Sunday, September 01, 2013

"The End of America": Financial publisher predicts world will refuse to accept dollar as reserve currency because of our printing money to pay debts, leading to collapse

I haven’t covered purely “financial” disaster videos on this blog much.  I saw Porter Stansberry’s video “The End of America” being pushed in a news feed by Toshiba on my new Windows 8 laptop on the Internet Explorer default screen. 

The video visually is nothing more than a series of Power Point slides matching his speech that runs 83 minutes. 

Stansberry’s thesis is that the world is already turning away from the dollar as a reserve currency, and that this can cause a sudden, financial Armageddon.   That could occur, he says, one day when the rest of the world simply refuses to by bonds un US dollars at all. The reason for the process is that the US can print money to pay for its growing debts and deficit spending.  This obviously feeds into the debate on the debt ceiling, as well as population demographics (an aging population, fewer children in some populations).   The rest of the world will naturally balk at the US’s living beyond its means at their expense.  International monetary authorities are already developing bonds defined with “special drawing rights” or SDR’s.

Stansberry predicts sudden banking collapse within the US, wiping out normal assets.  Even ATM’s won’t work, he says.  Why would financial operations fail within the US?  Well, he claims, civil disorder and marital law could ensue.  The video was posted on March 13, 2013 and predicted a collapse within a few weeks of that time.

Toward the end of the video he offers his newsletter subscription, and refers to four steps which he will not name specifically.  The advice appears to include putting some assets overseas, owing more gold and especially silver, apparently doing puts and calls (but that requires skill in day trading), and, most of all, owning more commodities, and looking for barter opportunities.  Although the video denies that “guns” are involved, it sounds from the tone that rural real estate with real physical self-sufficiency in terms of food would be a good idea.  There is a tone of “doomsday prepper” mentality.

I actually heard some of these advice from co-workers in the early 1980s, one of whom was investing in junk silver.  I wonder what Stansberry would think of bitcoin today.

I does seem as though Stansberry thinks that the currencies of countries whose people are more "disciplined" (like China) will turn out to become dominating.  That view takes on moral aspects.
Stansberry does introduce a useful concept, called the "normalcy bias", which explains why people don't prepare for disasters that haven't happened before. 
An article on the Daily Crux gives some more info here.

Some other references on the web do indeed call into question Stansberry’s reputation.

I think it pays to bear in mind that some of the most serious threats are to infrastructure, particularly the power grid, and maybe even from cyberwarfare.

Stansfield’s theories would obviously cause other commodity prices to rise.  But the United States has the newfound ability to meet its fossil fuel energy needs (whatever the effect on climate change) from new technologies (fracking) to develop enormous local reserves of natural gas.  Demonstration of that ability could offset the reduction in the value of the US dollar.  

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