Why the USD is looking very sub-prime itself!

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for The Q Wealth Report

Well I’m not normally big on watching TV, but these last couple of days have certainly been exciting, watching the “financial crisis” unfold.

Last night I caught the end of an interview with my favourite US Congressman, Ron Paul, on Headline News. Forgive me if I don’t quote his words exactly, but when asked about this difficult week he said something like “this is just the preliminaries.” Then he went on to say the system is in for a huge shakeup, and that if things don’t turn around fast it looks like we are headed for an even more totalitarian regime, headed by big government and big corporations.

A lot of people, quite reasonably, are blaming banks – and now insurance companies – for the mess. Surprisingly (or perhaps not) not so many people are blaming the governments and the central banks. The Congressman pointed out that a debate over spending a million dollars might be bandied about in Congress for hours, while this trillion dollar support package was prepared in a matter of hours without oversight from Congress. He further pointed out that it is easier for Congress to get information from the CIA than from the Federal Reserve. Maybe that’s because the Federal Reserve is a private company.

Anyway, what is my point? The US dollar must be the biggest sub-prime debt out there. It is backed by nothing but the full faith and credit of the US Government, something that is fast going down the tubes. I’ve already pointed out months ago on my personal blog that the US has far the biggest debts and the lowest foreign exchange and gold reserves in the world, in other words it was effectively insolvent but being shored up by China (follow the links from this link)

Why, if the USD is bankrupt, has it been rallying in recent weeks against the Euro? Two reasons:

1. Manipulation of the markets, plain and simple

2. The EUR is also backed by almost nothing, it’s just that these days the financial markets seem to trust even the European Central Bank, which is something of a joke, more than the “full faith and credit” of the US Government.

As Ron Paul pointed out on Headline News, you can’t escape the USD’s problems by moving into another fiat currency like the Euro or the Swiss Franc, though it might give some short term respite. The real solution is to move into real money, for example gold. For further reading on this subject, visit Rayservers and follow my personal blog where I will be adding a more technical analysis shortly. That’s why those of us who keep most of our money in gold are sitting very comfortably, thank you, through this crisis.

As for the Chinese controlling most US debt, the pages linked above show it to be true, and on BBC this morning a China analyst was talking about how China’s Sovereign Wealth Fund is looking to buy up the relatively stable western banks. Apparently they are in talks right now with Morgan Stanley. They are also pumping millions into China’s big three state owned banks, making them stronger than ever. It’s worth noting that Chinese companies are prohibited from making acquisitions abroad due to their currency controls, so it really is the Chinese government that is buying up America.

If you are already “Prepared Thoroughly” you can sit back and relax and watch all this pan out. I remind you that Ron Paul said we are just in the preliminary stages of the crisis at the moment. I firmly believe he is right. My one “panic reaction” right now, is that I am taking action to liquidate some gold holdings I have in ETFs, which depend to a great extent on Wall Street, and am buying real physical gold to bury somewhere offshore like the pirates of old. My kid is already excited about holding on to the treasure map!

I think it is an old Chinese curse: “May you live in interesting times!”

If you are interested in seeing more and talking more about the unfolding banking crisis from an offshore wealth creation and profit point of view, it’s not too late to book a last minute trip to Panama. I’ll be talking about this – together with practical solutions and safe, secure banking – in a major hotel there next week at the Secrets of the Super Rich conference. If you would like to attend, get to Panama City asap. If you can’t make it next week, then we’ll be meeting again in November the week after the US elections: details at www.qwealthevents.com

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