I have written many times that with all of the money being conjured up out of nowhere- and with the US dollar being the unquestioned leader in the parade- that the US dollar is poised to lose a lot of value and likely its position as the world’s only reserve currency.

Many others have been saying the same thing and many have laughed at us because it is taking so long to play out.

Just recently, another person has joined the chorus. Stephen Roach. Dr. Roach is an economist who is currently a lecturer at Yale but previously was chairman of Morgan Stanley Asia and chief economist at Morgan Stanley. I followed his work for years and was always pleasantly surprised at his honesty in calling things as he saw them.

He stated that he believes that by the end of 2021 the US dollar could see a drop of 35% in the dollar index. That in itself would be a HUGE drop in the value of the US dollar. Keep in mind, however, that the currencies that the US dollar is measured against are also falling in value just at different rates. That means that the actual loss of purchasing power could be FAR greater than the already opined loss.

This is the main reason I believe it is imperative to have a plan to preserve your purchasing power. For all of our lives it has been “king dollar”. It appears we are rapidly approaching the end of this road.

I also believe this is being done on purpose to do away with the dollar and introduce a new form of digital currency- most likely Fedcoin.

Just recently, many central banks have come out and declared that they are looking into launching their own digital currencies. According to the BIS (Bank of International Settlements) website both the Philippines and Malaysia are working on launching digital currencies and are looking to make sure all are included with a “digital wallet”. This sounds eerily similar to the Fed’s announcement that they want all Americans to have digital wallets so “money” can be directly distributed- bypassing our congress and most likely traditional banks.

The ECB, also “looking into” launching “Digital Euro”, just trademarked the name.

I don’t believe that all of this effort is being made around the world for fun. This is dead serious and could lead to total control by central banks. For anyone who thinks bitcoin or these other cryptos will save you I believe you should ask yourself a few serious questions like:

  • If those in charge have their own digital currencies what makes you think they will not outlaw the “private” currencies? By the way, if they really are so “private” how could I have written an article about 4 people sitting in jail a few years ago for illegally trading bitcoin? How could they have known? It’s totally private right?
  • If those in charge make it illegal to buy or sell what is the value of that holding?
  • If someone can access your “wallet” and empty your account electronically how secure is it? Can’t happen? There were stories in the Financial Times (which I used as a source in a prior article) where people watched their bitcoin being drained from their account and NOTHING could be done about it.
  • If the power is out for any extended period of time- assuming the electronic blip still has any perceived value left at all- how do you access it to buy and sell?

This article is not meant to demean Bitcoin in any way. I believe some money may be made trading it but I believe that it will ultimately be worthless by government decree similar to the way gold was revalued from $20.67 to $35.00 after Roosevelt confiscated what he could.

There are many other headwinds for our beloved US dollar also.

Our economy is in a shambles despite the massive massaging of numbers to make it appear that it’s not so.

Our admitted national debt just surpassed $27 TRILLION for the first time.

Our monthly trade deficit is the second-worst of all time and the worst of all time for goods exchanged alone.

Over 60 million people have filed for unemployment, 26 million are still collecting benefits and we still have to add in the 100 million plus that have been jobless for so long they are not counted- but don’t worry- unemployment is at 7.9%! Yeah!

Meanwhile, many small businesses have closed for good and will not be coming back. Even major corporations are laying off thousands at a time as I wrote about last week. Corporate bankruptcies continue to also set records. If corporations don’t exist the jobs that were there are also gone for good.

There are 40 million at risk of being homeless- that is in addition to the already exploding homeless population that is a national disgrace already. I just read some sobering statistics. For FHA insured loans as of July 2020 the delinquency rate nationally was 17%. If that isn’t bad enough, major metro areas are far worse. Like Long Island at 27.8%, NYC 27.2%, Fort Lauderdale 25.8%, Miami 24.2%, New Orleans 22.6%, Washington DC 22%, Chicago 21.9%, Houston 21.6%, Atlanta 21%, Philadelphia 20.3%.

If its not bad enough that people can’t afford the mortgage or rent payments, food is also becoming an issue. According to The US Census Bureau’s Household Pulse Survey a full 10% of adults (22.3 MILLION) reported that they didn’t have enough food. In addition, Feeding America has come out and said they expect to have a deficit of 8 BILLION meals between  now and June of 2021. Even the food pantries are being overextended. As of now 44.5 million Americans are using Food stamps to at least supplement their diets. This is up from 38 million just last year.

24% of all American households have virtually NO assets. How do I know? Because to qualify for Medicaid you can have virtually NO ASSETS and 79.9 MILLION Americans are on Medicaid.

While many focus on the mortgages and rents not being paid the National Energy Assistance Association did a study which showed that 179 MILLION Americans are at risk of having their power shut off for non-payment. As a matter of fact, in one state- Indiana over 112,000 households are currently 120 days or more behind on energy bills.

In a first- that I can remember anyway- JC Penney is CUTTING 15,000 jobs heading into the holiday season.

The greatest economy of all time or the greatest CON of all time?

The fact of the matter is that the dollar is being sacrificed to buy some time and usher in a new system altogether in my opinion. The dollar has to be undermined and some real or imaginary “crisis” will likely be needed so that the solution (which I am sure is already known and ready to go) can be implemented and people will not only not dissent but will likely be begging for it.

My opinion is that real assets are what is needed in an environment where all asset classes are providing false prices and massive counterparty risk. One man’s asset is another’s liability. If the liability can’t be paid what is the “asset” worth? I am afraid many are going to find out soon enough. It likely won’t be pretty.

This information is just a small sample of how our economy is cratering right before our eyes. I also believe that it is a large part of the reason many people are talking about hard assets right now like oil, natural gas, food, gold, silver, etc.  Assets that can’t be conjured up out of nowhere and can’t be worth zero because a company, entity or individual goes bankrupt and your “asset” disappears in a bankruptcy or insolvency.

As more fiat currency units get conjured up out of nowhere those assets that are tangible are likely to increase in value. It also doesn’t hurt to mention that commodities are currently at an all-time low in relation to the stock market. What is that saying? BUY LOW- SELL HIGH!

With the election coming up and the uncertainty that it may present, now may be a good time to take a good hard look at your portfolio and make sure you are comfortable with where you are allocated.

If you find that all of your holdings are debt-based and you are counting on being repaid or if the companies you hold are not only over valued  but also over-leveraged that could ultimately lead to a default- and a loss that likely will not be recoverable from- maybe some changes are in order.

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

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Precious Metals, including gold, are subject to special risks including but not limited to: price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability and the market is unregulated.

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