Directing the Dollar's Demise
By Staff News & Analysis - May 30, 2013

Is the Dollar Dying? Why US Currency Is in Danger … The U.S dollar is shrinking as a percentage of the world's currency supply, raising concerns that the greenback is about to see its long run as the world's premier denomination come to an end. When compared to its peers, the dollar has drifted to a 15-year low, according to the International Monetary Fund, indicating that more countries are willing to use other currencies to do business. While the American currency still reigns supreme – it constitutes $3.72 trillion, or 62 percent, of the $6 trillion in allocated foreign exchange holdings by the world's central banks – the Japanese yen, Swiss franc and what the IMF classifies as "other currencies" such as the Chinese yuan are gaining. – CNBC

Dominant Social Theme: The dollar is in danger … a surprise to us all!

Free-Market Analysis: Read this article, (which was published several months ago but allows us to make a timely point), and you are perhaps reminded of Bill Murray's "Groundhog Day," where everything is always new again even though a single day repeats itself in a closed loop.

In this case, the closed loop is the dollar and its evolutionary degradation. Journalism like this, however, postulates the idea that we are not supposed to look past a few weeks. We are only supposed to examine the dollar within the context of the present.

But if we analyze what's going on today within the context of what we call dominant social themes, we can perhaps acquire – or recall – a more complex picture of what's going on now and thus what may happen in the future.

This is certainly helpful from an investment point of view and indeed, simply from the standpoint of everyday living, as the dollar is still far and away the world's most important and dominant currency.

But not perhaps forever, as this article points out. Here's more:

"Generally speaking, it is not believed by the vast majority that the American dollar will be overthrown," Dick Bove, vice president of equity research at Rafferty Capital Markets, said in a note. "But it will be, and this defrocking may occur in as short a period as five to 10 years."

Bove uses several metrics to make his point, focusing on the dollar as a percentage of total world money supply. That total has plunged from nearly 90 percent in 1952 to closer to 15 percent now. He also notes that the Chinese yuan, the yen and the euro each have a greater share of that total. "To the degree that China succeeds in increasing its market share of the world's currency market, the United States is the loser," Bove said. "For years, I have been arguing that the move of the Chinese makes perfect sense from their point-of-view but no sense for the Americans."

Greg Zuckerman, author of "The Greatest Trade Ever," offers insight. For a country with a budget deficit in excess of $1 trillion a year, the consequences of losing standing as the world's reserve currency would be dire. "If the dollar loses status as the world's most reliable currency the United States will lose the right to print money to pay its debt. It will be forced to pay this debt," Bove said. "The ratings agencies are already arguing that the government's debt may be too highly rated. Plus, the United States Congress, in both its houses, as well as the president are demonstrating a total lack of fiscal credibility."

Bove is not the only one sounding the reserve currency alarm, though the issue has fallen off the front pages as hopes for a sustained U.S. recovery have taken hold and the stock market has surged to near-record highs. But the looming battle over budget sequestration in Washington could revive long-standing fears of fiscal stability.

… "The No. 1 security issue we have as a nation is the preservation of the U.S. dollar as the world's reserve currency," said Michael Pento, president of Pento Portfolio Strategies. "It's a thousand times more important than a nuclear bomb being tested by North Korea. It's a thousand times more important that we keep the dollar as the world's reserve currency, and yet we are doing everything to abuse that status."

We read in this excerpt both dire predictions for the dollar's future and expressions of concern that not enough is being done to alleviate the dollar's plight. But we would argue that in a sense these commentators offer proverbial "crocodile's tears."

We remember quite well that the dollar's current demise began during the years of President George W. Bush who was a man determined to carry out a certain agenda, it seems, one perhaps of globalist elites that want to reduce the US's power and financial stability in the service of further internationalism.

This is surely a controversial statement but how else can one explain Bush's policies? They determinedly expanded US power while piling on numerous expensive wars alongside a focus on "open borders" that were obviously intended to dilute the remnants of US exceptionalism while supporting a controversial North American Union that would include Canada and Mexico.

The demise of the Bush years parallels the demise of the US economy, the dollar and US republican culture itself. However, it is not the purpose of this article to discuss this larger issue but only to remind people that it is perfectly possible that the dollar's demise is being stage-managed – as we have suggested – by the larger monetary powers that run 150 central banks around the world and are coordinating, it would seem, a gradual evolution the global economy toward a currency basket.

To this end, as we have pointed out, it would seem that a vast and irreversible movement is underway to diminish the dollar, the euro and gold while raising up the yuan and other BRIC currencies. Similarly, it seems whole economies are tracking the same movements.

One can pretend all of this is coincidence – and then write stories speculating about the dollar's fate. But if we are correct, there is no need to speculate. The bankers' plan is to create a single currency, perhaps out of the IMF's SDRs, and is apparently being implemented even now.

Of course, the timeline is in question along with the ability of those coordinating this gigantic transition. We've been on the record for years as suggesting that what we call the Internet Reformation has enormously complicated the lives of those who plot these kinds of vast schemes. People are increasingly aware of their manipulation and often don't like it.

But with awareness comes knowledge, in this case awareness that there is a powerful force operating in the world today determined to agglomerate currencies in service of a larger globalist enterprise.

We would argue that accepting this analysis is a good deal more productive than spending a lot of time worrying about the dollar's positioning and whether, in fact, it is diminishing as the world's most powerful currency.

After Thoughts

It is, we believe, and for a reason. Our humble proposal: Seek to understand the larger dominant social themes in play and the events on this confusing planet may begin to become clearer.