alt-market.com
August 8, 2012

The idea of “collapse”, social and financial, comes with an incredible array of hypothetical consequences ranging from public dissent and martial law, to the complete disintegration of infrastructure and the devolution of mankind into a swarm of mindless arm chewing cannibals.  In an age of television nirvana and cinema overload, I have found that the collective unconscious of our culture has now defined what collapse is based only on the most narrow of extremes.  If they aren’t being hunted down by machete wielding looters or swastika wearing jackboots, then the average American dupe figures that the country is not in much danger.  Hollywood fantasy has blinded us to the tangible crises at our doorstep.

If the past four years since the implosion of the derivatives bubble have proven anything, it is that catastrophe has the ability to drown a nation slowly like a river of molasses, rather than sweep it away like a flash flood.  That said, almost every recorded collapse of modern societies in the past century has been preceded by a primary trigger event; a moment in which the mathematical certainty of failure becomes clear, even if the psychological certainty is muddled.

In 2012, we still await that trigger event, which I believe will be the announcement of QE3 (or any unlimited stimulus program regardless of title), and the final debasement of the dollar.  At the beginning of this year, I pointed out that we were likely to see such an announcement before 2012 was out, and it would seem that the private Federal Reserve is right on track.

Last month, the Fed announced that it was formulating a plan to “expand its tool kit”.  This includes an openly admitted possibility of a third round of quantitative easing starting as early as September:

http://www.reuters.com/article/2012/07/24/us-usa-fed-tools-idUSBRE86N1G120120724

This timeline appears to coincide perfectly with the breakdown of the EU, which may also see a climax event in September.  In that month, EU policymakers will return from summer holiday.  German courts will make a ruling which could put an end to any chance that the country will support a eurozone rescue fund.  The Dutch, which are anti-bailout, will vote in elections.  Greece will be attempting to renegotiate its financial lifeline.  And, the ECB will have to assess the impending chaos in Spain and Italy:

http://www.reuters.com/article/2012/07/29/us-eurozone-crisis-idUSBRE86S05J20120729

As far as the Fed’s ability to remedy the fiscal situation goes, let’s clear something up right here; the Fed has NO TOOLKIT.  Sorry, but central banks have only two options when attempting to shift the tide of the economy:  They can lower interest rates to zero, and, they can print-print-print.  That is it.  We’ve had TARP, numerous bailouts, QE1 and QE2, Operation Twist, and interests rates have been kept near zero for years!  These so called solutions have been strapped like millstones around our necks and absolutely nothing has been accomplished since 2008.

Real unemployment still stands at over 20%.  The housing crisis remains an unstoppable juggernaut.  Europe is on the verge of meltdown (despite the trillions in American taxpayer dollars handed to EU banks).  The national debt continues to grow at a pace far beyond what the Obama Administration and mainstream economists (who should have been fired long ago) predicted in 2010.  There are no secret magic tricks up the sleeve of Ben Bernanke.  Even if the Fed actually wanted to save our financial system, and our currency (which they don’t), there is nothing they can do except make the situation worse.  Central banks are perhaps the most useless institutions ever devised, unless, of course, their true purpose is to diminish the financial health of a country and siphon away its economic sovereignty…

Enter the death of the dollar.

The IMF has been consistently calling for the end of the dollar as the world’s reserve currency, and for its replacement by the SDR (Special Drawing Rights):

http://money.cnn.com/2011/02/10/markets/dollar/index.htm

http://www.imf.org/external/np/pp/eng/2011/010711.pdf 

The new president of France, Francois Hollande, has recommended the expulsion of the dollar as the go-to reserve, a deeper relationship between France and the BRIC nations:

http://www.atimes.com/atimes/Global_Economy/NE08Dj06.html

China has been demanding an end to dollar primacy for years:

http://online.wsj.com/article/SB123780272456212885.html

And so has Russia…

http://news.xinhuanet.com/english/2009-04/01/content_11109506.htm

And so has the UN…

http://www.telegraph.co.uk/finance/currency/6152204/UN-wants-new-global-currency-to-replace-dollar.html

It’s not as if it’s a big secret that the dollar is on everyone’s hit list.  Until recently, alternative economists could only point out circumstantial evidence that this sentiment was a product of collusion between the world’s central banks and elements of various governments.  Suggesting that China, Russia, the UN, the IMF, and the Federal Reserve were working in tandem to devalue the dollar and replace it with a global currency has always elicited at least a few jeers and the ever present standby catch-all accusation of “conspiracy theory”.  However, the times they are a’ changen’…

With the exposure of the Libor Scandal, we now have definitive proof and even open confessions from international banks, the Federal Reserve, and the Treasury, admitting that the true debt problems of major institutions have been hidden, deliberately, in tandem with multiple agencies in multiple countries, from the general public, with the full knowledge of numerous governments.  The most vital and shocking element of the Libor Scandal is that it shows, beyond a shadow of a doubt, that there is indeed a conspiracy which has melded the corporate world and the political world into a single ominous creature.