The Dollar Collapse Preparation

This is the summary of another article on preparation in anticipation of the US dollar collapse, Dollar Collapse Preparation Plan, by Mr Jim Rickards.  His free report can be found in

There are four scenarios that can usher in the collapse –  inflation, deflation, market collapse and financial warfare.


In the scenario of inflation, it is simply the value of your money is diminishing.  Between 1977 to 1981, the US dollar lost half of its value in just five years.  The losers will be those who hold dollar deposit, insurance, retirement income, pensions, annuities and savings.  That is, any kind of fixed dollar amount is going to devalue in the event of inflation.  Presently with so much printing of money by the Federal Reserve and yet there seems to be very little inflation.  But it can come suddenly and we have to be ready for it.


Deflation is the opposite of inflation.  Money actually worth more while other asset classes lose value. But governments hate deflation because the value of their debts goes up.  For people who borrow a lot from the bank to buy houses for example, and the value of the houses go down,  they will be caught with margin call from the bank.

Market Collapse

We had seen three such collapses in 1998, 2001 and 2008.  In 2008, people lost 50% of the value of their stocks and houses. And it came very quickly and almost out of nowhere.  Contagion can happen very quickly.  When the subprime loans were having problem, the US hedge funds were selling Japanese stocks to raise cash for margin call.  That is the kind of contagion which cause other stock markets to suffer as well.

Financial Warfare

Inflation, deflation and market collapse have happened before.  But financial warfare is new.   The British ever blockaded France during the Napoleonic wars to cut off French access to imported goods and war materials.  In the current environment, states can use stocks, bonds, commodities, derivatives and foreign exchange to fight other enemy states.  Financial warfare can also include cyber-warfare to hack computer systems. Today, we are so digitized that if these computer systems running the economy are hacked, everything can be brought to a halt.

Sidestepping The Crisis

In 1920, the Weimar Republic of Germany was the best example of a major industrialized economy that faced hyperinflation in history.  A load of bread, which used to cost one Reich mark, eventually cost 4 trillion marks.  Outrageous, isn’t it ?  One German guy, Hugo Stinnes, made a fortune instead and became the richest German then in 1922.  He had the right assets in energy and transportation.  If you have these hard assets such as factories,  you don’t get wiped out.   So how do we diversify ?  We can start with 10 to 20% of our investment portfolio in gold.  Gold is physical and not digital and cannot be wiped out unlike being in the digital accounts in banks.  Gold is a very good insurance policy. Gold should be kept in independent storage places and not in banks in case banks get closed down.  Keep some cash as part of the portfolio.  It is a good deflation hedge.  Gold and cash are hedges against inflation and deflation respectively.  Cash can also give us opportunity to buy important assets at the right price. We can keep money in the bank up to the insured limit only.  Investing in energy and transportation assets are great hedges against inflation. 

The Financial System Collapse Explained

What I am trying to do here is to summarize the main points made in the article “Rickards’ reaction : a model for predicting financial collapse” written by Mr Jim Rickards.  The free article can be found in In his model known as REACTION, there are five stages of collapse –  RE-pricing, ACceleration, Transmission, Irrationality and Oblivion.  It is a good explanation of what will happen in each of these stages. 

Stage 1 : Re-pricng

A market meltdown occurs with the rapid re-pricing of a particular instrument or asset class.  Take for an example in Tesla.  Presently it is so over-valued even though the company is losing billions of dollars and running on unpayable debt.  One day, if a prominent analyst can report that it is destroying value and heading towards bankruptcy and the stock will crash suddenly and dramatically.  Other triggers can be an election result or a criminal complaint.  Wishful expectation can outweigh reality at the moment but when reality takes over,  the asset will be re-priced. 

Stage 2 : Acceleration

Acceleration happens when a repricing overshoots the new reality and continues based on momentum and market dynamics.  The main causes are margin, leverage and stop losses.  Leverage are basically bets in markets.  An explicit leverage appears on the balance sheet in the form of bank loans, repurchase agreements or securities lending agreements.  An implicit leverage exists off balance sheet in the form of derivatives such as options, swaps or futures.  As a result, such leverage amplifies whatever non leverage gain or loss made in markets. To prevent such heavy losses, such bets made by funds can be automated to conduct selling.  And different levels of stop loss selling can be activated as a result as one level selling triggers another and spiraling downwards can happen as a result.  The most famous example was the Oct 1987 stock market crash known as “Black Monday”.  Dow fell 22.6%.  Much of the selling pressure came from automated “portfolio insurance” programs.

Stage 3 : Transmission

The next stage, transmission or commonly known as contagion, occurs when disruptions in one market spread to other markets which seem unrelated or uncorrelated with the initial market.  Take the example of the 2008 crisis.  The crisis was caused by subprime loans in the US.  Because the US hedge funds were unable to off-load the toxic mortgages,  they had to sell their holding of Japanese stocks to raise cash to meet margin calls on the mortgages.  Today, the markets are so densely connected and so contagion will affect all markets altogether.

Stage 4 : Irrationality

Investors know that at the end, only cash is money and all stocks and bonds are merely assets.  When contagion happens, investors may panic and want to convert all assets into money by selling all their assets.  Panic selling leads to more irrational panic selling sending prices spiraling downwards.  When everyone wanted their money back in previous crises such as in 2008, central banks printed money and made it available through asset purchases and swap lines.  The oblivion stage was avoided so far.

Stage 5 : Oblivion

In the next panic, IMF is likely to be relied on for liquidity.  If it still fails, the response will be to freeze all accounts at the banks and brokers. This stage is the oblivion stage or complete system collapse.  In 1933, all banks were closed in the US for 8 days.  Near collapses happened in 1987, 1994, 1998 and 2008.  Total collapse can happen with a number of catalysts such as social unrest, war, infrastructure failure or natural disaster.  More likely, there will be a combination of these events in which one collapse cascades into another and eventually cause a total collapse. As seen so far, the elites have the powerful political, financial and military tools at their disposal to truncate the near collapse. When total collapse happens, the elites have the most to lose.

(I believe God will judge this Babylonian system mentioned in Rev 18:17 by destroying all wealth in one hour through a combination of the above-mentioned catalysts – possibly a natural disaster such as a major earthquake devastating a major financial city or infrastructure failure caused by a solar flare, meteorite hit, or cyber or physical terrorist acts.)


If you prepare and the disruption does not reach total collapse stage, you are none the poorer.  But if you do not prepare and the total collapse comes,  you will suffer the consequences. Either the banks collapse or closed, you cannot lay hold of your money.  So the solution is to look at alternatives in which your money cannot be frozen.  Examples are silver and gold, and physical cash.

For further reading :

Father Of The Fatherless

Psalms 68:4-5

D                        G                        A            D                               Bm

Sing praises to God’s name, extol His name forever and ever,

                 Em                          A                          D

Lift up a song to Him who rides through the deserts.


   G                        A    F#m                Bm

His name is the Lord, exult before Him.

  G                      A                  F#m                        Bm

Father of the fatherless, protector of the widows

    G                  A     D

Is God in His holy habitation.

Truly Finding Life

Mark 8:34-38

Then he called the crowd to him along with his disciples and said: “Whoever wants to be my disciple must deny themselves and take up their cross and follow me. For whoever wants to save their life will lose it, but whoever loses their life for me and for the gospel will save it. What good is it for someone to gain the whole world, yet forfeit their soul? Or what can anyone give in exchange for their soul? If anyone is ashamed of me and my words in this adulterous and sinful generation, the Son of Man will be ashamed of them when he comes in his Father’s glory with the holy angels.”

John Stott paraphrased verse 35 this way :

“If you insist on holding on to yourself and living for yourself and refusing to let yourself go, you will lose yourself. But if you are prepared to lose yourself, to give yourself away in love for God and your fellow human beings, then in that moment of complete abandon, when you think have lost everything, the miracle takes place and you find yourself.

That miracle is the BORN AGAIN experience. A new heart and a new spirit have been born. And the Spirit given by the Lord God has begun the good work in conforming one to be like Christ to love God and fellow men perfectly. That is the turning point of repentance. That is the point reached in realizing one’s spiritual bankruptcy and turn to the Lord for salvation or freedom from the penalty, power and presence of sin in the crucified, living and coming Savior. That is the point of resolve to be a disciple of Christ in denying oneself, taking up the cross and following Him.

Journey Mercies (VI)

Some years ago, when I was driving home in the wee hours of one morning, I got a prompting from the Spirit God to stop at the traffic lights even though the traffic light was already flashing green for some time and there was hardly any vehicular traffic at that time. I obeyed and stopped. A truck sped past the red light on my right. I would have been hit if I had not stopped.

About ten days ago, I thanked the Lord yet again that I slowed down my car at a particular stretch along a main road upon His prompting. All these years in using this main road, I felt that there was no necessity to slow down my car to watch out for cars coming out of the small lanes. That was basic highway code. One reckless car driver sped out of a small lane and crossed the main road into the opposite small lane in a split second before me. I was sure that the driver did not even look left and right before doing such a car stunt. Such reckless driving is only seen in movies. I was again thinking of the odds for such an occurrence.

All thanks to the Lord for His protection.