The Dollar is Collapsing: Plan Accordingly

“It is difficult to get a man to understand something
when his salary depends upon his not understanding it.”
-Upton Sinclair

There is no reason to question economic conditions that are playing out in our favor.  Loosing half of our family income 4 years ago turned out to be an unexpected blessing that forced us to question commonly believed economic ‘truths’, and what we discovered left us forever changed. 

“Dishonest money dwindles away, but whoever gathers money little by little makes it grow”  (Proverbs 13:11)

The US dollar will eventually cease to be the world’s reserve currency.  Will this happen in 1 month or in 10 years?  We don’t know.  The fact it hasn’t happened yet, is testimony to the extreme lengths the established system will go to prop up a failed economy in order to benefit governments, businesses, and industries that are ‘too big to fail’.

How We Became An Economic Superpower:

*   Non-Interventionalist Stance Post WWI & Early WWII- The US was not engaged during the first half of the second world war. This catapulted the US onto the global scene as an economic superpower for 2 reasons-

– The world turned to us to build manufactured goods not available in war stricken countries, resulting in massive economic growth
– We became a safe haven to store much of the world’s physical gold holdings

*  Bretton Woods System (July 1944)- Since the US controlled ~67% of the world’s gold, the US dollar was set as the global reserve currency because of its convertibility with the gold reserves.

Major Milestones collapsing the US Dollar:

*  Nixon Takes US Off the Gold Standard- On August 15, 1971, President Nixon announced the US dollar was no longer convertible to gold in a fixed value.

*  Morning in America- Under President Ronald Reagan’s administration, supply-side economics tactics were ushered into practice. This stopped “tax and spend” and moved our economic policies towards “borrow and spend”. Supply-side economics is a macro-economic theory where capital investments are made with borrowed money on the promise that the economy will grow due to the capital investments. The issue is, perpetual economic growth is required to chase deferred returns on today’s investments. The federal debt was quadrupled (from 1 to 4 trillion dollars) during Reagan’s presidency.

*  George W. Bush- Under the George W. Bush presidency, with an unfunded war, wall street bailouts, and cash stimulus packages, the federal debt rose rose from $5.73 trillion to $10.63 trillion. The bigger story though is the dollar index dropped from 121.02 in 2001 to 70.69 in March of 2008.

*  Barrack Obama- Under the Barrack Obama presidency, Quantitative Easing (QE2 & QE3) continued, flooding the global economy with unbacked reserve notes. The federal debt rose to $19.9 trillion dollars at the time of this writing. Also, in December of 2014 the ‘Cromnibus’ passed eliminating key protections of the Dodd-Frank Act of 2010.  The result not only puts taxpayers on the hook for future bailouts of the banks, but actually gives banks and their derivative investments priority over private citizen’s deposits.

*  Private US Debt- After decades of unprecedented consumerism fueled by easy to get credit cards, mortgages, auto loans, student loans, and other personal debt, at the time of this writing US citizen’s collectively owe $17.9 trillion dollars in personal debt.

*  The 2015 GDP = $17.9 Trillion (point of reference)

“Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law.”  (Romans 13:8)

Even if the US economy is able to prevent a full blown collapse, 2020 is still on the horizon when the last of the baby boomers will start retiring forcing the economy into the hockey-stick’s bend as retirees draw on their federal entitlements and collective retirement savings (the majority of which is currently held in securities).

The US dollar is collapsing.  At Fruit Hill Farm, we are preparing by paying off our debts, investing in the resilience of our local community, loving our neighbor, and trusting God.

(adapted from post originally appeared on Shawna’s former blog, Lion’s Thunder)

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