I Thessalonians 5:20, 21

Do not despise expounding of scripture, but scrutinize all things. Hold fast that which is right.

Malo periculosam libertatem quam quietum servitium

- I prefer liberty with danger to peace with slavery.


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Wednesday, July 23, 2008

Where the US Dollar is Headed and the Fed Knows It

zimbabwe_500,000 million

HARARE, Zimbabwe: The Zimbabwe currency tumbled to a record low of 25 million for a single U.S. dollar Wednesday, currency dealers said.

With Zimbabwe dollars mostly available in bundles of 100,000 and 200,000 notes, one US$100 note bought nearly 20 kilograms (40 pounds) of local notes at the new market rate Wednesday.

With industry and production collapsing, Zimbabweans have become heavily dependent on imports of the corn meal staple and basic goods. Until last year, the former regional breadbasket was self sufficient in canned and processed foods, household goods, soap, toothpaste, toiletries and other items now imported from neighbors Malawi, South Africa and Zambia and from as far afield as Egypt, Germany, Iran and Malaysia.


This is where the US is headed, as the US too has become "heavily dependent on imports of ....basic goods" while the fiat dollar is losing value world wide and is headed for eventual and inadvertent collapse. The chart below is for up to 2006. US imports has now - in 2008 - exceeded US exports. The US used to be a net exporter of food, at one time the largest exporter of food in the world, the 'world's breadbasket." The US is now a net food importer, thanks to having switched from a agricultural nation to an agri-business nation. Americans are not growing enough food to feed themselves and are now dependent on foreigners for much of their food. And, Americans are borrowing the money to buy the food, giving an IOU - unbacked fiat currency - i.e., the Federal Reserve dollar - for food.
Once the dollar collapses, those who are supplying the US consumer with food, i.e., China and Mexico, these exporters will stop shipping their foodstuffs into the US because the money the US consumer is using to pay for these imports will become worthless.

Stock up folks, the US just-in-time warehousing is going to be the not-there-in-time and eventually the never-there-anytime distribution system. Hello. If you don't have your own stock of food, you're going to go hungry, just like these Zimbabweans - whose life expectancy has now dropped from 60 years to 37.
Zimbabwe inflation


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