Gerald Spencer

Economic Collapse Is Accelerating

Real wealth and real monetary value is created only when an individual or a family grew and harvested something from the earth, extracted something of commercial value from the earth, provided services (medical, dental, engineering, technology, etc.), and/or made (manufactured or constructed) something that is consumable (or useful), and then sells these items to parties outside of their family in return for a net transfer of gold, currency or commodities from other parties into their family. The members of their family reflect their real wealth with the accumulation of grain, gold, cattle, jewels, land, commodities and/or other marketable products for reserve use in times of emergency and/or also to raise the standard of living for the members of that family. A country and its citizens can prosper or become debt ridden in accordance with their industrial behavior and economic actions.

The USA has almost entirely ceased to generate wealth for future US generations. Instead the USA has elected to sell or export title to US wealth including real estate, farms, agri-businesses, food supplies, dairies, forests, industries, breweries, hotels, factories, casinos, financial institutions, retail businesses, and most other assets located in the USA in order to pay people in foreign countries to manufacture the things that US citizens consume, and also to pay for US government expenses when the expenses exceed the taxes raised by the government. The USA government is selling our means of creating future wealth to pay for imported products that US citizens consume and US government expenses.

A Trade Deficit is created when the USA importing, transportation, distributing and retail sales companies such as Wal-Mart, Home Depot, NTB and etc. pay companies and individuals in foreign industrialized countries like China with US dollars to manufacture the things that these US businesses import, distribute, and then sell to the US consumers. Manufacturers such as GM, Ford, GE, Chrysler, GE, Westinghouse and etc. manufacture vehicles, appliances, and equipment made with imported parts that they paid the companies in the foreign countries with US currency to manufacture these parts for assembly of the finished product in the USA that is then sold to US consumers.

The US government also "borrows" US dollars or actually they sell freshly printed-paper T-Bills, US Government Bonds, and other US securities that can be redeemed for title to US real estate at public auction to China, private individuals, and other industrialized countries that earned US dollars (mostly by manufacturing things for international trade) to pay US government expenses including negative balance of trade, wars, military jets with active duty military USAF pilots for the personal use of specially privileged members of congress (Pelosi), employee payrolls, government retirement checks, courts, federal police, failed business bailouts, cash bonuses to the various Wall Street forgers of SEC documents that contributed to political campaigns, Las Vegas corporation junkets for failed corporation employees, foreclosed house mortgages for big spenders with bad credit, new multi-million dollar French manufactured personal corporate jets for political contributor's bankrupt corporations, pork barrel projects, research contracts, Welfare, Social Security, Medicare, Medicaid, SSI, expensive corporate vacations, new infrastructure, wealth re-distribution, mental health services, imported consumer goods and any other thing that congress and the president decides to use taxpayer money to acquire, build or just give to their political contributors and various other privileged individuals with borrowed US dollars. If taxes taken in each year are not sufficient to pay these expenses, then the government just prints more paper T-Bills, Government Bonds, etc. and sells them at auction for US dollars from people who are holding US dollars (foreign industrial manufacturers) in exchange for these freshly printed T-Bills, Government Bonds, etc.

Will China Dump the Dollar?

The US Federal Reserve market bid almost 4% interest on $100bn of freshly printed paper US Treasury securities issued in May 2009 public auctions. This was almost double the Treasury Department expectations/predictions. China, and other wealth generating nations hold a large portion of all US federal debt securities, and they are exchanging these instruments for title to US real estate and most other assets located in the USA, since the US government does not redeem these dollars for gold.

The US government will need to "borrow" $6 trillion more from the industrial manufacturing countries before the end of this year by conducting more US Federal Reserve auctions, to pay for their expenses. Who knows how high the interest rates will be bid at these future auctions.

Will China Dump the Dollar?

The 40 year US spending spree could go on forever if we were earning and not borrowing the money that we are spending (from people in foreign nations that have a positive balance of trade).

If the US dollar value diminishes to a few pennies on the dollar at some future Federal Reserve Auction, the Chinese Yuan might be the "last man standing".

It does not matter how we reverse the US balance of trade as long as we stop the flow of gold, US dollars, US T-bills, US Government Bonds, title to US located property, and other US assets from this country to other countries in payment for the things that they make and we consume.

Will China Dump the Dollar?

I believe that the Chinese renminbi (aka yuan) will replace the US dollar as the world standard for international trade if the US government continues to borrow and then spend a lot of money with the careless abandon of a drunken sailor on shore leave?

This is very disturbing to those very same foreigners that the USA hopes will buy our freshly printed currencies (hopefully at not too much of a discount) to pay for our economic stimulation, our imported consumables, and our government expenses. The discounts offered at public bid by manufacturing nations that have the dollars will depend upon the confidence that we instill these foreigners by our economic actions. Many countries are losing confidence in the dollar as the benchmark for world trade and currency values. Other currencies, like the Chinese Yuan with a more stable value, are now being talked about as a replacement for the US Dollar as the benchmark for international currency values.

Will China Dump the Dollar?

If I owe the bank $500,000.00 and cannot pay, I am in real trouble. If I owe the bank $50,000,000.00 and cannot pay, the bank is in real trouble. China is probably worried that the USA cannot pay.

But right now China is allowed to redeem the freshly printed paper T-Bills, US Bonds, US Securities, US currencies, etc. that they were paid by USA importing, transportation, distributing and retail sales companies such as WalMart, Home Depot, NTB and etc. to manufacture the things that these US businesses imported, distributed, and then sold to the US consumers for title to US real estate, farms, agri-businesses, food suppliers, dairies, forests, industries, breweries, hotels, factories, casinos, financial institutions, retail businesses, and most all of the other assets located in the USA, instead of redeeming these dollars for gold.

Some US government sources estimate that the title to 25% of our assets with recorded deeds and titles are now listed as foreign owned (economyincrisis.org/ar...) and this percentage is increasing rapidly. Our payments to foreign oil, manufactured assembly parts, and foreign raw material suppliers are handled in essentially this same manner. What will we do when we have nothing of value to sell to the foreigners who work to make the things that we consume? Maybe they will work for free.

We are also losing the technology race, and when we become a second rate technology nation, we will have no chance of creating any wealth by reversing the trade deficit. We are dumbing down our education system so that every student will pass everything. We have de-emphasized science and anything technical at every level, and we need to emphasize science & engineering if we want to recreate the technological intelligence base that we had a few decades ago.

The US government also needs to "borrow" US dollars from China to pay US government expenses including employee payrolls, government retirement, wars, military jets with active duty military USAF pilots for the personal use of specially privileged members of congress, courts, federal police, pork barrel projects, research contracts, welfare, social security, Medicare, Medicaid, SSI, negative balance of trade balances, failed business bailouts to postpone their bankruptcy, cash bonuses to the Wall Street forgers of SEC documents, Las Vegas corporation junkets, house mortgages for big spenders with bad credit, new multi-million dollar French manufactured personal corporate jets for political contributor's corporations, expensive corporate vacations, new infrastructure, wealth re-distribution, mental health, imported consumer goods and etc., and any other thing that congress and the president decides to use taxpayer money to acquire, build or just give to their political contributors and various other privileged individuals with borrowed US dollars. If taxes taken in each year are not sufficient to pay these expenses, then the government just prints more paper T-Bills, Government Bonds, etc. and borrows US dollars from people who are holding US dollars (foreign manufacturers) in exchange for these freshly printed T-Bills, Government Bonds, etc.