That Didn't Take Long - What Does it Mean?

The U.S. Dollar is the "world currency", and is the currency oil is traded with; has been for many many decades.  It is estimated that China has about $1 Trillion dollars in reserves in order to purchase oil and other commodities that trade in U.S. Dollars. Russia is likely in a similar position. If these countries don't need the dollar to purchase oil and commodities, they will dump it, and fast. That potentially means a glut of dollars surging into circulation that lower it in value quickly.

Because the U.S. continues to print our money (fiat currency - not linked to any standard since the early 70's), China, Russia, and several other countries have threatened and even encouraged others to drop the dollar as the world currency.  There has been talk of using a "basket" of currencies that include the Yuan (China), the Yen (Japan), and the Euro (though the Euro is also experiencing a lot of trouble due to several Euro-nations huge in huge debt crisis).

What does that mean? It means that the U.S. will no longer be able to sell our supply of U.S. treasuries to pay for our its deficit spending. Of course, QE2 had the Fed creating the money and then using that money to buy their own treasuries! I still haven't figured out the math on that one. Either way, we have no way of paying our debt or paying the interest on our debt.

So what does THAT mean?  It means that they'll have to raise interest rates to gather the money back in.  They'll also have to print even MORE money so they can make the interest payments on our national debt. Bottom line: INFLATION!  Some experts believe it may even lead to hyperinflation.

What does THAT MEAN?  That means we need to prepare so we can still function when bread costs $10 a loaf (or more?), gas is $10 a gallon, and your monthly grocery bill triples or quadruples. 

So what am I suggesting?  Stock up. 

Why am I saying this now?

On November 23rd, in the China Daily News, there was an article that China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade.  While it is not a wholesale quitting of the dollar from a world-wide perspective, it is two of the more powerful countries making their first HUGE step towards the eventual destruction of the U.S. Dollar, which I believe will have a domino effect on other countries holding U.S. dollars.

Here's just some examples of what I've noticed lately about rising prices.  In some cases these increases haven't hit the consumer yet, but they will once the companies can no longer sustain the losses:

Sugar prices already rising over 70% this year alone
General Mills and Kraft to raise prices due to grain price increases
Rising Corn prices
Cotton going up