Home > The dollar, not the euro, is threatening a major crisis
The dollar, not the euro, is threatening a major crisis
F. William Engdahl
We have at this point already explained in detail how the Wall Street and Obama’s finance minister, together with the U.S. credit-rating agencies since the December attack on Greece and the weaker countries to ride the euro zone. This cash warfare - it is war in the truest sense of the word - if the pressure of a far more serious problem to be taken, namely the stability of the U.S. dollar and its future as a world reserve currency for trade and central bank transactions. Recently reported to the governor of the "Bank of England" and the International Monetary Fund with the warning words, the dollar will weaken in the near future.
Meryvn King, governor of the Bank of England, had recently stated: "The United States, the largest Volkswirschaft the world, registered a substantial fiscal deficit." In Washington it was reportedly outraged that brought renewed attention on the dollar was.
At the same time, the International Monetary Fund (IMF), monitored as a multinational institution that finances of the member countries, has published under the title Cross Country Fiscal Monitor’s annual report. The document is analyzed, must amount by which each country in the years to reduce the current deficit. Although the IMF takes the highly euphemistic calculation for U.S. government deficit and debt, he predicted that meet the debt of the U.S. in the next five years, 100 percent of GDP. Currently there are only a few countries, including Japan and Italy in debt, to such an extent. In addition, the rise of debt in the U.S. is steeper than in all other industrial nations.
According to the IMF, the cost of additional health care and pensions in the U.S. in the next 20 years once again rise by six per cent of GDP, the largest increase in a G-20 member country other than Russia - and this despite the demographic distribution in the USA is much cheaper.
The level of public debt is not the only problem. The maturity of government bonds in the U.S. is much shorter than in most other countries, which means that even if no additional available money would be borrowed, year after year to have higher government bonds are issued to refinance only the old debts.
The most alarming is the so-called Bruttofinanzbedarf for the U.S. national debt, which will reach 2010 levels by 32 percent of the GDP of the country - not even Greece has such a bad value, and this will rise in the U.S. for at least ten years on.
This means that the U.S. government, investors - especially foreign central banks such as the Japanese and Chinese - it needs to convince to buy into an unprecedented level new U.S. government securities, and at a time when those countries already the stability the dollar begin to doubt. Only because of the crisis and Greece staged a panic about the future of the euro was a full dollar crisis averted so far. Currently, no one can say how long this will still be possible. It is clear, however: without any kind whatsoever with new war situation, the stability of the dollar can not be sustained.
According to estimates by the IMF, the U.S. must cut public spending by 1.4 trillion dollars, to regain fiscal stability. If this does not happen, a collapse of the dollar is inevitable. Either way, the U.S. economy is in dire straits.