Damon Vickers is the author of The Day After the Dollar Crashes.
Judging from the book title, it’s not surprising that he is one of the most vocal media personalities calling for the demise of the US dollar and US Treasuries.
Vickers is also the head of Nine Points Capital Partners, a private investment firm based in Seattle, Wash.
He speaks to IBTimes about his bearish view on the US dollar.
IBT: You’re talking about a dollar crash, the end of the world as we know it, and the rise of a new world order. What makes you think this will all happen?
Vickers: The imbalances that are building in the Westernized economies are like a fault line of an earthquake. Tensions will build up on the fault line for only so long before it rips. The tension is the mass and size of the global debt, in particular those of the United Sates.
The breaking point of the fault line is kind of where we are right now. There simply isn’t enough demand to absorb all the funding needs of the US economy, nor of the Western economies.
That’s why QE2 exists. The US is buying their own paper.
IBT: So we are manufacturing our own demand.
Vickers: Right. For example, in a store, cashier number 1 sells a beer to cashier number 2, and somehow this is recorded as a sale, but there is no sale taking place.
In the US, we may want to vilify China or other Asian countries, but it’s simply economics. The cost of producing something in the United States is disproportionally high compared to many other countries, and the US is just not competitive.
This gives the United States no means to repay the debt, because the only way to repay this debt is to export our way out of it.
What can we do?
We either have a global war and we sell weapons into that war, or we start producing things. Or, we have the crisis we lay out in our book The Day After the Dollar Crashes, which begins when China stops buying US Treasuries. Then, in a series of steps that happens over 14 days, all hell breaks loose across the world.
There will then be a decision to reset all Western debt and create a new currency.
IBT: How far away are we from all of this? Is there an event zero that triggers it?
Vickers: It’s China saying no to the buying of US debt. But without an official announcement, we’re actually already there. We’ve seen China make an announcement that they will use their own currency to settle trade with Russia. That’s a huge announcement!
If we really look at it, a company is bankrupt when it has no more customers and they’re no longer profitable. The US is long since past that. The US is functionally bankrupt right now.
IBT: What can Americans do to protect themselves from this? Is it buying gold? Or even canned goods?
Vickers: If you eat too many canned foods, you’ll have health problems, so I don’t recommend them. But maybe you should have a supply of dry goods. Maybe you should have a 6 to 9 months supply of food, particular in the period we’re in right now.
IBT: Are there any financial indicators to watch to anticipate this crisis?
Vickers: You want to watch the dollar against a basket of currencies. If you get a break in the dollar below a certain price, and we’re watching what that level is, we will move aggressively, as an investment firm, to start placing trades to benefit from the dollar’s meltdown.
IBT: What are some examples of those trades?
Vickers: You can short the dollar. You can hedge with options and leverage yourself against the dollar. We might long currencies with more resources, like the Aussie dollar, the Swiss franc, or the Canadian dollar.
But the truth is, in an all-out meltdown, everything goes down, so there are few places to hide. In a systematic, domino-like, cascading event of Western currencies collapsing, there won’t be many places to hide.
[After these currencies collapse, and there is a] reset and the arrival of a global government, we have the opportunity to think about how to do it right. If you start from zero, what would you want the world to look like? The time is now to think about that.
IBT: What’s one message you’d like to get across from your book?
Vickers: May we live to see a day when the world is united in peace and harmony, when we see each other through our hearts and not our eyes.
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