All Americans Should Read This, Market Proof Our Dollar is Doomed

Even if you find the stock market boring or uninteresting, you will most likely find the following information very interesting. I want this article to make sense to those that don’t care about financial markets so you should find it quite understandable.

Countries have a credit rating just like people have a credit score. Like a credit score, this rating helps determine how cheaply we can borrow money. The worse your score, the higher the interest. The stock market recently fell sharply for a day or so because the Standard and Poors financial services company, who performs credit ratings, said that the United States had a 30% chance of having our AAA credit status downgraded. This would be like Bill Gates having his credit score lowered. It was never imagined possible.

Next, investors trade currencies constantly. If there is a radiation meltdown in Japan, investors take their money out of Yen and put it into another currency, often dollars. A year ago when Greece had a financial crisis people started bailing out euros and into dollars. If you were lucky enough to go on a vacation in Europe at this time, you got things cheaper than normal because you money was worth more. Today the dollar is at a 40 year low in value.

Let me show you how I can prove that the dollar is viewed as such a bad bet right now that the big time investors must know we are screwed. Today Greece had a bond auction, they have a super crappy credit rating and they had to pay a ridiculous 22% interest. We usually pay like somewhere around 3% when we borrow. This interest rate reflects the belief that there is a 70% chance that Greece defaults on its debt and implodes. Portugal will also likely implode and people are worried about Spain.

This news should have sent people scavenging out of euros and into dollars right? I mean if those countries go, the euro could be toast. One should have expected to see the dollar get much stronger against the euro today, but it didn’t. Investors must have thought this risk was still a better bet than the old USA because we hit a three year low against the euro today.

This means the big time investors that move millions of bills in a click of a mouse know that our dollar is screwed.

We are in the ultimate catch 22. There are two ways out of this. If the Federal Reserve has a rate hike to increase the value of the dollar, we lose too much gross domestic product and double dip hard. If we print more money the world deems our bills worthless crap. I will write articles following this up with ways that you can protect yourself. If you have a company or professional that invests for you I would call them to see if they are hedging against a further dollar decline in your portfolio. If you don’t own any stocks you can still protect yourself. I do not do sales pitches for anyone so it doesn’t matter how you do it, but taking some savings and purchasing some physical gold and silver in a bank safety deposit box might not be a bad idea.