Fiat Currency Insanity - The Swiss Franc Shocker And TEOTMSAWKI

[The following post is by TDV Chief-Editor, Jeff Berwick]

Things are really starting to go off the rails now.  The End Of The Monetary System As We Know It (TEOTMSAWKI) is coming to a rapid, volatile end.  It may not be this year but at this rate it would not surprise us if it was.

Many anti-bitcoiners like to point out the problem with bitcoin is that it is very volatile.  And, they are right, it is an issue.  Bitcoin recently flash crashed to nearly $150 and has now rebounded to over $200 as the Bitstamp exchange has re-opened without problem as we expected.

But bitcoin almost appears to be a beacon of stability compared to what is going on with the fiat currencies.

Of course, the Venezuelan Bolivar and Argentine Peso are lost causes.  But more important currencies like the Russian Ruble have been incredibly volatile. Scott Freeman wrote his contrarian perspective on the ruble ruckus for TDV: 

Moreover, at least in terms of economics, a devaluation is likely to be a net benefit to the Russian government. This is because most of its costs are in rubles, whereas a significant part of its income is in dollars. According to a recent calculation made by the Moscow Times, at least in the short term each additional ruble per dollar translates into 205 billion rubles per year in additional government revenue. 27 rubles x R205b = US$92 billion at 60:1. While such gains are likely to be partially offset by increased inflation, gains are immediate whereas additional costs are delayed.

Why carry out the devaluation now in the midst of the oil price drop? The answer should be fairly obvious: because the oil price drop provided an excuse – a scapegoat if you will – for something which was both inevitable and planned. According to its own published figures, the Russian government had already expended US$80 billion to defend an unrealistic exchange rate, and anyone with basic math skills could see that a trend reversal was not very likely. It was only a question of timing, and for that, the oil price drop provided an ideal backdrop. The peg was abolished and the rate adjusted. The middle classes tend to be the principal losers in devaluation scenarios, but thanks to the apparent external cause, in this case for the most part they did not blame their government. 

Then, yesterday, the Swiss Franc rose nearly 40% in a matter of seconds after the Swiss National Bank stated in a press release that they are going to charge people even more to hold the money:

Swiss National Bank discontinues minimum exchange rate and lowers interest rate to –0.75%

The SNB is lowering interest rates significantly to ensure that the discontinuation of the minimum exchange rate does not lead to an inappropriate tightening of monetary conditions. The SNB will continue to take account of the exchange rate situation in formulating its monetary policy in future. If necessary, it will therefore remain active in the foreign exchange market to influence monetary conditions.

Interestingly enough, I was in Cancun at the Passport to Freedom conference and was having a drink with Jim Rickards, the writer of Currency Wars, when he told me the news on the Swiss Franc!

I looked at him and he looked at me with the same expression.  It’s happening!

Of course, Mr. Rickards, who has confirmed to me that he is an anarcho-capitalist, has written extensively on the coming collapse of the monetary system as we know it.  Ourselves, as well, at The Dollar Vigilante, have been talking about this since 2010.  At that time I stated that the current monetary system might last five years but no more than ten.

I now am predicting that we might get pretty close to outright collapse this year, but, if not, no more than a few years.

You just have to open your eyes to see the symptoms everywhere.  Oil crashing just how it did prior to the 2008 crash… currencies going highly volatile… the stock market becoming more volatile… these are the tremors prior to a big quake.  Will this be the ultimate event that takes down all fiat currencies and most of the Western financial and monetary systems?  There’s no way to know… but if you still aren’t prepared for it you should be really thinking about it.

How to prepare?  We’ve been saying the same thing for years, get your assets outside of the financial system, internationalize them as much as possible, own precious metals – also outside of your home country – and learn about and get into bitcoin… there hasn’t been a better time to get into bitcoin in more than a year.

The January edition of The Dollar Vigilante will be coming out to subscribers (sign up here) in the next few days and it will be epic.  After spending much of last week in Anarchapulco with Max Keiser, who I have also confirmed and reverted him to anarcho-capitalism, and having spent the last few days with Jim Rickards, we are all in agreement.  Something big this way comes.

Hold on to your hats (and your assets, if you can!).

Questions or comments? Join us at The TDV Blog

The Dollar Vigilante is a free-market financial newsletter focused on covering all aspects of the ongoing financial collapse. The newsletter has news, information and analysis on investments for safety and for profit during the collapse including investments in gold, silver, energy and agriculture commodities and publicly traded stocks. As well, the newsletter covers other aspects including expatriation, both financially and physically and news and info on health, safety and other ways to survive the coming collapse of the US Dollar safely and comfortably. You can sign up to receive our FREE monthly newsletter, our Basic Newsletter ($15/month) or our Full Newsletter ($25/month) with specific stock recommendations and updates at our Subscriptions page on our website at DollarVigilante.com.