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L. Neil Smith's
Number 555, January 31, 2010

"The days of political correctness are numbered"

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Secession and Economic Collapse
by Russell D. Longcore

Special to The Libertarian Enterprise

Economic collapse in the United States is inevitable. But because the dollar is currently the world's reserve currency, when the US gets sick, so will the rest of the world. Tragically, the worst of the consequences for regular people will happen here in America. Let's look at what will happen.

I Thessalonians 5: 3-6 "For when they shall say, Peace and safety; then sudden destruction cometh upon them, as travail upon a woman with child; and they shall not escape. 4 But ye, brethren, are not in darkness, that that day should overtake you as a thief. 5 Ye are all the children of light, and the children of the day: we are not of the night, nor of darkness. 6 Therefore let us not sleep, as do others; but let us watch and be sober."

Today, I'd like us to stop talking about the theoretical side of economic collapse and actually put some specifics out there for you to consider.

The Causes of Economic Collapse

Congress, the US Treasury and the Federal Reserve have flooded the world with paper US money. Not all "money" is a spendable piece of paper currency. Treasury securities are sold to pension funds, insurance companies and to other nations, like China and Japan. They can be traded between parties just like cash. Look over the pie chart below and notice who owns MOST of the US debt... states, foreign nations and the Federal Reserve, who owns a whopping 49% of all US debt.

US Treasury Securities Ownership
(Source: CNBC)

Just the Federal Reserve and foreign government holdings account for over 77% of all US Treasury securities owned. So if the Federal Reserve controls the money supply... and own almost 50% of the Treasuries... and foresee deficits into the future... what choice do they have but to buy more Treasury debt and printing more paper money to pay for it?

The US Federal Government is going to run a TRILLION DOLLAR deficit this year. That means they can do one of four things: (a) tax Americans a trillion dollars to collect the money from the citizens; (b) borrow (sell debt instruments like bonds) to the Fed, pension funds, states, insurance companies and nations of the world; (c) slash government and cut back to a balanced budget; or (d) print another trillion dollars in currency and buy some more US Treasury debt.

Which one do you really believe that Washington will do?

Now, institutional investors aren't completely droolingly stupid (that we can prove). And most of the foreign investors are way smarter than Americans. They know that the dollar has no basis for value. They all know that inflation happens when governments print too much paper money with no underlying value. So, they can look into the future and see that they are going to receive payment in dollars that have shrunk in value. And they see that the more wildly Washington spends money, the more the dollar will shrink. Dollars that shrink in value means their buying power diminishes... the definition of inflation. The US Dollar has lost 95% of its value since the 1920s. Said another way, what now costs a dollar today only cost five cents in 1920.

This is the reason that the other nations of the world are looking for a new reserve currency. This is the reason that the oil producing nations would like an oil bourse, which would accept payment in currencies other than the dollar (Iran just started one). They know how bad off the dollar is and they don't want to get stuck with billions of dollars of worthless currency as payment for their oil.

Here's something else that institutional investors know... that the value of these securities and dollars they hold is a soap bubble on a hot day. It will only last briefly and then it will pop and disappear. Investor confidence maintains most of the value of US Securities, and investor confidence is extremely shaky right now. Said another way, if a couple of major holders of US Treasury securities tried to sell off their holdings next Monday, it would trigger a worldwide panic in the bond markets. Others holding US debt would also try to sell their holdings in an effort to get something for them as opposed to holding worthless bonds unsellable at any price. The bond market would collapse overnight, which would also collapse the rest of the financial markets, including the banking sector.

There are hundreds... perhaps thousands of holders of US Treasury securities. To maintain the semblance of investor confidence, every boldholder would have to sell his holdings with perfect timing. But selling presumes that there is a willing buyer at some price, and that has yet to be proven. Any one of them that makes a mistake could cause the crash of the worldwide bond market, and inevitably the crash of the entire world financial system. So, do you really believe that no one will make the mistake that crashes the system? Remember, much of investor confidence is based upon PERCEPTION, not reality.

Once that happens, the banks and credit companies would cease to function, or at least, their operations would be curtailed for an indefinite time. The term for this event used to be a "bank holiday." Few will see the fun in that holiday.

If you watch the news each week, you'll notice that lots of banks have already closed in America. And the bank examiners and regulators ALWAYS seem to close the banks on Friday. That gives them the weekend to scurry around and fix things if possible.

So, let's explore the string of events that will likely occur on the day the system fails.

It's a Friday. You go to work in a normal fashion. At lunchtime, you swipe your credit card at the restaurant and the transaction is rejected. The cashier says that all the credit and debit card transactions are being rejected, and there must be something wrong with the satellite feed. Luckily, you have cash, and you pay your bill. By the time you are leaving, the manager announces to the whole restaurant that they are not accepting any more new customers until their credit card system comes back online. All customers will have to pay cash.

You go back to work. When you get there, you punch up CNN on your computer and find that the problem is not just that restaurant's uplink. News reports state that the worldwide bond market crashed during the morning, sending the rest of the financial markets into a freefall. The New York Stock Exchange called a halt to trading and closed at 11:30 am. Credit transactions all over the US are not working. Businesses are closing early, or only accepting cash transactions. You and your co-workers leave work early to go to your banks to make a withdrawal of cash to tide you over the weekend. But hundreds of thousands of other people have run to their banks to get cash, too. And because the banks are only required by law to keep about 15% of their assets on hand in cash, they quickly run out of money. Many banks have closed their doors for the day. When you arrive at your branch bank, it's already closed. The sign on the door says the branch will be open again Monday morning. The ATMs do not function... anywhere.

You look in your wallet and there is six dollars there. Payday was today and now you cannot cash your paycheck. You were going to fill your tank on the way home, but now you can't. You wonder how you'll get to work Monday with no gas.

On your way home you drive past gas station after gas station. Many have already closed. Many have erected hastily-scrawled signs that say "CASH ONLY, NO CHECKS." The lines of cars are blocks long.

When you get home, your spouse has had much the same experience. She went to the market on the way home from her job and the market manager had also posted "CASH ONLY" signs on the front door. People were buying up everything they could afford. The milk and bread shelves were already bare. Thankfully, your wife's car has a full tank of gas.

You look in the pantry. A quick look tells you that the family will be able to get through the weekend just fine, although the meals might be a little weird. But by Tuesday, you'll be running out of essentials.

Throughout the weekend, regularly scheduled news shows become 24/7 special reports about the banking and credit interruptions nationwide. Videotape from all over America shows the closed banks, shops and gas stations. 18-wheelers are parked and shut down all over the roads and in truck stops since the truckers can't fill their fuel tanks using credit. And, some of their loads of refrigerated or frozen goods will spoil if the reefer unit runs out of fuel.

The Saturday news shows report that the Federal Reserve has been taken over by the World Bank. The President has signed an Executive Order authorizing the takeover. But since taking over the failed Federal Reserve, they have now replaced all dollar-denominated money with the Euro. They also devalued the dollar's convertibility by a factor of 2. That means when you convert your dollars to Euros, you will only receive less than half of the face value of your dollars. Before the collapse, it cost $1.50 to buy one Euro. Now it costs $3.00. So, your $100 bill will only convert to about 33.50 Euros. The President proclaims a limited window of 30 days in which citizens will be allowed to convert all dollar currency into Euros. Than after that, the Federal Reserve notes will be entirely worthless. The President states that this is the only solution to prevent chaos.

Sunday afternoon your boss calls. Your suppliers cannot get product to your business since the truckers cannot move cargo. He tells you to just not come in Monday but to call him for instructions about Tuesday.

Monday brings no good news. More and more people, desperate for cash and panicked by the news broadcasts, have crowded in a riotous mood at banks all over America, but they're turned away. News film shows inner city markets, gas stations and businesses that have been looted over the weekend. And the looting will now begin to spread out into the suburbs. Small bands of armed looters openly storm into businesses and take what they want. News stories show business owners sitting outside their front doors with rifles or shotguns in their arms. Crime mushrooms in only a 72-hour period. The police are completely overwhelmed.

Over the weekend, you and your family have combed the house for spare change. Between your change jar, coins in the couch and in drawers, you've come up with about twenty dollars. All the rest of your money is in your uncashed paycheck and in your bank account... unavailable. You have a no gold or silver coins. You have a couple ounces of gold jewelry that could be sold for cash. But what kind of cash? Should you hold onto the jewelry or sell it? Perhaps you should trade it for gold or silver coins.

On Sunday evening all TV and radio networks simulcast a Presidential address. In a terse statement, the President declares martial law in effect immediately. From now on, you will see troops on the streets, and all police officers will be dressed in SWAT team military gear, carrying AR-15 rifles.

On Monday, you call your boss and ask if he can take back your paycheck and pay you in cash. He cannot, since the business account is frozen just like everyone else's accounts. He also tells you not to come in at all until the credit and banks work again. By the way, you're not getting paid for your time off.

On Tuesday, you go to your local supermarket. When you arrive, you find armed guards at the entrances who search you for weapons before you enter. Upon entry, you find that many of the shelves are empty. You're able to buy some canned goods, but that's about it... and you only had $26 bucks anyway.

By Thursday, The World Bank has replenished some banks' cash reserves. Some banks have re-opened for only a couple hours per day, and have restricted service to drive-up service only. Most people park their cars to save fuel and line up on foot to use the drive-up service. The employees that do show up for work are locked safely inside the branch away from the angry mobs. Women, who comprise most of the branch bank work force, are too scared of mob violence at the bank. Some refuse to work and some simply quit.

But many banks cannot reopen again, since the larger financial fallout has made them bankrupt.

By Friday, news programs show story upon story of armed thugs breaking into homes, looking for food, cash, valuables... and guns. Other stories feature homeowners who fought off robbers and looters with their own weapons, and showed film of the thugs lying dead in the front lawn. Cops are nowhere to be found, responding to calls more serious than simple robberies.

Only one week has passed in America, and things are only going to get worse. How are you going to feed your family? How are you going to keep the utilities on if you cannot work, earn money, get paid in cash and pay the utility companies? How will you pay if you need medication at your pharmacy, or need medical treatment? How are you going to keep your cell phone working? How are you going to feed your pets?

All of your neighbors are in the same mess you're in. But now, you're meeting together to see about ways to band together for safety, protection, and sustenance.

Now, you will see prices of all goods and services skyrocket. Inflation of 200%... 300%... 500% are common. Soon, those annual rates of inflation might become weekly rates.

A black market of goods and services springs up quickly. But the Federal Reserve or World Bank Euro currency is not accepted in this black market. Only gold and silver coins are accepted as money. For those who possess gold and silver coins, most goods that are unavailable to paper money users are readily available.

What's happening to the poor... the sick... the elderly? Actually, the elderly may do better than you do, since the elderly are known for keeping more cash at home than most families. But this reputation will also make them prime targets of criminals who will rob them of their cash and valuables. For those who cannot fend for themselves, hunger and death are a very real possibility.

And folks, we are less than two weeks into the economic crash.

If the economic crash lasted a month, or two or three months, America would see a complete breakdown of society, with massive death tolls due to starvation and crime. There are going to be millions of men and women whose jobs will simply vanish, never to return. Millions of businesses will close, as consumers deem them to be unimportant to survival. What will these people do to earn an income? What skills do they have?

Eventually, states are going to have to decide if they are going to allow themselves to be run by Washington, or if they believe they can do better. One of the only ways to lessen the cultural chaos that has been portrayed here is for an American state to secede from the Union and establish a gold/silver monetary system. Even secession after the economic collapse will not protect anyone from the short-tem fallout of being unprepared to weather a disaster. But secession with a gold/silver monetary system is the ONLY possible method of cutting short the disastrous effects of the inevitable economic collapse. No one believes that Washington will ever again accept Constitutional restrictions and a gold standard for money. So, absent any help from DC, state secession is the only possible solution for governance and the only way out of economic collapse.

In conclusion, let me say that I am not trying to convert the sycophants of tyrants into liberty lovers, although that might happen in isolated incidents. I am writing to give crucial information to any citizen who is disturbed about America, and to encourage rebellion and sedition by the rest of the Americans who already know they are DC slaves.

Secession is the Hope For Mankind. Who will be first?

DumpDC. Six Letters That Can Change History.

© Copyright 2010, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

Russell D. Longcore is an insurance claims consultant based in Marietta, Georgia. He is the author of the hot-selling book, Insurance Claim Secrets REVEALED! which has been a Number One book at Amazon continuously since October 2007. His second book, Commercial Insurance Claim Secrets REVEALED! has just been released in Ebook format.

Russell also owns an insurance quote service offering competitive insurance quotes for every kind of insurance imaginable. What sets this website apart from all other quote sites is that Russell also shows consumers how to take control of their insurance claims and add hundreds or even thousands more dollars to their claim settlements.

Russ can be reached at:
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