Editor's note: Originally published on August 4, 2014
I hate to be the bearer of bad news, but it's time to face the facts. Time to look at the economy for what it really is, not what the media and government portrays it to be.
Copious amounts of debt masquerade economic growth. This so-called recovery is nothing more than some number manipulation on behalf of economists. Let's look at it this way, we dug ourselves a hole that's too deep to get out. And by hole, I really mean DEBT. Trillions of dollars of DEBT.
It's as if 2008 wasn't enough of a wake up call, we decided to print more currency through a process the Fed likes to call 'Quantitative Easing' or QE for short.
Death of the US Dollar
According to the Law of the Conservation of Mass, "You can't get something for nothing" … By this I mean, you can't print infinite sums of currency out of thin air to fix the monetary situation… For those of you that don't know, the U.S. left the Bretton Wood's System under Nixon's Presidency in 1971. Under the Bretton Woods System, every dollar was backed by an equated amount of Gold. This ensured that the U.S. dollar retained intrinsic value and inflation remained fairly low. This is what we call, actual money. Nowadays, we can't actually call the U.S. Dollar 'Money' it is in fact considered a 'Currency' because it simply mimics the properties of money, money cannot be printed out of thin air. What's scary is the fact that our currency, utilized through transactions worldwide, relies solely on faith. With that being said, let me remind you that every fiat currency throughout history has failed.
Scared yet? Wait! There's more! What if I were to tell you that the government releases manipulated economic numbers to maintain economic stabilization? Inflation at 2%? GDP at 4%? Unemployment at 6.3%? - HA, please.
On top of that, the government actually lowered interest rates for consumers and corporations to spend more. Genius right? It becomes cheaper to borrow money than it is to save. As a result, you get more economic activity from increased spending and voilá, you have a temporary fix to a permanent deficit crisis.
We can expect to lose Reserve Currency Status in the future being that the lifespan of a fiat currency usually runs a little less than 40 years. China has already begun major deals through the Yuan rather than the dollar. Who's to say other countries won't follow? The last 6 years have been propelled by a printer, yet with QE Tapering in full effect we can presume some economic contractions will follow. All-in-all, the U.S. is bankrupt, and we neglected to let 'problems' work themselves out.
Essentially, we're sustaining life at this point. Hooked up to life support with all eyes on us; a ticking time bomb. No one can predict when a financial crisis will occur, but what CAN be assured is that doomsday will occur in the future. That is not merely an opinion, that is factual. The question is, do you want your assets tied up in something inevitable to fail, or will you take the steps necessary to not only protect your assets, but potentially profit? See here and here for more information.
Disclosure: No positions