What would happen if the Chinese announced someday that they were going to back their currency with gold and would no longer be using the U.S. dollar in international trade? It would change the face of the global economy almost overnight. In a previous article, I described some of the things that we could expect to see happen… If China does decide to back the yuan with gold and no longer use the U.S. dollar in international trade, it will have devastating effects on the U.S. economy. Demand for the U.S. dollar and U.S. debt would drop like a rock, and prices on the things that we buy every day would soar. At that point you could forget about cheap gasoline or cheap Chinese imports. Our entire way of life depends on the U.S. dollar being the primary reserve currency of the world and being able to import things very inexpensively. If the rest of the world (led by China) starts to reject the U.S. dollar, it would result in a massive tsunami of currency coming back to our shores and a very painful adjustment in our standard of living. Today, most U.S. currency is actually used outside of the United States. If someday that changes and we are no longer able to export our inflation that is going to mean big trouble for us. The fact that we get to print up giant mountains of money and virtually everyone around the world uses it has been a huge boon for the U.S. economy. When that changes, the word “catastrophic” is not going to be nearly strong enough to describe what is going to happen. According to a Rasmussen Reports survey that was released this week, only 13 percent of all Americans believe that the country is on the right track. But the truth is that these are the good times. The American people haven’t seen anything yet. Someday people will look back and desperately wish that they could go back to the “good old days” of 2012 and 2013. This is about as good as things are going to get, and it is only downhill from here.
Posted on: Sat, 19 Oct 2013 17:57:18 +0000
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