Whilst the US government worries about the military threat of Russia, and the trade deficit with China, they show no concern for the real problems. To understand what is really happening, all we need to do is to Follow the Money. The flows of real money reveal where global economic power is moving.

The US has not had a real budget surplus for almost 60 years and has run balance of payment deficits every year since 1975. A country that lives above its means for over half a century is technically and economically bankrupt. Its debt should have zero value and so should its currency. But the US has skilfully avoided bankruptcy so far by having the reserve currency of the world and being the biggest military power.

THE WORLD’S MOST INDEBTED COUNTRY

Both Russia and China can see the writing on the wall. They understand that the world’s most indebted country cannot solve its debt problem by issuing more debt. That is why Russia, China together with India are buying most of the global gold production every year.

In May 2018 Russia added another 600,000 oz or almost 20 tonnes to its gold reserves. Since January 2018, when Trump became president, US debt has increased by 6% or $1.1 trillion to $21.1 trillion whilst Russia has added another 9 million oz of gold and are now holding $80 billion of gold reserves.

THE WORLD WILL NO LONGER FINANCE US EXCESSES

So whilst the US economy is taking the road to perdition, Russia knows that the only money that will survive is gold. Just like it always has! The world has for years financed US debt by buying US treasuries. But we are now seeing a marked change. Many countries are currently liquidating US debt paper. They know what will happen to US debt and are trying to get rid of their holdings in an orderly manner to avoid treasuries crashing together with the dollar. This is what will happen at some point in the next 1-3 years. Global investors will panic out of dollar-denominated bonds leading to a crash of both the US currency and dollar debt.