I just viewed a long sales hype from Stansberry Associates regarding the imminent collapse of the United States. Most of the sales pitch was the lack of confidence in the dollar by other countries, especially oil rich countries. Stansberry made the point that as the dollar is devalued, other currency such as the Euro, Yen, or Chinese Yuan will become the monetary standard of the world, or possibly a new world currency 'Bancor'. After about an hour of hype, he said that following his plan, that we could become quite wealthy in the failing economy. Sounds like a contradiction here. Here is some of the other issues in his statements - some are basically true:
The federal government is deeply in debt (about 13 trillion), and many states (including Illinois, of course) are pretty much bankrupt. Gas prices will go up substantially, as will other prices since transportation is a large part of our economy. However, I feel that the demise of the US Government is a bit over-hyped. The value of the dollar is taking a serious hit due to the failing economy, but we have recovered before (depression in 1938) and we returned to a booming economy. The problem currently is that we will not see a recovery for several years, and during that time unemployment will remain high and businesses will continue to fail. What I am most concerned about is that government's solution to the current crisis is to take over businesses and banks. That can be a dangerous precedent and smacks of socialism. If we, as citizens, are told it is to save the economy, while at the same time greatly increasing our debt, simple accounting tells you it is not true. However, I wish I would have bought gold when it was $32 an ounce in the 1960's. Inflated gold is common in times of a down market.
The same banks (too big to fail) who were "loaned" enormous amounts of money have reduced interest on savings and CD's to minuscule amounts - often less than 1% while shutting off mortgage loans to most borrowers because the interest rate for the loan is too low for their profit margin. That was not an issue when they could rake in the undervalued mortgages. Also credit card interest is climbing - often to 20% or better when they are paying their good customers less than 1%. The banks are not hurting - the investors and savers are. And, with government running the big banks, we are in danger of a worse economy. This is a Capitalist society where competition drives the economy by forcing businesses to build better products at reasonable costs. That is why we have been the economic leader in the free world. Hopefully, although we are losing the economic advantage, we will not lose our tenuous position as the beacon of Democracy in the free world.
