Is the Bubble About to Burst?

by Gary Kah

Yes, it's true! The Federal Deposit Insurance
Corporation (FDIC), the organization that "insures" your bank
deposits, is officially broke. It ran out of money in early
October due to the large number of banks that are continuing
to fail.1 This news came in spite of the fact that
the FDIC had raised its rates to member banks earlier in the
year in an attempt to shore up its dwindling reserves.

When the financial crisis began in September of
last year, the FDIC reported that 117 banks were in trouble.
Since then approximately 80 percent of the banking companies
on that list have gone under. To make matters worse, according
to the FDIC the current number of troubled banks has risen to
over 400.2 Let's think positive and say that only
50 percent of these institutions will fail during the next
year; that could mean the closing of another 200 banks – twice
as many as in the last 12 months. (Seven banks failed in just
one day on October 23rd.)3

The FDIC has a special arrangement to borrow up
to $20 billion of additional funds from the US Treasury in an
emergency, but that will only get the agency through a few
more months. What happens when that fund dries up?

At some point the American people will realize
how dire the circumstances are and, having lost confidence in
the system, will seek to withdraw their money before their
banks go under as well. If you believe such a scenario is
unlikely, consider the fact that the FDIC recently announced
it expected to be "in the red" through 2012.4

This situation is compounded by the scores of
jobless Americans who are depleting their bank accounts in
order to survive. Although the government reports the
unemployment rate to be at 9.8 percent, the real unemployment
rate is closer to 17 percent. Millions of Americans have
stopped looking for jobs or have taken on part-time positions
and therefore no longer appear in the government's statistics.
This drain on wealth is putting an increasing number of banks
at risk.

The US Government is also being affected. As a
result of the dramatic rise in unemployment, Uncle Sam is
taking in less and less tax revenue. The government's tax base
is faltering not only because of fewer jobs and a slumping
GDP, but also due to the colossal amount of this year's tax
write-offs resulting from last year's business and investment
losses. Economist John Williams, who publishes the website
Shadow Government Statistics, recently reported that the
federal budget deficit for 2008 was $5.1 trillion based on a
GAAP accounting basis. And, calculations from the 2008
Financial Report of the US Government showed that the negative
net worth of the federal government had increased to $59.3
trillion, with total federal obligations now totaling $65.5
trillion (based on GAAP).5 This figure is expected
to climb to more than $70 trillion by the end of this
year.

Where is this Leading?

It's really quite simple: We are broke as a
nation! Were it not for the escalating amount of money the US
Treasury is printing and the funds that we are continuing to
borrow from foreign sources, our economy would have already
come to a grinding halt. Many people who can see the
handwriting on the wall are wondering how much longer we have,
what will happen next, and what they should do to prepare.

Although I have my opinions, I have been
hesitant to share them – especially when it comes to a
timetable for future events. This is because of my belief that
nothing happens unless God allows it. Global planners may do
everything possible to create financial chaos in order to move
the US into a new world monetary system, but if God chooses to
intervene, it will not happen. Having prefaced my opinions
with this statement, I will share with you the following
thoughts.

I believe there is a growing possibility that a
more serious financial collapse could occur between now and
the end of 2010. I also believe that Barack Obama is "the
anointed one" of the international elite and has been
designated to take the United States into the new world order.
As long as he is making unhindered progress toward their
goals, they probably will continue to pump a measure of money
into the US economy to create a "softer landing." However, if
resistance to Obama increases to the point where he is no
longer able to effectively push forward their (and his) agenda
for world government, they could pull the financial plug and
throw America into a crisis that makes our current situation
seem benign. Globalization efforts by the international elite
could soon be accelerated through a designed crisis if they
fear Obama might lose his majority in the House and Senate in
next year's election.

Most of the pieces are in place and our economic
sovereignty has, for all practical purposes, already been
handed over to international interests. This took place,
unbeknownst to the American public, through agreements made at
the G-20 summit in London (last April) and was finalized at
the summit in Pittsburgh (this September). As a result, a
group known as the Financial Stability Board – composed of the
top central bankers of the world – is now running the
show.

From now on the FSB will be making the most
important financial decisions impacting the United States and
the rest of the world. Six of the twelve national members on
this board are from European countries. The United States,
with a GDP three times that of the next largest G-20 member
(Japan), will have only one vote.6

Europe's top financiers are making a strong case
against the US dollar. Joining them are the Arabs, Brazilians,
Russians, Japanese, and Chinese. On September 6, Cheng Siwei,
a top member of China's Communist hierarchy and the former
vice-chairman of the Standing Committee stated,

If they [the US Treasury] keep
printing money to buy bonds it will lead to inflation, and
after a year or two the dollar will fall hard. Most of our
foreign reserves are in US bonds and this is very difficult
to change, so we will diversify incremental reserves into
euros, yen, and other currencies.

Mr. Cheng went on to say, "Gold is definitely an
alternative, but when we buy, the price goes up. We have to do
it carefully so as not to stimulate the
markets."7

China bears close watching, as it is the world’s
largest holder of US and other foreign bond reserves – valued
at more than $2 trillion.8 If it ceases to buy US bonds, or if
it were to transfer a substantial amount of its reserves held
in US bonds into gold and other more stable currencies, it
would push the price of gold and these other currencies
significantly higher while driving the dollar down.

On a related front, Gulf Arabs are planning –
along with China, Russia, Japan and France – to stop using the
US dollar for oil trading. On October 6, The Independent
reported that leaders of these countries are,

...moving instead to a basket
of currencies including the Japanese yen and Chinese yuan,
the euro, gold and a new, unified currency planned for
nations in the Gulf Co-operation Council, including Saudi
Arabia, Abu Dhabi, Kuwait and Qatar.

According to The Independent,

Secret meetings have already
been held by finance ministers and central bank governors in
Russia, China, Japan and Brazil to work on the scheme, which
will mean that oil will no longer be priced in dollars. The
plans, confirmed to The Independent by both Gulf Arab and
Chinese banking sources in Hong Kong, may help to explain
the sudden rise in gold prices... The transitional currency
in the move away from dollars, according to Chinese banking
sources, may well be gold. An indication of the huge amounts
involved can be gained from the wealth of Abu Dhabi, Saudi
Arabia, Kuwait and Qatar who together hold an estimated $2.1
trillion in dollar reserves.

The report continued:

The Chinese believe... that the
Americans persuaded Britain to stay out of the euro in order
to prevent an earlier move away from the dollar. But Chinese
banking sources say their discussions have gone too far to
be blocked now. "The Russians will eventually bring in the
rouble [ruble] to the basket of currencies," a prominent
Hong Kong broker told The Independent. "The Brits
are stuck in the middle and will come into the euro. They
have no choice because they won't be able to use the US
dollar."

"...These plans will change the face of
international financial transactions," one Chinese banker
said. "America and Britain must be very worried. You will
know how worried by the thunder of denials this news will
generate."9

Transition Underway

Even though the stated deadline for the
completion of this currency transition isn't until 2018, the
dominos have already begun to fall. Iran, for example,
announced in late September that it would henceforth be
selling its oil in euros rather than dollars.10 The
nations of the world have begun moving away from the dollar,
and the Obama administration is doing little, if anything, to
stand in the way of these developments.

Meanwhile, the 2009 Trade and Development Report
issued by the UN Conference on Trade and Development in
Geneva, presents a blueprint for getting nations on a new SDR
(Special Drawing Rights) world system in the near
future.11 If they succeed it would facilitate a
rapid move away from the US dollar as the world's main reserve
currency.

There are many complex developments and plans to
sort out; the aforementioned represent just the tip of the
iceberg, making it difficult to project exactly how events
will unfold. But here is what we know for sure. The financial
movers and shakers of the world want to replace the dollar
with a new international currency. They will do whatever it
takes to make this happen and are eager to do it sooner rather
than later, while Barack Obama is at their beck and call.

What we do not know is exactly how long this
transition will take, and whether the US will first be moved
into a regional currency or if this step will be by-passed in
favor of an immediate global currency. There are other
questions, including: How much resistance will there be from
the people of the United States and Britain, and their
legislative bodies? Will there be a partial or complete
collapse of our economy? Will other types of crises be
precipitated (via terror, war, disease, etc.) to accommodate
this change? And, will God in his mercy intervene to give us
more time? These variables make it impossible to set dates
with any degree of accuracy. However, it is important to get
prepared now in case things fall into place quickly, which
they could.

Every indication suggests that when the new
currency is issued, it will involve a major revaluation. Rumor
has it that if the new currency were to be released soon
(within the next year or so) we could expect a 6:1
devaluation. In other words, if you have $6,000 in a bank
account, you would have only 1,000 units of the new currency
when your bank reopens. If such an event were to occur, banks
would shut down for a period of time, meaning you would not
have access to your accounts and probably not your safety
deposit box for several days to several weeks. In some cases
involving currency revaluations in other countries, bank
authorities have seized the contents of citizens' deposit
boxes. For this reason I would consider moving valuables out
of my box to another location – possibly a fireproof safe in
my home.

What to Do

Although my professional background is in
economics and international business, I have been reluctant to
tell people what to do with their personal finances, as
everyone's circumstances are different. Furthermore, I am not
a professional financial planner or advisor. However, because
so many people continue to call or write us on this matter, I
will give an example of what I personally would do if I had
significant money to invest.

First of all, I would get out of debt, while
giving generously to biblically solid ministries who are
speaking the truth. But if I had cash left to invest after
doing so, here is what I would do with it. I would keep up to
5% of my money on hand in the form of cash. This would be for
short-term purchases of groceries, gas, and day-to-day items
in case a banking holiday is declared where banks would shut
down for a few days or weeks before introducing a new
currency. Eventually all old currency will be worthless unless
it is traded in for the new, so I would not hoard large
amounts of cash – only enough to get through a brief period of
time. All of my other investments would be geared toward
off-setting the affects of a currency revaluation that would
likely occur if the dollar is replaced with a new regional or
global currency.

I would plan to remain in such investments until
the new currency is introduced and any revaluation of the
"old" US dollar has taken place. After this transition has
occurred, some or all of these investments could be traded
back in for the new currency. By temporarily putting my
dollars into items more likely to hold their value it would
help off-set any losses that might occur with a revaluation.
For example, if I would eventually be given only one new
currency unit for every six dollars, then it would have been
better if I had put my dollars into gold or other stable
currencies and then sell them off in exchange for the new
currency once it comes out.

This is how I would invest my remaining 95
percent. I would put 10% of my money into silver coins that
could be used to barter for goods and services. Silver is
perhaps the most practical of the precious metals because of
its affordability and potential use as a bartering item.
Historically, it has at times been valued at 10% of the price
of gold. It is currently trading at less than $20 an ounce (2%
the price of gold). I consider this to be a good price.

Another 25% of my portfolio would be put into a
combination of gold and platinum, which should continue to
trade in the $1,000 range for the near future – possibly going
significantly higher if China and other countries continue to
buy gold or if the crisis intensifies. I would also consider
putting 25% into Swiss francs or a combination of other stable
foreign currencies. All such purchases would depend to some
degree on whether prices are favorable at the time I consider
the purchase. Also, the percentages of what I invest in would
be conditional on the amount of wealth I have. Someone with a
million dollars, for example, would invest differently than
someone with $10,000. I am basing my scenario on what I would
do with $100,000.

I would invest the remaining 35% in survival
related items. I would purchase a few acres of land with
available firewood and a fresh spring that could also be used
for growing food. The fact is people can't eat silver and
gold. Food and water are necessary for survival. In planning
ahead it would be a good idea to keep some extra food and
basics on hand for difficult times.

As Christians, anything we do to prepare should
be done unselfishly, keeping others in mind. If we are in a
position to help others when things come crashing down, it
will be a strong testimony to those who are unprepared.
Difficult times could present unique opportunities to share
the gospel of Christ with those who've been unwilling to
listen before.

While Christians should be prudent and plan
wisely as the Lord directs, our number one focus must be on
our relationship with Him. We should use this time to grow in
our walk, learning to depend on His direction in every facet
of our lives. Just getting our houses in financial order won’t
be enough in the days ahead. We will need supernatural
discernment and perseverance that only the Holy Spirit can
bring. Draw close to Jesus and He will provide the strength
you need to stand firm while facing the challenges ahead!

For God did not give us a spirit of fear,
but a spirit of power, of love, and of a sound mind. (2
Timothy 1:7)

CNN Headline News, October 15, 2009.

MarketWatch, "FDIC: Number of troubled banks
rises to 416,", Boston, August 27, 2009,
http://www.marketwatch.com/story/story/print?guid=637EA711-9253-43CA-89E8-22193EF436A5

Fox News, October 23, 2009.

CNN Headline News, October 15, 2009.

WorldNetDaily, From Jerome Corsi’s Red
Alert, "It's Official! U.S. government is bankrupt," October
18, 2009,
http://www.wnd.com/index.php?fa=PAGE,printable&pageId=113366.

Dick Morris, "The Declaration of
Independence has been Repealed," April 6, 2009,
http://www.dickmorris.com/blog/2009/04/06/the-declaration-of-independence-has-been-repealed-#more-568.

The Telegraph (U.K.), "China Alarmed by US
Printing Money,", September 6, 2009.

Ibid.

Robert Fisk, The Independent, "The demise of
the dollar," October 6, 2009,
http://license.icopyright.net/user/viewFreeUse.act?fuid=NTIyMDAyNg%3D%3D.

Ibid.

United Nations Conference on Trade and
Development – Geneva, "Trade and Development Report, 2009,"
Overview, pp. 10-13.