April 1, 2012 By Eric McWhinnie
Earlier this week, a fully loaded Brinks truck carrying between $3 million and $5 million in uncirculated loonies and toonies crashed on a snow covered highway in Ontario, Canada. The truck crossed the centre line and slammed into a rock, launching the coins in every direction. The accident is an unfortunate event, but can serve as an analogy about today’s fragile fiat currencies.
The current financial system serves as a global high-speed economic highway that is filled with many obstacles, including debt, bubbles and politics. Being the world’s reserve currency, the U.S. dollar is the truck that is one good bump away from losing control and crashing, causing a chaotic financial wreck. The U.S. official national debt now stands at over $15.6 trillion, representing about $140,000 per taxpayer. The record debt amount continues to increase as Washington gridlock is stronger than ever. The debt ceiling, which was raised last August to $16.394 trillion and initially expected to last well into 2013, is now estimated by Zero Hedge to be reached in September of this year. When Treasury Secretary, Timothy Geithner, was recently asked how much he would raise the debt ceiling if given only one more request, he responded, “No idea.” After $20 trillion and $50 trillion were floated as ideas, he finally conceded, “It would be a lot. It would make you uncomfortable.” The dire situation in Washington and the dollar is causing states to prepare for a bumpy road ahead.