John Williams, founder of Shadowstats.com, predicts the US dollar will collapse by May 2013 from a massive self-off (i.e. the value of the dollar will crash because other countries will dump dollars in favor of other currencies) by May 2013. ShadowStats.com is dedicated to correcting the deliberate distortions the federal government, builds into their unemployment figures and other economic data. Sustainability activist Richard Heinberg first popularized the site in his 2012 The End of Growth. According to Williams, Obama has until May to get our fiscal house in order. If he fails to do so, global financial markets are going to dump all their dollars, their Treasury Bills and their dollar-denominated stocks in favor of stronger currencies.
Employing Treasury data and General Accounting Principles (GAP), Williams calculates the true federal deficit for 2012 was $6.9 trillion. This means the US government, in 2012 alone, spent $6.9 trillion more than it collected in taxes. In other words, as Williams asserts in the following USA Watch Dog video, the US is bankrupt:
In the absence of real growth, which according to Williams hasn’t occurred since 2007, the country has no hope of ever recouping this shortfall by raising taxes. Williams reminds us that the US government relies on consumer spending for 70% of GDP. Household incomes were already significantly declining before Obama reduced them an additional 2% with a higher payroll tax. Prior to the 2008 financial crash, consumers made up for declining incomes by incurring debt, via credit cards and home equity and personal loans. With banks freezing credit and house values collapsing, this avenue is closed for the vast majority of Americans.
Given the heavy reliance of all the major world economies on the US economy, it looks like a no-win solution – except, apparently, for two forward-thinking economists at the IMF. After coming to similar conclusions as Williams, they are promoting a plan in which government, rather than private banks, would assume responsibility for issuing and controlling the money supply. To read the IMF working paper, entitled The Chicago Plan Revisited, click here