US Dollar ponzi scheme?

[Wimbledon]

something to. Factor in

You've probably heard by now that there's a...

If you are having trouble viewing this email, or you'd like to share this article with your friends, click here

November 18, 2013

Hong Kong

You've probably heard by now that there's a politician in Russia trying to ban the US dollar, calling it a Ponzi scheme.

20 years ago this would have been considered blasphemous. 10 years ago it would have been laughed at. Today, it's taken seriously. And with good reason.

If you dive deep into the Federal Reserve's balance sheets, you can see for yourself.

Just like any other bank, the Federal Reserve has assets and liabilities. The difference between the two of these is the bank's capital. And in general, the higher the capital, the stronger the bank.

One way to measure a bank's capital is as a percentage of its assets-- higher is always better.

You may recall, for example, that when Lehman Brothers went bankrupt in 2008, the firm's capital (or equity) was about 3% of its total assets.

A year ago, the Fed was at 1.93%. By August of this year, its capital had fallen to 1.53%. Today it stands at just 1.42%. So the Fed's balance sheet is clearly deteriorating quite rapidly.

This is critical to understand... because the dollar is ultimately the Fed's currency. The Fed has monopolistic control over the US money supply. So as the Fed deteriorates, so does the dollar.

Take a look at that dollar in your pocket. It says 'Federal Reserve Note'. 'Note' is just an accounting term for a liability. So by printing money, the Fed is really just creating more liabilities and eroding its balance sheet.

As they do this, the Fed's capital shrinks. This puts the Fed... and the dollar... in precarious financial condition.

Now, when the dollar reaches its intrinsic value in British Thermal Units is anyone's guess. Maybe it happens tomorrow. Or in the next decade. No one knows... And that's why it's important to find a solution that is suitable in either scenario.

Here's one option to consider: own the Hong Kong dollar.

Fundamentally, the Hong Kong dollar is MUCH stronger than the US dollar. Hong Kong's central bank is nearly 20-TIMES more capitalized than the Federal Reserve, and the Hong Kong government has a minimal debt level.

But more importantly, the Hong Kong dollar is pegged (for now) to the US dollar. It trades at 7.80 Hong Kong dollars per US dollar, a very narrow band.

This essentially eliminates currency risk. You can freely convert between Hong Kong and US dollars without taking a bath.

And if the US dollar surges temporarily with respect to other currencies, the Hong Kong dollar will also do well.

But should the US dollar collapse, then the Hong Kong Monetary Authority would simply de-peg from the US dollar... or at least revalue it.

In other words, by holding Hong Kong dollars, you can capture the benefits of US dollar exposure while protecting against downside risks.

There may be options at your local bank for holding Hong Kong dollars. But the best option is to go straight to the source-- open a bank account in Asia, preferably Hong Kong or Singapore where you can own Hong Kong dollars directly.

The banks are much better capitalized in this part of the world, and you would substantially reduce your counterparty risk by holding the funds directly.

(Sovereign Man Confidential members: please refer to recent premium content for information about how to do this...)

[Asiantravel]

My personal experience of this “ change of thinking “ regarding the US dollar is seeing immigration officers at the borders of Thailand and both Cambodia and Myanmar rejecting dollars like as if it's some kind of monopoly money

Even with everyday commercial transactions in Cambodia, eight years ago, everything was about the American dollar and you would have been laughed at for even considering trying to use the local currency the Riel.

Now it's almost the direct opposite with shopkeepers and traders becoming more and more reluctant to use American dollars.

Edited November 20, 2013 by Asiantravel

[Naam]

But should the US dollar collapse, then the Hong Kong Monetary Authority would simply de-peg from the US dollar... or at least revalue it.

says who?

There may be options at your local bank for holding Hong Kong dollars. But the best option is to go straight to the source-- open a bank account in Asia, preferably Hong Kong or Singapore where you can own Hong Kong dollars directly.

nonsense!

[Naam]

My personal experience of this “ change of thinking “ regarding the US dollar is seeing immigration officers at the borders of Thailand and both Cambodia and Myanmar rejecting dollars like as if it's some kind of monopoly money

these immigration officers also believe that Santa Claus was a transvestite

[Naam]

But more importantly, the Hong Kong dollar is pegged (for now) to the US dollar.

But should the US dollar collapse, then the Hong Kong Monetary Authority would simply de-peg from the US dollar... or at least revalue it.

a closer look at "for now" and "de-peg" shows that in july 1972 this peg was USD 1 = HKD 5.650 and till 1983 the peg was ajusted several times and always with a devaluation of the Hong Kong Dollar. finally in 1983 the HKD got his (perhaps) final devalution to 7.75/7.80

the author of the above mentioned "report" is an ignorant who, instead of doing a little homework, presents a garbled up view by denying the facts but drawing personal assumptions out of thin air.

[Wimbledon]

I was reading this and posted it .THIS IS FROM A WORLD. TRAVELLER. , GOOD BUSINESS ENTREPRENEUR,visits banking institutions all over Southeast Asia and western and

european countries regularly .He is connected to some reputable people. That are very wealthy among other good qualities ..... I don't know as i am very self sufficient .However. After seeing how countries ,govts,in the past have operated when their Bankrupt ....we'll more informed will have. Better info ........ Above. Post. Is pretty snap reply ,and too quick maybe to really ......ponder. Possibilities ,however i cant say. As i did not major in High finance,just financially independent in one type of business successfully! hope others comment. Too... Like to hear ........

Edited November 20, 2013 by Wimbledon

[kblaze]

best part at the end;

"Sovereign Man Confidential members: please refer to recent premium content for information about how to do this..."

ahh the old upgrade to "premium" content trick eh..

[brit1984]

the world economy is a ponzi scheme but its better than the alternative...

[farang000999]

The general misunderstanding of the role of money in an economy has reached unbearable levels.

Quick, send this guy all your money so he can save you.

[Berkshire]

But more importantly, the Hong Kong dollar is pegged (for now) to the US dollar.

But should the US dollar collapse, then the Hong Kong Monetary Authority would simply de-peg from the US dollar... or at least revalue it.

a closer look at "for now" and "de-peg" shows that in july 1972 this peg was USD 1 = HKD 5.650 and till 1983 the peg was ajusted several times and always with a devaluation of the Hong Kong Dollar. finally in 1983 the HKD got his (perhaps) final devalution to 7.75/7.80

the author of the above mentioned "report" is an ignorant who, instead of doing a little homework, presents a garbled up view by denying the facts but drawing personal assumptions out of thin air.

Agree. The author is simply another financial advisor with an idea. And clearly, he's trying to profit from his idea. The US dollar is not going anywhere.

[Naam]

I was reading this and posted it .THIS IS FROM A WORLD. TRAVELLER. , GOOD BUSINESS ENTREPRENEUR,visits banking institutions all over Southeast Asia and western and

european countries regularly .He is connected to some reputable people. That are very wealthy among other good qualities ..... I don't know as i am very self sufficient .However. After seeing how countries ,govts,in the past have operated when their Bankrupt ....we'll more informed will have. Better info ........ Above. Post. Is pretty snap reply ,and too quick maybe to really ......ponder. Possibilities ,however i cant say. As i did not major in High finance,just financially independent in one type of business successfully! hope others comment. Too... Like to hear ........image.jpg

what is there to comment? don't the facts speak for themselves? what part of "HKD multiple devaluations vs. USD" is it you don't understand?

note: two plus two equals four even if a "world traveller" and "good business entrepreneur" claims it's equals six-point-nine.

[Naam]

But more importantly, the Hong Kong dollar is pegged (for now) to the US dollar.

But should the US dollar collapse, then the Hong Kong Monetary Authority would simply de-peg from the US dollar... or at least revalue it.

a closer look at "for now" and "de-peg" shows that in july 1972 this peg was USD 1 = HKD 5.650 and till 1983 the peg was ajusted several times and always with a devaluation of the Hong Kong Dollar. finally in 1983 the HKD got his (perhaps) final devalution to 7.75/7.80

the author of the above mentioned "report" is an ignorant who, instead of doing a little homework, presents a garbled up view by denying the facts but drawing personal assumptions out of thin air.

Agree. The author is simply another financial advisor with an idea. And clearly, he's trying to profit from his idea. The US dollar is not going anywhere.

i fail to see how one can profit by publishing not only unsubstantiated ideas but ideas which clash with established facts except... if the author is one of these poor chaps who make a living by being paid per word or line.

[infinity11]

I have read that some important countries want to stop using the dollar as THE currency.

Especially in regards to the cost/purchase price of oil.

This is actually not so new, for the past few years now.

There is something used/traded globally but i forgot what it is called.

The dollar has lost over 90% of its value in the last century.

Have all currencies faired as poorly?

The federal resere is neither federal or reserve.

[farang000999]

We need to bring back the gold standard so we can have another Great Depression.

[Naam]

I have read that some important countries want to stop using the dollar as THE currency.

Especially in regards to the cost/purchase price of oil.

This is actually not so new, for the past few years now.

There is something used/traded globally but i forgot what it is called.

The dollar has lost over 90% of its value in the last century.

Have all currencies faired as poorly?

The federal resere is neither federal or reserve.

yes Infinity! other currencies have faired as poorly or even worse due to inflation or currency "reforms".

let me state an example. 38 years ago i accepted my first job abroad based on a remuneration in US-Dollars. i am German and everybody warned me that the Dollar is doomed and will buy less and less Deutsche Mark. at that time one Dollar bought ~DM 1.75 and 8 years later one Dollar bought DM 3.48 (~double!).

big fluctuations vs. other currencies since then but the ongoing call for the demise of the Dollar never materialised.

[Wimbledon]

Oh. My ...2008 financial crisis was unsubstantiated....Until it appeared Quite draamtically FRONT AND CENTRE! Ps also singapore apparently propped up their currency to the tune of 5 billion this year..... SO THEY ARE TRYING LIKEevery other country to bypass us currancy.exchanging As middle man. The US is doing every thing it can also to stop,Bitcoin Asia seems to be embracing it . I think the US is Loosing their grip and trying to desperately create fear, deception,and restrictions in banking, one of their DOMINANT. STRENGTHS. Shit happens !

Edited November 20, 2013 by Wimbledon

[brit1984]

We need to bring back the gold standard so we can have another Great Depression.

what about "bitcoins"!

[Naam]

We need to bring back the gold standard so we can have another Great Depression.

what about "bitcoins"!

my preference are pink bits

[Asiantravel]

the world economy is a ponzi scheme but its better than the alternative...

hunting.jpg

The alternative is already here in East St. Louis, Camden, New Jersey, Chicago , Detroit, New Orleans, Oakland, Stockton...............

[Asiantravel]

I have read that some important countries want to stop using the dollar as THE currency.

Especially in regards to the cost/purchase price of oil.

This is actually not so new, for the past few years now.

There is something used/traded globally but i forgot what it is called.

The dollar has lost over 90% of its value in the last century.

Have all currencies faired as poorly?

The federal resere is neither federal or reserve.

have you heard this guy infinity ?

http://investmentwatchblog.com/canadian-billionaire-predicts-end-of-us-dollar-as-worlds-reserve-currency-ned-goodman/

[davejones]

Old news.I thought everyone knew that USD was a ponzi scheme. Only question remaining is when it will collapse.

[davejones]

My personal experience of this “ change of thinking “ regarding the US dollar is seeing immigration officers at the borders of Thailand and both Cambodia and Myanmar rejecting dollars like as if it's some kind of monopoly money

Even with everyday commercial transactions in Cambodia, eight years ago, everything was about the American dollar and you would have been laughed at for even considering trying to use the local currency the Riel.

Now it's almost the direct opposite with shopkeepers and traders becoming more and more reluctant to use American dollars.

LOL. I spent a month in Cambodia recently. ATMs gave out USD and all the shops took them. The only people who too Riel were poor street traders. Everything I saw was priced in USD. There wasn't anywhere to get Riel apart from in small change (under $1).

[impulse]

We need to bring back the gold standard so we can have another Great Depression.

what about "bitcoins"!

my preference are pink bits

I was going to say "you can't eat 'em", but.....

[marcgold]

What a bunch of nonsense. People have been saying "the sky is falling" about US Dollars for decades. Guess what? It is still - by far - the number one currency in the world and this is VERY unlikely to change for the foreseeable future.

I recommend taking a basic course in economics.

[Pinot]

The sky is falling and we're all going to killed.

Well written headline and maybe not a bad idea.

I'll hang with $'s for now.

Let's hear more.

I'm bringing in US $'s to Thailand. High exchange rate and a bank savings rate of over 3%.

Edited November 20, 2013 by Pinot

[Asiantravel]

What a bunch of nonsense. People have been saying "the sky is falling" about US Dollars for decades. Guess what? It is still - by far - the number one currency in the world and this is VERY unlikely to change for the foreseeable future.

I recommend taking a basic course in economics.

But decades ago the US didn't have 17 trillion of debt and a lot of people unemployed ( and we can't even can't determine how many are unemployed because of

BLS -Department of bullshit statistics keep lying about them )

The US Dollar is backed only by a belief system (as are all other currencies today). The belief system is backed by the US military (stop believing in USD and bombs will fall shortly after) as Sadam and Muammar Gaddafi found out

Edited November 20, 2013 by Asiantravel

[thrilled]

Your playing chicken little again.Sure the almighty buck is getting weaker,but it still dominates the world.As long as the US pays the interest on time ya don't have to worry about anything.If your nervous buy GOLD.

[impulse]

I'm all for transacting the world's business by HKD.

In order to meet the demand for even a few percent of the world's economy to be transacted in HKD, they'll print up all we need. Anyone else see a problem there?

dam_n, there's always a catch.

And we can go back to gold. But either the economy will have to shrink by about 95%, and they'll have to dig harder for 20x as much gold as they're mining now, or the price will have to go to, like, $50,000 per oz.

There's that catch again.

Maybe we're stuck with the USD. Good thing. Because that's just about all I have.

Edited November 20, 2013 by impulse

[Bpuumike]

Old news.I thought everyone knew that USD was a ponzi scheme. Only question remaining is when it will collapse.

The US can't continue printing $85 Billion per month without eventual consequences.

[pomchop]

My personal experience of this “ change of thinking “ regarding the US dollar is seeing immigration officers at the borders of Thailand and both Cambodia and Myanmar rejecting dollars like as if it's some kind of monopoly money

Even with everyday commercial transactions in Cambodia, eight years ago, everything was about the American dollar and you would have been laughed at for even considering trying to use the local currency the Riel.

Now it's almost the direct opposite with shopkeepers and traders becoming more and more reluctant to use American dollars.

I just finished three weeks in Cambodia and not one time did I find anyone anywhere who was the least bit reluctant to accept american dollars...in fact it sure seemed to me they PREFERRED them to the local money....at Angkor wat the twenty dollar admission fee is quoted and collected ONLY in US DOLLARS....and with thousands of visitors everyday that is a LOT of dollars....the arrival visa fee at Cambodia airport is quoted and collected in US DOLLARS......and I have never had US dollar rejected at Burma border either....