Category Archives: US Dollar

What Can’t Be Paid, Won’t Be Paid

National Debt Creditors About to Lose their Assets [courtesy Google Image]

National Debt Creditors About to Lose their Assets
[courtesy Google Image]

I’ve argued for five years that the U.S. National Debt is too great to ever be repaid in full, or even by half.  My personal guesstimate is that at least 80%–and probably 90%–of the National Debt will inevitably be repudiated.  That repudiation will take the form of hyperinflation, express repudiation (“Sorry, boys–but we’re too broke to pay that debt.”), or perhaps even WWIII (a good war could wipe out virtually all memory and enforce-ability of the National Debt.).

Here’s a graphic that illustrates my argument.  If you take a few minutes to view the graphic, you’ll see the size of the U.S. National Debt is:


1. Larger than the 500 largest public companies in America;

2. Larger than all assets managed by the world’s top seven money managers;

3.  25X larger than all global oil exports in 2015;

4. 155x larger than all gold mined globally in a year; and, my personal favorite:

5. Larger than all of the world’s physical currency, gold, silver, and bitcoin combined.
In other words, there’s not enough actual money and currency in the world to repay the U.S. National Debt.
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Foreign Currency Inflation Causes U.S. Dollar Deflation

Dangerous Deflation is Death to Debtors [courtesy Google Images]

Dangerous Deflation is Death to Debtors
[courtesy Google Images]

Forbes magazine recently published “Egypt Is About To Slash The Value Of Its Currency To Revive Its Flagging Economy”. According to Forbes,


Egypt’s Finance Minister Amr El Garhy has said his country needs to move faster in dealing with its currency woes, opening up the possibility of a large and rapid devaluation of the Egyptian pound.”


Big deal. Egypt is devaluing (inflating) the Egyptian pound. Who cares, right?

Q:  What’s the value of the Egyptian pound have to do with the U.S. dollar and U.S. economy?

A:  Actually, more than you might suspect.

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Teeter-Totter Relationship Between U.S.$ and Foreign Currencies

USDX [courtesy Google Images]

[courtesy Google Images]

The “Group of 20” (G20) includes the world’s 20 biggest industrial and emerging economies. G20 finance ministers and central bank chiefs met in China on Saturday and Sunday (July 23-24, A.D. 2016).

According to the AFP (“US Warns Against Devaluation Ahead of G20 Finance Meeting”), on the Thursday before this G20 meeting:


US Treasury Secretary Jacob Lew said that top economies should refrain from competitive currency devaluations–a message likely directed at China.

According to Secretary Lew, “The global outlook . . . underscores our focus on the commitment made at the last G20 in Shanghai to consult closely with one another on [currency] exchange rate policy, and to refrain from competitive devaluation.”


First, the term “competitive currency devaluations” is misleading insofar as “competitive” signals something civil like a genteel, after-dinner game of Whist in the parlor. In fact, these “competitive currency devaluations” are almost as potentially serious and lethal as nuclear war.

(More, it’s conceivable that China’s “competitive currency devaluations” just might be enough to trigger naval conflict between China and the U.S. or even Japan in the South China Sea.)

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Alasdair MacLeod interviewed on Greg Hunter

James Bond's "Q" presents his latest weaponized pen. [courtesy Google Images]

James Bond’s “Q” presents his latest weaponized pen.
[courtesy Google Images]

You may remember the fictional character “Q” in the old James Bond films.  “Q” was the head of Q Branch–the fictional research and development division of the British Secret Service that devised all of those incredible gadgets for spies.  His speech was so articulate that he was almost a parody of intelligent Englishmen.  “Q” was “veddy British”.

Unlike “Q,” Alasdair MacLeod not a fictional character.  He’s a writer, pundit, and student of global economics.

However, like “Q,” Alasdair  is “veddy British,” “veddy articulate,” and “veddy intelligent”.  In fact, he could play “Q” in the modern James Bond films.

Alasdair MacLeod has an extraordinary, almost encyclopedic grasp of global economics and politics. Every time Greg Hunter asked a question, Alasdair had an automatic, articulate, and often concise answer.  He’s a brilliant communicator.

If you want to hear a classical Englishman speak who has “connected the dots” in global economics, this interview is for you.

video      00:37:01


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Currency War’s Prize: Privilege to Print “World Reserve Currency”?

Dali: a surrealist artist for a surreal currency [courtesy Google Images]

Salvador Dali: a surrealist artist for a surreal currency
[courtesy Google Images]

Salvador Dali (1904-1989) was one of the world’s premier surrealist artists.  During his peak popularity he enjoyed a peculiar privilege: Whenever he wrote a check, he embellished the check with so many distinctive flourishes and artwork, that many people refused to cash his checks. 

Why?  Because they believed his check (an intrinsically worthless piece of paper) was—as a work of art signed by the Dali—worth more than the face value of the check. 

Result?  Dali frequently didn’t have to actually pay for many of the goods and services he purchased by check with a deduction from his bank account.  Dali could buy dinner or a new pair of tools and discharge his debt with nothing more than a few doodles.

Dali was essentially printing his own fiat currency (an intrinsically worthless piece of paper just like a US fiat dollar).  His celebrity allowed him to use that “currency” to discharge his debts without redeeming that currency at Dali’s bank.

In that regard, Dali was able to emulate the US government’s ability to issue fiat dollars (the World Reserve Currency) and never have to actually redeem the fiat dollar. 

I.e, whoever prints the world reserve currency doesn’t have to actually pay his bills.  At least not for a couple of generations.

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Current Currency Wars

World Reserve Currency Teeter-Totter-- if they go up, we go down

World Reserve Currency Teeter-Totter–
if they go up (inflate), we go down (deflate)

In “Currency Battle Is Tethered to Obama Trade Agenda,” The New York Times recently offered some bases for insight and conjecture concerning currency:



“A number of countries — China most prominent among them — have long acted to hold down the value of their currencies against the dollar, helping their industries by keeping exports to American consumers cheaper and making goods from the United States more expensive.”


Since the fiat dollar is still the World Reserve Currency, there’s a teeter-totter relationship between US dollars and the rest of the world’s major fiat currencies.  When foreign countries hold their currencies down in relation to the dollar, they hold the dollar up. That is, by inflating foreign currencies they make the dollar more valuable and thereby contribute to dollar deflation.

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Fiat Currency Conjecture

Spinning Fiat Currency--an act of Economics or "Sorcery" as seen in Revelation 18:23? [courtesy Google Images]

Spinning Fiat Currency–an act of Economics or of the “Sorcery” seen in Revelation 18:23?
[courtesy Google Images]

Philipp Bagus (“PB”), author of The Tragedy of the Euro, was interviewed by the Mises Institute (“MI”) about recent developments in Switzerland and the European Monetary Union.  Excerpts from that interview follow.

I (“AA”) understand most of what Mr. Bagus said in that interview, but there are parts that seem almost incomprehensible to me.  Because Mr. Bagus’ meanings are not always clear to me, some (maybe all) of my comments should be taken with salt.

Still, my “discussion” with Mr. Bagus might offer grounds for several items of interesting and vaguely-related conjecture:


MI: Why do you describe the euro as a sinking ship?

PB: The euro is badly designed. . . .”


AA:  I doubt that it’s possible to have a “well designed” fiat currency that could last more than a few decades.   I doubt that any economics spin-meister could ever overcome the fatal flaw that seems inherent in all fiat currencies:  the presumption that, unlike individuals and even major corporations, governments will always be able to repay their debts simply by raising taxes on their people.  Based on that presumption, governments are entitled to borrow beyond their ability to repay–and grow–almost without limit. Eventually, the government grows larger than the private sector can support, and causes a national recession, depression or even collapse.


PB:  “In the EU, there is one central banking system that can be used by a wide variety of governments to finance themselves.  This is the tragedy of the euro: governments can finance their deficits indirectly through the central bank as their debts are pledged as collateral for loans to the banking system.  Or they can be directly purchased by the central bank.”

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