Britannia Radio

Porter Stansberry: The U.S. is defaulting now

Thursday, February 18, 2010 From Porter Stansberry in the S&A Digest: I've spent this week trying to figure out what will happen as the U.S. continues to default on its debts. And make no mistake, the U.S. is defaulting. By that I mean it can no longer find any real creditor to finance its obligations, so it is making ends meet by having the Federal Reserve paper over our funding gap, which I estimate is at least $500 billion per year. I know what will happen in general... Inflation will rise, interest rates will soar, and credit, generally, will be harder to come by. But the big question is whether or not there will be a real run on the dollar. I estimate our annual foreign borrowing requirements are now around $2 trillion per year. That's the foreign contribution to our annual deficits plus the amount of foreign debt we must roll over each year. China has stopped buying. What happens if we have to paper over the entire $2 trillion? It could happen. In fact... I think it will happen. And here's the curious part. U.S. Treasury and agency debt makes up about 60% of the world's banking reserves. So... what happens when the world's reserve currency defaults? I don't think anyone knows for certain. But I know a few things are very likely to happen – soaring hard commodity prices, for example. In my latest newsletter, I tell my subscribers how to protect themselves from a full-blown dollar crisis. It's coming. Back in my November issue, I explained the secret of the Greenspan-Guidotti rule. It accurately predicts when countries will experience a currency crisis. And it flashed a warning signal about the U.S. in 2009. One guy I know who understands Greenspan-Guidotti is George Soros. You might not like his politics, but no one in history has made more money trading currencies. He put on his biggest trade in years last December – just after I wrote my analysis of the Greenspan-Guidotti rule and U.S. finances. What did Soros buy? More than $600 million of gold. He knows what's going to happen. If you don't understand the Greenspan-Guidotti rule, you really ought to read my newsletter. This one idea alone is worth more than the price of admission. Crux Note: The S&A Digest comes free with a subscription to Porter Stansberry's Investment Advisory. To learn more - and get access to Porter's latest issue due out this week - click here. More from Porter Stansberry: What you must know about bankruptcy of the United States Porter Stansberry: The 3 types of stocks you should always short Porter Stansberry: The high-return/low-risk vehicle investors should place most of their money in

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Porter Stansberry | US dollar | Cruxallaneous