It’s hard to know when the US dollar will finally die. Even now, the only reason why it’s still alive is that there doesn’t seem to be much in the way of an alternative to the dollar. But, that’s changing as the Chinese Yuan starts to gain momentum in the world. And, that’s not the only threat to US Dollar hegemony.
The Saudis have been having second thoughts about pricing oil in dollars and have begun something of a pivot towards China. You can see evidence of this in the rapid rise in cooperative ventures between Saudi oil companies and China’s Sinopec. Should the Saudis complete their pivot towards China and price their oil in a basket of currencies, the dollar will finally die. If the world could buy their oil in Euros or Yuan, why would they need the dollar?
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Of course, the US has been trying to kill the dollar all by itself. The US National Debt, a zero interest rate policy (ZIRP), and Quantitative Easing (QE) are doing massive harm to the US monetary system. Even if the Saudis fall back in love with America, the huge amount of cash that’s being created out of thin air will drown the dollar under a mountain of debt and electronic currency.
And, that debt… ouch. We’ve only been able to maintain it thus far because the interest rate has been essentially set at zero. But, that can’t last. In fact, we’ve started to see the cracks in the foundation supporting ZIRP.
You see, there’s still a bond market out there which means that there’s something called yield. The United States Treasury department is offering a 10 year US Treasury Note (T-Note) for just under 2.5%/year for a thousand dollars. What happens if I think that inflation is higher (or going to be higher) than 2.5%?
Well, I offer to buy the T-Note at a lower price.
This means that the interest rate on the T-Note has essentially increased. And, this would be very bad news for the government. The government already pays about $263 billion in interest every year. If bond yields double… triple… quadruple…
Here’s what William Kaye had to say on KingWorldNews.com:
The glue that is keeping things together, which is also allowing stock prices to continue to go higher, is excessively low interest rates. Yields by historic norms are far too low, especially given the true financial condition of the West.
As yields regress to the mean, and in markets they always regress to the mean, it’s basically game over for the West. Western stock markets will collapse and so will consumer demand. Home demand, consumer spending, and the economy will literally collapse. This is going to be a horrific time for people in the West, Eric.
Oh, and the title of that October 23rd interview?
In fact, Eric King’s King World News is full of articles that will make you want to reach for the Prozac:
Historic End Game – “A Collapse To End All Collapses” (w/John Embry)
“The West is headed into a historic collapse, and we have all of this misinformation in the mainstream media which is designed to fool people. We are in the middle of the biggest financial bubble in the history of mankind. The Fed and the Bank of Japan are combining for over $150 billion of QE each month. Mario Draghi, head of the ECB has already come out and said they will backstop all European debt….
World Reaches Tipping Point As Next Catastrophe Approaches (w/James Turk)
And we didn’t even get a chance to talk about the ocean of derivatives sloshing around the world that are ready to unwind and kill the banking system. (Word has it that they are already unwinding, but you didn’t hear that from me.)
Are you ready for this?
If you find a flaw in my reasoning, or wish to add your own viewpoint, leave a comment. Your input is truly welcome.
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