this dance can’t continue forever. Most economists believe (and point to many historical cases) that the US federal government will eventually have to start printing a lot more money to repay its debt. The side-effect of this, of course, is massive inflation. Inflation means lower value for the dollar, which means creditors will freak out and dump their holdings, which will devalue the currency further, which ends in a downward spiraling currency. This has happened in all other similar historical examples.
The US is bankrupt. What to do now?
Economists of every political stripe are predicting a slump, the Democratic presidential candidates have all made proposals for an economic stimulus package — and even the Bush administration, long in a convenient denial about the housing crisis and its impact, is trying to put together a plan to jump-start the economy. Here is where the situation gets tough. The USA must stop pretending to be a super power any more. Will they take the path of war? Yet the stimulus proposals from both parties amount to just a fraction of the amount spent on the US wars in Iraq and Afghanistan. This war was and still a disaster for the US economy. Bush thought that Iraq by now should have been already functioning as a country and the US economy getting the benefits of their Oil to recover the war expenses plus making profits. Well, that never happened. George Bush, will be remembered in history as the man who destroyed the USA, we are living the fall of an empire. With more bad news emerging on practically every economic front — falling house prices, a credit squeeze, declining consumer spending, stagnant wages and higher inflation — the picture is likely to get worse. Wall Street has already signaled Corporate Americas plan: grab all the cash you can, and make workers pay. This was the reason why Oils prices were very high because everyone (hedge funds)was and still now desperately trying to get liquid; and Oil, Gold and Drugs have become the universally accepted world currencies. The only sensible advice is either to change dollars into other currencies, or buy gold and silver while you still can, because the US is likely to make it illegal to own gold; and stock up on canned food, the price of which is going to go through the roof. Already the major canners have reduced the size of cans by 20% to preserve stock whilst also maximising their profits. It is universally accepted internationally that the US Dollar is going to collapse some say that it will happen by the end of September 2008. Some foreign banks have already started to refuse to take US deposits and, since the Patriot Act, any american citizen who manage to send money to a foreign bank, is required to report the fact to the USG, who will make you prove how you obtained it and if you cannot do so, they will automatically label you a ‘terrorist’ or a ‘drug dealer’ and confiscate it. The Bank of South America (Banco del Sur)is trying to organise its own currency for use within the South American continent when the US Dollar finally crashes, based on an initial provision of eight billion dollars. The social consequences within the US are expected to be extremelly hard.