Tuesday, July 15, 2008

Scary future

part of the article from http://futurefastforward.com/component/content/article/188

UMNO'S AND BUMIPUTERAS' DEATH WISH - THE TREACHERY OF ABDULLAH BADAWI - By Matthias Chang (LATEST UPDATE) Future FastForward, Sunday, 13 July 2008 05:26


The US is the largest debtor country in the world and its current account deficit (in the US$ trillions) cannot be balanced at any time in the near future (i.e. 20 years minimum). The dollar is now toilet paper. Tan Sri Hassan Merican, Chairman and President of Petronas has warned that very soon (between 2010 to 2012) we will be net importer of oil. There is no Plan B for the Bumiputeras and their future generations when the oil tap runs dry. In the short term, there will be very painful adjustments and disillusionment. This is also a given.

(iv) Impact of the US$ Toilet Paper

Most of our exports are paid in US$ toilet papers - crude, palm oil, electronics etc., and Malaysia is at a huge disadvantage.

Let me explain to those who have no experience of selling goods overseas and getting paid in US$.

When a Malaysian exporter gets paid in US$, the company does not get physical dollars, like when one exchanges ringgit for US$ with the Money-Changer at the shopping mall or at the local bank.

The foreign importer's bank transmits "digital money" – these are mere digits in the computer to the computer of your local bank holding the dollar account. So when the company wants ringgit, it will have to exchange the "digital dollars" for ringgit. This is done by the local bank via Bank Negara, our central bank. At any one time, Bank Negara either prints extra ringgit to exchange for the digital US$ or creates "credit digits" in the account of your local bank. When the exchange rate is RM3.8 to 1 US$, Bank Negara must create "new ringgit" to facilitate the exchange. As a result, there will be more ringgits in our economy and this is the principal cause for our domestic inflation!

This is also how Bank Negara accumulates our country's foreign (dollar) reserves which I believe stands at approximately US$128 billion.

What this means is that the so-called mighty US is buying goods from all over the world for free. The US pays for its imports by creating digits in the computer as payment for the imports. When we say that the US is in a current account deficit, it means that the US is buying more than what it sells. To overcome the shortfall in revenue from its declining exports, the US Federal Reserve creates money out of thin air, by creating "digits" in their computers (i.e. digital money). It is a global fraudulent scam, but the US has been getting away with it for so many years, because it is a big bully and the US demands that countries must accept its "digits" or else face the threat of an invasion.

(v) When Dollar Goes Into Free Fall

When the dollar goes into a free fall, as it assuredly will, the value of our dollar reserves plunges. We may have US$128 billion worth of "digits" but they will not buy US$128 billion worth of anything.

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