While market observers worry about what the Fed will do next or the health bill, nobody sees that the United States is on the way to total ruin because they have been running budget deficits for over half a century and trade deficits for over 40 years. It seems that the US economy is walking on water, and this opinion is fueled daily by seasoned commentators like Ambrose Evans-Pritchard in the UK Telegraph. In a recent article, he uses selective data to prove that “The American strategic decline is a myth.” So here is another journalist who falls for manipulated statistics and focuses on the wrong things. For example, it is definitely not a proof of a strong economy that the Americans buy an enormous number of new cars which they don’t need. Especially since they do it with subsidized credit, leading to massive bad debts that will never be repaid. Nor are the deficits, falling wages, 23% real unemployment and falling real GDP. 

There is only one reason why the US could live above its means for over 50 years and that is because the dollar is the world’s reserve currency. But how can the world trust a reserve currency which is based on unlimited debt creation and money printing. Since Nixon abolished the gold backing of the dollar on August 15, 1971, the US currency has had a precipitous fall. Measured in Swiss Franc, for example, the dollar is down 77% since 1971. And against the only money which has survived in history and money which represents stable purchasing power, gold, the dollar is down 80%. 

The average American is totally unaware of what is happening to his money since he doesn’t travel outside of the country. He doesn’t realize how prices are going up every year, especially since the official inflation figures have nothing to do with real inflation. 

The only reason the dollar is still standing is that it is used as a trading currency, especially for oil. In the early 1970s, the US made an agreement with Saudi Arabia, which at the time was the biggest oil producer in the world by a big margin. Against US weapons and protection, Saudi Arabia would sell oil in US dollars, which meant that the whole world would trade in dollars. This was the start of the petrodollar. It is still in existence but it is only a matter of time before major parts of the world will start to trade in their own currencies. This is already happening between Russia, China and Iran for example. 

But let’s look at the consequences of a currency backed by nothing except debt and printed money. Until 1970, the US was running a healthy annual trade surplus. Then, due to a weakening economy and escalating costs for the Vietnam war, the dollar started to fall. The French president de Gaulle had seen the US economic problems and therefore demanded that US debt would be paid in gold. The US gold backing of the dollar meant that any sovereign state could request payment in gold. But Nixon realized that the US gold would disappear quickly and he broke the Bretton Woods System which had been in place since 1944. Thus, the US would no longer settle its sovereign debts in gold but in depreciating dollars. 

But Then Things Exploded…
Since this ominous day in August 1971, the United States has been in a state of continuous decline with escalating debts and a collapsing currency, with a standard of living that is no longer based on productivity but on credit. Let me just show the most obvious proof of this, proof that no one ever considers and which is the clearest evidence that the US is bankrupt. Since 1970, the US has had a trade deficit every year except for in 1972 and 1974. That led to a cumulative deficit of $2 trillion over 20 years, up to 1999. But then things exploded. Between 1999 and 2017 the cumulative trade deficit was $12 trillion.….More Here