If the US Dollar is replaced as THE WORLDS CURRENCY RESERVE the only thing to save the US from complete disaster is DRILL BABY DRILL!

I think this is the most IMPORTANT and unnerving post I have ever written. I wish everything in it was wrong. But I would rather deal with reality than make-believe and I think that my readers feel the same way. THIS IS A MUST READ!

When the world banking system collapsed in 2008 the bad debts were absorbed by the world’s governments, at least those governments big enough to pay the cost, i.e. the US among others. When Fannie Mae (FNMA) and Freddie Mac (FHLMC) became insolvent in 2008 (a huge part of the world’s banking problems) the US government stepped in and bailed them out. Since then both of these organizations have continued to record billions upon billions of losses costing the US government an “un-specified” trillions and trillions of debt! And this debt continues to add up EVERY SINGLE DAY!

According to the National Inflation Association: “Even if all US citizens were taxed 100% of their income it still would not be enough to balance the federal budget. We’d still have to borrow money just to maintain the status quo’”

The new “Conservative” members of congress claim that they want to end the status quo and cut the size of government and limit spending according to a balanced budget. I think that it would be wonderful if they succeeded! However, the reality is that there are more sinister things happening around the world that are in motion that threaten are total and complete way of American life and simply cutting the federal coffers and reducing the size of government won’t be enough!

Since WWII the US Dollar has been THE WORLDS CURRENCY RESERVE and banks around the world maintain the US dollar in reserves for their loans. Oil is priced according to US dollars. This means that any country that buys oil from any oil producing nation must do so with US dollars. In order for foreign countries to keep their oil price as low as possible they need their currency conversion rate to be very high against the US dollar. So where am I going with all of this? Keep reading and you’ll feel the same chill up your spine as I did when I discovered this information for myself.

Since the US dollar is THE WORLDS CURRENCY RESERVE and is “currently” accepted just about everywhere, all the US needs to do to pay its debt is print more currency—and we are doing it at an unprecedented rate! The result of “phony money” (printed instead of accrued/earned money) is devaluation of the US dollar also know as inflation.

This also leads to high mortgage rates, not the 4.75% for a 30 year fixed mortgage we see today but 8,10,12,14,18% or higher! In 1981 30 year fixed rate mortgages were as high as 18.45% According to inflationdata.com the annual rate of inflation in 1980 was 13.58% According to the government our inflation rate today is around 1.50%. I’m not going to calculate the cost of a gallon of gas at the 13.50% inflation rate because the number would be so high you wouldn’t believe me anyway. But I will tell you that a Prius would seem like a huge gas guzzler and you and I would probably walk much more than we drove, if we could afford to drive anywhere at all!

Now here is where my analysis gets REALLY scary!

If OPEC nations sell their oil based on the US dollar but the US dollar continues to decline in value (it has already declined 8% in the last 12 months) that means that OPEC will be making less on their sale of oil which will leave them with two options; one raise the cost of oil (we have already seen that happing over 16% in the last 6 months) or two; (this is the BIG ONE) discontinue using the US dollar to price their oil.

What would this mean to all of the US? It would mean HYPER-INFLATION! Everything in our economy uses oil either in its construction, production or transportation, EVERYTHING! Right now the average cost for a gallon of gas in the US is around $2.72 per  gallon. But look at some other parts of the world, Toronto $3.82, Tokyo $5.32, Parris $6.00, Rome $6.40, London $6.60, Berlin $6.82, and in Norway it is $7.41 a gallon!

Just imagine how much our American way of life would change if our fuel was double what it is now? How would it change things for you if you paid $5.44 per gallon or $7.41 per gallon? But the reality is that it could and MAY get much worse

What would happen if the US Dollar was no longer THE WORLDS CURRENCY RESERVE?

According to Award Winning Middle East correspondent Robert Fiske of The Independent of London in an article he wrote October 6, 2009 a secret meeting was held between China, Japan, Russia and France without the US. He said;

"It is the most profound financial change in recent middle east history, Gulf Arabs are planning—along with china, Russia, Japan and France to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese Yen, Chinese Yuan, the Euro, gold and a new, unverified currency planned for nations in the Gulf Corporation Council, including Saudi Arabia, Abu Dhabi, Kuwait, and Quatar."

(You can go to the article here: http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html)

The U.S uses about 20,680,000 barrels per day. The current cost for a barrel of oil is $88.38 (January 6th 2011). Therefore the U.S spends about $1,827,698,400 a day; over 1.75 Billion U.S dollars daily. On a yearly basis $1,827,698,400 times 365 (days) = $667,109,916,000 well over half a trillion! (In June of 2011 oil was 73.61 per barrel which means an Increase over 16% in the last 6 months!)

It is interesting that our Federal Government is telling us the inflation rate is only around 1.50% yet the price of oil has increased over 16% in the last 6 months and the cost of other commodities like corn, wheat, rice have increased by double digits in the last year and precious metals like gold have increased about 45% in the last 12 months from $800 an ounce to over $1,400 an ounce and MANY forecasters believe it will move much higher, some say as much as $6,000 to $10,000 an ounce in the next few years! (Here is another great website to suport my points http://goldswitzerland.com/index.php/hyperinflation-will-drive-gold-to-unthinkable-heights/)

I have spent most of my career over the last 27 years in the financial services industry and although I am not an economist I believe that our massive federal debt if not stopped will destroy our country in a matter of months or years. But just stopping the reckless spending is like putting a bandage on a ruptured artery, it may slow the flow but it won’t stop the bleeding that will eventually lead to death.

We must do something more, in addition to cutting spending and balancing the budget, we must stop buying foreign oil. We MUST tell our government that TODAY we will DRILL BABY DRILL in our own country in places like Alaska where we have more oil than all of the world’s oil reserves combined. China is now the world’s 2nd largest consumer of oil and it is estimated that within this decade its oil demands will increase by 80%! China also owns most of the US debt and in the last 24 months it has been divesting US Debt at an alarming rate. If China cuts a deal with OPEC everything I have written in this blog will come true and at a much more exaggerated pace!

Every time the US has even hinted of drilling for oil in its own boarders OPEC lowers the price of oil for fear that we would either reduce or eliminate our need to buy OPEC oil. It is time to stop hinting and start drilling. It’s time to stop buying oil from our arch enemies in the Middle East who relish the idea of destroying America as long as they can replace it with a bigger buyer—China will do just fine!

I don’t care what you or the liberals think about Sara Palin, but she got it right when she said “Drill baby drill!” If we no longer import our oil but instead become the world’s largest exporter of oil we can save our economy and also shut up our enemies in the Middle East. They can eat their sand and wash it down with their own oil!

The environmentalist and other leftist wacko’s in the US are NOT the majority of Americans! The American majority with the help of the Tea Party movement spoke up last November and just threw out the extreme leftists in Congress and the Senate and there is more to come in the next election. It is time to tell the US Government to end the red tape and EPA regulations that have tied the hands of our oil companies so that they can drill ANYWHERE in the US where oil can be found and that includes my back yard, if they can find oil there too!

I am proud to be an American and I am not ready to give up the way of life that my forefathers sacrificed everything for. I am not ready to let any other country dominate my country. The US Dollar must remain THE WORLDS CURRENCY RESERVE or the United States of America will lose everything!