Max Keiser and Stacy Hurbert recently discussed how JP Morgan in a secret report is telling only their elite clients that the dollar is unlikely to remain the global reserve currency.The report was only meant for their private wealthy clients , people worth more than twenty million dollars.This is what they are telling their elite clients while going into the press in the US and telling the ordinary american , do not worry everything is great. JP Morgan’s recent report for their private wealth clients, asking: “Is the dollar’s ‘exorbitant privilege’ coming to an end?”
The bank makes the case that the rise of China will dent this privilege. They present data that demonstrates China had, for thousands of years, a major share of world trade until its encounter with the then narco-state of Great Britain in the mid 1800s when the UK and the East India Company used military force to impose opium on the population. China’s military defeat sank the country into rapid economic decline from which they are only now emerging. JP Morgan recommends reducing client exposure to the dollar and increasing exposure to gold and Chinese renminbi.
The report goes on saying :
The U.S. dollar could lose its status as the world’s dominant currency. How does this affect investors?.
The US dollar has been the world’s dominant reserve currency for almost a century. As such, many investors today, even outside the United States, have built and become comfortable with sizable US Dollar overweights in their portfolios. However, we believe the dollar could lose its status as the world’s dominant currency (which could see it depreciate over the medium term) due to structural reasons as well as cyclical impediments. As such, diversifying dollar exposure by placing a higher weighting on other currencies in developed markets and in Asia, as well as precious metals makes sense today.
This diversification can be achieved with a strategy that maintains the underlying assets in an investment portfolio, but changes the mix of currencies within that portfolio. This is a completely bespoke approach that can be customized to meet the unique needs of individual clients. It is commonly perceived that the U.S. dollar overtook the Great British Pound as the world’s international reserve currency with the signing of the Bretton Woods Agreements after World War II. The reality is that sterling’s value was eroded for many decades prior to Bretton Woods. The dollar’s rise to international prominence was fueled by the establishment of the Federal Reserve System a little over a century ago and U.S. economic emergence after World War I.
The Federal Reserve System aided in the establishment of more mature capital markets and a nationally coordinated monetary policy, two important pillars of reserve-currency countries. Being the world’s unit of account has given the United States what former French Finance Minister Valery d’Estaing called an “exorbitant privilege” by being able to purchase imports and issue debt in its own currency and run persistent deficits seemingly without consequence. There is nothing to suggest that the dollar dominance should remain in perpetuity. In fact, the dominant international currency has changed many times throughout history going back thousands of years as the world’s economic center has shifted. After the end of World War II, the U.S. accounted for biggest share of world GDP at more than 25%.
This number is brought to more than 40% when we include Western European powers. Since then, the main driver of economic growth has shifted eastwards towards Asia at the expense of the U.S. and the West. China is at the epicenter of this recent economic shift driven by the country’s strong growth and commitment to domestic reforms. Over the last 70 years, China has quadrupled its share of global GDP to around 20%—roughly the same share as the U.S. and this share is expected to continue to grow in the years ahead. China is no longer just a manufacturer of low cost goods as a growing share of corporate earnings is coming from “high value add” sectors like technology.
Be prepared for a possible recession.
Plenty of people are asking about the chance of a crash, which I interpret as a pretty severe recession, like 2008-09. The primary trigger of a full-blown crash would be a financial crisis, when many companies, consumers and other entities have borrowed short to fund long-term assets which start looking dodgy. I don’t think that’s in the cards.
Household finances are improving. Over the last four quarters, their real estate equity is up 10.0%, financial assets up 8.0%, debt up only 3.4%, for a gain in net worth of 8.2%, based on Federal Reserve data.
On the corporate side, cash holdings at non-financial corporations are high relative to the overall economy.
America’s banks hold more capital relative to assets than before the last recession. They have also undergone stress tests to determine how they would fare in a recession. Even though the exercise is imperfect, it goes a long way toward helping a bank survive.
The stock market has risen for the last three years, sparking some worries. Most of the time, stock prices are a response to changes in the economy, though occasionally stock prices can influence the overall economy. The market is not so overblown now that it will drag an other-wise healthy economy into a crash, though it would certainly fall if some other cause triggered a recession.
As for housing, but we are not at all overbuilding relative to underlying needs driven by population growth and obsolescence of older properties. A recession could push prices down in the regions that are hardest hit, but a housing collapse will not be an independent cause of recession.
If an economic collapse occurs, it would happen quickly. No one would predict it. The surprise factor is, itself, one of the causes of a collapse. The signs of imminent failure are difficult for most people to see.
Most recently, the U.S. economy almost collapsed on September 17, 2008. That’s the day the Reserve Primary Fund broke the buck. Panicked investors withdrew a record $140 billion from money market accounts where businesses keep cash to fund day-to-day operations. If withdrawals had gone on for even a week, the entire economy would have halted. That meant trucks would stop rolling, grocery stores would run out of food, and businesses would shut down. That’s how close the U.S. economy came to a real collapse, and how vulnerable it is to another one.
What Would Happen in an Economic Collapse
If the economy collapses, you would lose access to credit. Banks would close. Demand would outstrip supply of food, gas, and other necessities. If the collapse affected local governments and utilities, then water and electricity would no longer be available. As people panic, they would revert to survival and self-defense modes. The economy would return to a traditional economy, where those who grow food barter for other services.
A U.S. economic collapse would create global panic. Demand for the dollar and U.S. Treasurys would plummet. Interest rates would skyrocket. Investors would rush to other currencies, such as the yuan, euro, or even gold. It would create not just inflation, but hyperinflation, as the dollar became dirt cheap.
How Close Are We to a Total Economic Collapse?
Any of the following seven scenarios could create an economic collapse.
If the U.S. dollar rapidly loses value, it would create hyperinflation.
A bank run could force banks to close or even go out of business, cutting off lending and even cash withdrawals.
The internet could become paralyzed with a super-virus, preventing emails and online transactions.
Terrorist attacks or a massive oil embargo could halt interstate trucking. Grocery stores would soon run out of food.
Widespread violence erupts across the nation. That could range from inner-city riots, a civil war, or a foreign military attack. It’s possible that a combination of these events could overwhelm the government’s ability to prevent or respond to a collapse.
In March 2019, the Federal Reserve warned that climate change could threaten the financial system. Extreme weather caused by climate change is forcing farms, utilities, and other companies to declare bankruptcy. As those loans go under, it will damage banks’ balance sheets just like subprime mortgages did during the financial crisis. A study by Pennsylvania State University predicted that extreme weather in North America will increase 50% by 2100. It will cost the U.S. government $112 billion per year, according to the U.S.
Government Accountability Office.
Natural disasters could cause a localized collapse. If Hurricane Irma had hit Miami, its damage would have been worse than Hurricane Katrina. If the 2019 polar vortex breakup had lasted weeks instead of days, cities would have shut down. Munich Re, the world’s largest reinsurance firm, blamed global warming for $24 billion of losses in the California wildfires. It warned that insurance firms will have to raise premiums to cover rising costs from extreme weather. That could make insurance too expensive for most people.
Some believe the Federal Reserve, the president, or an international conspiracy are driving the United States toward economic ruin. If that’s the case, the economy could collapse in as little as a week. The economy is run on confidence that debts will be repaid, food and gas will be available when you need it, and that you’ll get paid for this week’s work. If a large enough piece of that stops for even several days, it creates a chain reaction that leads to a rapid collapse.
How To Be Prepared For Economic Collapse
Being prepared for an economic collapse means having on hand essential items you’ll need to get you through until things begin to normalize. This is similar to preparing for a hurricane but on a larger scale.
Store emergency water
It’s possible in an emergency such as an economic collapse that you may be without water and electricity for an extended time. Clean water is the most important thing you’ll need for survival. For your convenience, store as much water as you can, but also be prepared to sanitize water in case the outage lasts for a long time. There are several options for this, from chemicals to filters. Be sure to research your options, decide on a method, and put it with your supplies.
Stockpile emergency food
You’ll need to accumulate stores of nutritious, non-perishable food that has a long shelf life. Items such as rice, beans, canned foods, beef jerky, dried foods, and nuts are all good options. Numerous resources online can help you decide which foods to store. Essentials such as salt, sugar, coffee, honey, and powdered milk are usually included. Try to stay away from processed foods and snack items, which usually have a short shelf life.
Grow a garden
Cultivating a garden will provide you with fresh, nutritious food in the event of extended food shortages. It’ll also help you save money on food costs if the economy is experiencing hyperinflation. A garden also provides you with the opportunity to preserve nutritious food through canning and drying. Most items you grow in the garden can be canned and stored for years.
Homesteading is the only (legal) way I know of to become almost completely self-reliant from the food corporations, the utilities companies, the Government and Big Pharma… by harvesting hundreds upon hundreds of dolars of organic food year-round, and collecting thousands of gallons of crystal-clear drinking water for free…
To take back your health by growing your own groceries, and making your own food out of basic ingredients, such as cheese, bread and even chocolate to name a few…
Then you could stockpile the excess produce for dark days… (The shelf life of ingredients is longer than that of the resulting foods, anyway…) So while other preppers pay thousands for overpriced, highly-processed “emergency food”, you’ll build your survival stockpile for free…
It’ll be like having your own personal supermarket just a few feet away from you… Though not the kind that sells processed meat full of hormones and steroids, veggies full of pesticides that have absolutely no taste at all, not to mention and all the other junk full of preservatives…
Batteries, matches, flashlights, emergency radios, tools, and maps
Chemicals for disinfecting such as bleach
Essential medications that your family requires
First aid supplies and a book on administering first aid
Over-the-counter medicines such as painkillers, antibiotic ointments, cold medicines, anti-diarrhea medicines, and laxatives
Be sure to keep your supplies in an airtight, watertight container that’s portable and easily accessible.
How likely is an economic collapse?
The U.S. economy is remarkably resilient, and it’s especially stable right now. With our Federal Reserve keeping an ever-vigilant eye on the economic fundamentals of our economy, they’ll likely see any warning signs and be able to institute monetary policies to ward off any serious threat.
You can also keep up on key economic factors that help in predicting the ups and downs of the economy. Watching the stock market can give you a good insight into the health and direction of the economy. Also, monitoring key economic influences such as fuel prices, GDP growth, bond markets, inflation, and commodity prices can help you better understand where the economy is headed.
Most important is being prepared to be as self-sufficient as possible.
When the power goes out, your safety and comfort is important.
Protect your home with a new fully automatic standby generator. Maintain your security system, lighting and air conditioning to keep your family or business safe and comfortable through any power outage
Enjoy the total peace of mind that comes with knowing you have a constant and reliable power supply for your home or business in with a standby generator from Alternate Power Solutions. From everyday necessities like heating, cooling, refrigeration and lights, to daily essentials like cooking, laundry or kids bath times. Power outages are occurring more frequently than ever and lasting longer with devastating effects.
Stand up to unpredictable weather and unforeseen outages with the most trusted name in residential standby power with backup generators for homes. If the power ever goes out, your General standby generator goes on – automatically – protecting you and your home 24/7.