Global Financial Crisis and Currency Collapse

After nearly 30 years of unprecedented prosperity, the U.S. economy is now in shambles. Millions of Americans have lost their homes… their life savings… and their jobs. While the U.S. military remains the most powerful force in the world, the most immediate threats America now faces are closer to home:…failing banks… …soaring government spending that will lead to Hyperinflation……runaway taxes……an increasingly totalitarian government that believes in illegal surveillance of law-abiding citizens……older citizens no longer able to retire and live what used to be known as “their golden years.” America’s biggest banks are running to the Federal government for emergency loans and bailouts. Hundreds could end up failing. Yet the FDIC has only $19 billion in insurance funds to cover an estimated $4.4 trillion in deposits.The government tells YOU that everything is just fine, not to worry… but that’s NOT what it tells the bankers.“Without substantial amounts of additional assessment revenue in the near future, current projections indicate that the (FDIC) fund balance will approach zero or even become negative,” FDIC Chairman Sheila Bair wrote in the letter to the chief executives of the nation’s 8,305 federally insured banks and thrifts. The truth is, when a bank fails, the Feds close it down without advance notice. It’s policy. You show up at the bank to make a withdrawal and the doors are locked shut. There is usually a notice on the door instructing depositors how they can gain access to their money. That’s what happened to depositors at Colorado National Bank in March 2009. The bank issued a notice telling depositors that their money had been transferred to Herring Bank of Amarillo, Texas. There are usually few delays in gaining access to your money—usually but not always. And do you really want to take that chance? When IndyMac Bank of Pasadena, Calif., failed in July 2008, the second largest bank failure in U.S. history, angry depositors lined up around the block trying to get their money. Many were turned away. Police threatened anxious customers to remain calm or they would be arrested. It was estimated that 10,000 depositors had as much as $1 billion in uninsured IndyMac accounts. For American investors worried about the safety of U.S. banks, it will soon be too late to seek an alternative.That’s because the new Democrat-controlled Congress has plans to make it virtually illegal for an American citizen to open a bank account in another country—even for legitimate business purposes. It’s already very difficult. Many foreign banks no longer will do business with Americans due to the onerous reporting requirements of the U.S. Patriot Act. Led by Michigan Senator Carl Levin, the Democrats believe foreign bank accounts allow ex-pats and others to avoid income taxes—at least $100 billion worth—and they are determined to collect it. In March 2009, Levin proposed new draconian rules to make it almost impossible for a U.S. citizen to open foreign bank accounts. What worries economists is that a large number of bank failures could overwhelm the FDIC and result in significant delays for depositors in gaining access to their savings. If that were to happen, many Americans would be unable to pay their bills or their mortgages. What’s more, widespread bank failures are quite possible. In the 1980s and 90s, more than 700 savings and loan institutions failed or were taken over by Federal regulators. The total cost to taxpayers was estimated at $130 billion. Some depositors had to wait years to get their money. The Federal Savings and Loan Insurance Corporation (FSLIC) covered accounts up to the maximum of $50,000. But depositors with large accounts often had to wait—and some never did get their money back. Bank officials have been informed by the Department of Homeland Security (DHS) that all safety deposit boxes will be seized in the event of a national disaster. As occurred sporadically during the Great Depression, Federal agents will examine all safety deposit boxes and determine which items may be returned to bank customers. No weapons, cash, gold or silver will be allowed to leave the bank—only paperwork will be given to its owners. Bank officials have been instructed not to reveal this policy to bank customers, even if asked. Bottom line: Only use safety deposit boxes for family documents you don’t mind being inspected by Federal agents. Never use them to store valuables. For one thing, the current crisis doesn’t just affect small savings and loans in Middle America but the largest banks in the world—banks like Wachovia, Citibank, Bank of America and Washington Mutual. They have all been forced to get large loans from the Federal government to cover bad debts worth hundreds of billions of dollars. The size of these bad debts, known as derivatives, are difficult to imagine. Derivatives are investments that are “derived” from IOUs like mortgage loans, corporate bonds and credit card debts. Investment bankers take these bundles of debts and then sell them as investments. According to the Office of the Comptroller of the Currency, banks in the U.S. currently hold more than $180 trillion in derivatives. The Bank of International Settlements estimates the total worldwide to be a staggering $683.7 trillion. That’s why, in March 2009, New York University economist Nouriel Roubini predicted that the banking crisis has just begun. He said that “many” banks will end up being nationalized because the government’s $750 billion TARP program does little more than help the banks meet their current obligations. It does nothing to address the underlying problem of bad debts (so-called “toxic assets”) the banks are carrying on their books.
Hyperinflation is not as rare as governments would like you to believe. Whenever a government spends far more than it takes in, the risk of Hyperinflation is there. It wipes out the value of accumulated savings, leaving even affluent people penniless. For example: In 2008, Zimbabwe: The socialist dictatorship of Robert Mugabe has created an annual inflation rate of 11,250,000%, resulting in currency that is basically worthless. At independence in 1980, 1 Zimbabwean dollar was worth approximately $1.25 in U.S. dollars. By mid-2008, one U.S. dollar was worth 688 trillion pre-August 2006 Zimbabwean dollars. 2007, Turkey: Turkey has suffered from chronic inflation for decades. In 1980, one U.S. dollar was worth 90 Turkish lira. By 2004, a U.S. dollar was worth 1.3 million Turkish lira. As a result, in 2007 the government simply declared a revaluation of the Turkish lira. One million Turkish lira would hence forth be worth only 1 lira. 2005, Romania: In 1998, the highest denomination in Romania was 100,000 lei. By 2005, it was 1 million lei. The Romanian government then devalued its currency, declaring that 1 new leu would be worth 10,000 old lei. 2001, Argentina: Overspending by the Argentine government resulted in massive inflation in the 1980s and 90s. By 1992, one new peso was worth 100 billion pre-1983 pesos. (Had you stuffed cash in your mattress during one of Argentina’s many recessions, not trusting their shaky banks, you would have ended up with nothing.) 1994, Russia: Following the collapse of the Soviet Union, the new Russia saw annual inflation of between 2,500% and 8,500% a year. The value of the ruble declined from 40 rubles to the dollar in 1991 to 30,000 rubles to the dollar by 1999.
In the past few months, prices have been falling. Real estate is down. Prices for some commodities have declined. But don’t be fooled! The current, temporary period of deflation will soon be followed by massive INFLATION. That’s because Barack Obama and his allies in Congress have embarked on the biggest government spending spree in history. This socialistic expansion of government will inevitably lead to a devaluation of the U.S. dollar (hyperinflation) that could wipe out your life savings. Imagine a world of $20 per gallon of gasoline… $30 hamburgers… and housing rentals costing $10,000 a month or more. The economic stimulus package alone (estimated at $850 billion) is nearly DOUBLE what the U.S. spent on FDR’s New Deal in inflation-adjusted terms. It’s 8 times more than the U.S. spent on the Marshall Plan rebuilding Europe after World War II. It’s more than we spent on NASA, the Race to the Moon or the Iraq, Vietnam or Korean Wars. And the stimulus plan is only the tip of the iceberg! When you add in the bailout lending for Citigroup and skyrocketing federal deficits, the U.S. government is spending $10 trillion it doesn’t have over the next few years. Whether the government borrows it or prints it, an increase that big in the money supply is going to do only one thing: Send inflation through the roof! The last time the U.S. government tried to spend its way out of a recession, in the 1970s, the inflation rate increased by 500%—from a 70-year average of only 2.5% to a high of 13.5% in 1979. But government spending in the 1970s is practically ZERO when compared to what the U.S. government is spending today. In the past 12 months alone, the U.S. government (both Republicans and Democrats) have promised to spend $7.4 trillion in bailouts. According to Bloomberg.com, this includes……$1.8 trillion in Net Portfolio Commercial Paper Funding through the Fed……$1.4 trillion in FDIC Liquidity Guarantees……$900 billion in the Term Auction Facility (TAF)……$540 billion in the Money Market Investor Funding Facility (MMIFF)……$700 billion in the Troubled Asset Relief Program (TARP)… 300 billion in the Hope for Homeowners program run by the Federal Housing Administration (FHA)……$200 billion for the Fannie Mae/Freddie Mac bailout……$128 billion for the American Insurance Group (AIG) loans……$250 billion for Term Securities Lending……$139 billion loan guarantee for General Electric (GE)Currency depreciation (inflation) robs retirement pensions and all savings, but most people don’t notice because it is gradual up to the latter stages when it is already too late. The U.S. Constitution protects citizens against “unlawful search and seizure.” U.S. courts have long insisted that police agencies must have “probable cause” that a crime has been committed before they can search through your home, subpoena your bank records, tap your private telephone calls and so on. But in the name of catching terrorists and “tax cheats,” all these constitutional protections are being flagrantly (often illegally) ignored by many government agencies. Laws that were designed to catch terrorists are now being used instead for domestic spying in the U.S…. illegal investigations of political organizations… monitoring of bank accounts and credit card companies… routine scanning of private emails and web browsing… tracking vehicle movements… and lots more. Both liberal and conservative organizations are outraged at the current scope of government surveillance—which now far exceeds anything George Orwell imagined in his chilling, anti-authoritarian polemic, 1984. Worst, the U.S. Patriot Act now requires tens of thousands of private businesses—from banks and brokerages to credit card companies and precious metals dealers—literally to spy on their customers for the government. In the name of catching money launderers and terrorists, the government forces private businesses to report any “unusual” activity involving transactions over $3,000—and all the data is fed into a massive government supercomputer known as the Financial Crimes Enforcement Network (FinCEN). What’s more, if employees of these businesses warn their customers about these spying activities, they could go to prison. If you think the election of Barack Obama will end illegal government surveillance of its citizens, you haven’t been paying attention. One of Obama’s first acts as president was to file a brief in federal court siding with the former Bush Administration and insisting that the government should be allowed to eavesdrop on Americans without warrants. Privacy advocates insist Americans will have just as much to fear from Democrat spies as they had from the Bush Administration—perhaps more. That’s because, while George W. Bush and the Republicans trounced on civil liberties and used warrant-less wiretaps in the pursuit of global terrorists, Barack Obama and his Democrat allies are going to use the same spying technologies… on U.S. taxpayers! “Hundreds of billions of dollars in taxes are owed to the government each year but are not being collected,” warned Rep. Charles B. Rangel, a Democrat from New York and chairman of the House Ways and Means Committee, himself investigated for criminal tax evasion. According to the New York Times, the kinds of “tax cheats” Obama and the Democrat-congress plan on targeting include “…self-employed painters and plumbers, small family businesses (from local florists and dry-cleaners to restaurants) and the growing legions who sell things over eBay and other Internet auction sites.” “Tax cheats come in all shapes and sizes,” explained Democratic Senator Carl Levin of Michigan, Chairman of the Senate Permanent Subcommittee on Investigations. Levin is pushing through a bill in Congress that would make offshore bank accounts virtually illegal. “This bill contains innovative and powerful measures that could strike an immediate and strong blow against these tax dodges,” he said in 2008. “These provisions would recover billions that could help pay for health care, education, manufacturing support, aid for wounded warriors and more.”In the eyes of power-mad government bureaucrats, ordinary citizens are guilty until proven innocent—and they’re pushing for NEW, expanded police powers that will include mandatory fingerprinting, iris scans and DNA sampling of all citizens, national biometric ID cards, transponder tracking of vehicles (for mileage taxes!), even geographical tracking of citizens through microchip implants. The potential for abuse and illegal snooping is massive—and is already occurring. Two years ago, the U.S. Senate held hearings about possibly revoking the Patriot Act because of revelations that the FBI was routinely and illegally gathering telephone, email and financial records of ordinary Americans without proper authorization. Fortunately, there are now steps you can take—100% legal steps routinely used by Hollywood celebrities and the super-wealthy—to shield yourself from government snoops and identity thieves who want to illegally invade your privacy. For example…A 100% legal way to move money offshore without violating U.S. reporting requirements. Federal law now requires that you report every bank or brokerage account you have outside the U.S. if the combined total in such accounts exceeds $10,000—or you face up to five years in prison and a fine of $500,000. However, the wealthy have long used an investment vehicle that is exempt from such reporting requirements— offshore life insurance policies. A life insurance policy purchased from a foreign carrier is NOT considered a “foreign bank, security or other financial account” and therefore not subject to U.S. reporting laws. What’s more, offshore insurance policies are “invisible” to the asset tracking services used by private investigators and government snoops in the U.S. They allow you to take advantage of tax-advantaged investments and offshore funds not accessible to U.S. investors. They also enable you to diversify into non-U.S. dollar assets that may gain in the event of future declines in the U.S. dollar, economy or markets. Best of all, offshore life insurance policies often have lower premium costs… better asset protection than their U.S. counterparts… zero tax on policy earnings… and the same provisions for tax-free borrowing and tax-free receipt of death benefit as ordinary U.S. insurance policies. In a word: They are the perfect investment vehicle for those who want to escape the illegal prying of U.S. government snoops and predatory lawyers. You may think an offshore annuity sounds complicated, but it’s not. It's quick and easy. All it takes is one phone call, fax or email and the people handling the accounts all speak excellent English. www.boblivingstonletter.com for more details