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30 Jan, 2009 17:22

Dollar is doomed: a conspiracy theory

Dollar is doomed: a conspiracy theory

While the world economy collapses the American dollar continues to strengthen its position in the world, to little wonder – it’s getting back to its basics as the backup currency on every continent except Antarctica.

Yet since the U.S. has debts two times exceeding the world’s GDP one cannot help but ask oneself – what’s next?

The web is flooded with lots of theories and rumours about what would happen to the American currency whether, when and where it would fall – or what else. Some of them look like senseless fantasies, others resemble futurologist’s predictions, but the conspiracy theories of all kinds and colours are firmly on top of all.

“Dollar will crash soon”, “U.S. will change currency”, “Dollars will be sold by weight” – as some smart Russian blogger put it – who creates such buzz and is there a rational reason for the slightest of anxieties?

Well, there is a fact that poses a question, with a big Q. Dollar monetary stock worldwide has grown two-fold over the last half-year and this printing press does not seem to be slowing down.

Would this financial pyramid eventually collapse (since these lots of green paper are not based neither on gold or something equally solid nor collateralized to be collateral)? No one from the U.S. Federal Reserve System so far has intelligibly explained what they are planning to do with the paper, and this mystery probably holds the key answer to the question posed above.

The unimaginable trillions of dollars of national debt make the currently realised $US 700 billion bailout plan look pale in comparison – as well as the $US 850 billion next one currently being discussed.

The truth is that all this money just DOES NOT EXIST. You can print banknotes but you cannot necessarily call them “money”. Imagine this money distributed equally among every living person and fancy what would happen if they all decided to buy goods simultaneously – there’d not be enough goods on this planet. What’s next? Guess for yourself.

So, the devaluation of the dollar is probably not far away but what could happen BEFORE this event? Here are just some of the most fabulous yet entirely possible worst-case scenarios.

Option 1. Have you heard about Amero? Not yet?! Well, that’s how most probably will be called the currency of the united economic zone of the U.S., Canada and Mexico. Unimaginable? You’d better imagine what to do with the green paper stockpiled throughout the world if the exchange rate is 1:10 or even 1:100.

Option 2. This world is infested with forgers and false dollars (most of them not in the U.S.) When the hour comes and the new (let’s say red) dollar is produced, all the rest of the world would face the problem of how to use the green ones. Beware! The print is toxic and you’d die anyway when trying to burn them in your fireplace once you survive the heart attack of hearing the news itself.

Option 3. Everyone knows that the U.S. is a cheap country. Americans do not hellishly spend popular $US 100 banknotes as often as the rest of us. No use – no need. Why don’t they call them off altogether? They are nearly all false, anyway.

Option 4. The U.S. declares itself technically bankrupt. Impossible? There are RULES, you’d say? Everything’s possible for the country that has changed the rules of the game countless times to become the biggest consumer sponging on the rest of the world.

Option 5. Uncontrollable printing of the dollar banknotes alone would collapse the dollar system that would make the debt returning for the U.S. Federal Reserve System a task somehow much easier than it is nowadays.

There are economists that do hope that a number of regional unified currencies would emerge within the near future in Asia, Latin America, and Arab world, and even among post-Soviet countries. The euro is a spectacular example, but you do not need to be an economist to understand that such processes expand for decades (consider again the euro example) while the crisis has already stepped in and mushroomed as straight and tall as an atomic cloud.

That is why the more probable seems an Option 6, which is a good old receipt when some countries are busy exterminating each other’s population while the other countries are just accepting arms contracts from both warring parties. Just keep in mind we live in a nuclear age. Again unthinkable? Than take a closer look at the Islamist-torn Pakistan and India and their relations after the Mumbai massacre. Nuclear weapons? They have them both.

If they wage war against each other, they’d be no such thing as Asian, Arab or even European financial markets at all and nobody would care what the hell happened to the dollar.