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Time to go to minimum US dollars mode

Posted by John T. Reed on

The US GDP is $21.6T. I have to guess how much this telling all non-essential employees is going to affect GDP. I’ll guess 75%. So the GDP for the 12 months after the covid 19 hit the fan would drop to $5.4T.
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The Great Depression was far milder that what Trump and the governors are now inflicting on the US. Look at the graph with the pink bar showing the Depression years.
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https://en.wikipedia.org/wiki/Great_Depression#/media/File:Real_GDP_of_the_United_States_from_1910-1960.svg
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What Trump and the governors are now doing, and bragging about, is a greater threat to the US than the Great Depression or World War II. Unemployment was 25% at the peak in the Depression. The unemployment COMMANDED by the president and the governors appears to be around 75%.
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I have talked in the past about the moment when you need to break glass in case of possible imminent hyperinflation and take emergency steps.
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Am I sure this is it? No. But I do not have to be. I think it is time to move money out of the US dollar except what is needed for paying current bills.
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Our social security and my wife’s pensions cover most of the bills. So I can put savings abroad. In Canada, you can have USD accounts. You can also transfer money on line instantly from your USD account to your CAD account. So I will now move money to the Canadian USD account. If there is no US hyperinflation, it will be meaningless. A USD account in Canada is essentially the same as a USD account in the US.
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If there is no US hyperinflation, no harm, no foul. But if there IS hyperinflation, this move will save all that money from being wiped out.
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The key fact here is the federal government is not bragging about spending TWO TRILLION dollars so that the millions being fired from their jobs will be able to go on vacation.
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Folks, the US government does not have $2T. It does not have $2. All money spent in this manner is printed by the Fed out of thin air. That is inflationary.
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Our national debt is currently $23.6T. Adding $2T makes it $25.6T. Our GDP is now $21.6T. Adding the new debt makes our debt-to-GDP ratio $25.6T ÷ $21.6T = 118.5%. The highest ever in the US was 122% after WW II and the Korean War. But if you divide our new national debt by our new GDP of $5.4 T, you get $25.6T ÷ $5.4T = 474%. That is almost double the highest debt-to-GDP ratio in the world, Japan’s 237.5%.
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People are going to read the above and shake their heads saying, “That can’t be.” As always, please point out the errors or omissions in my facts or logic.
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And once again, my approach to this is an insurance one: low cost, low risk. Moving money to a USD account in Canada is not some sort of bet like selling everything you own and buying gold with it.
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If you move USD to your Canadian bank still in USD and nothing happens, no problem. Move it back whenever you feel the situation has returned to all clear.
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But if you leave that money in USD in the US, and we DO get hyperinflation, it will disappear off the face of the earth. And remember that putting the money in the USD account in Canada is not the end. The moment the inflation starts, you need to go online and transfer the money into Canadian dollars which you do by simply transferring it into your CAD account. You can do that before the USD hyperinflation starts, but that will trigger a currency conversion charge (no big deal) and it will expose you to currency risk. If there is no USD inflation, and the CAD goes down in relation to the USD.  That is generally a mild risk. Hyperinflation, in contrast, turns the value of all your USD denominated assets to zero. No exaggeration.
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I am not telling readers to do what I am doing. You do not pay me. I AM telling you what I am doing. You are allowed to imitate.

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