The economy shrank from October through December (the peak shopping season) because the so-called 'recovery' is really just an illusion. It's important to remember that the stock market is not a reliable indicator of economic health. One runs on facts and figures, the other on emotion. They are often divorced from each other.
John Williams, an expert at analyzing government statistics and founder of ShadowStats.com, says, "We haven't had a recovery and we're not about to have one, and it's getting worse...Nations usually don't go bankrupt, they print money. That creates inflation. They can't raise enough in taxes and unless they cut social programs, they can't cut enough (spending). I'm looking for hyperinflation by the end of 2014. Hyperinflation is virtually assured." Williams believes if Congress does not get its financial house in order by the new deadline in mid-May, "it will be the end of the road. They are not going to have another opportunity."
Michael Paterson of the Paterson Foundation contends they "may have prevented the immediate threats that the fiscal cliff posed to our fragile economic recovery, but we haven't remotely fixed the nation's debt problem." He went on to say, "The primary goal of any sustainable fiscal policy is to stabilize the debt as a share of the economy and put it on a downward path, and yet our nation is still heading toward debt levels of 200% of GDP and beyond." According to SIGTARP (Troubled Asset Relief Program) Quarterly report to Congress, the economy remains vulnerable to a "house of cards collapse."
These aren't just rumors; the dollar is under attack.
The dollar declines when it loses value in relationship to foreign currencies. As a result of the $16 trillion U.S. debt (much of it borrowed from China and Japan), the dollar has declined 54.7% against the euro between 2002 and 2012! Why would the United States permit its currency's value to slide?
Because it allows us to repay the debt with cheaper money.
In other words, a devalued dollar helps the government, but hurts everyone else.
Does this mean they will allow the dollar to collapse?
According to About.com U.S. Economy, several conditions must be in place before the dollar could collapse:
- an underlying weakness
- a viable currency alternative for everyone to stampede into.
- a triggering event would need to occur
The first condition is definitely in place. No one can deny the dollar is losing its mojo.
But a collapse?
It's hard to say because there are as many opinions as there are experts. Our advice? You do the math. Be ready for anything. Trust in God.
A wise man once said: "Any government, like any family, can for a year spend a little more than it earns. But you and I know that a continuance of that habit means the poorhouse." -- Franklin D. Roosevelt
"For I know the plans I have for you," declares the LORD, "plans to prosper you and not to harm you, plans to give you hope and a future" Jeremiah 29:18.
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