The world’s currencies are being subjected to incredible devaluation forces, the likes I’ve never seen in 25 plus years I’ve been following the economy. In this race to the bottom, the real losers are those with savings who squirrel away pennies day after day in the hope of retiring before their health gives out. I know people in both Canada and the United States getting up before the sun and working three jobs to make ends meet. The age of growth and prosperity, it seems to me, is over. The King is naked, but in this twisted story he knows it while everyone else is pretending everything is normal and under control for fear the kingdom is about to get “repo’ed”.

If you agree with the gloomy picture I’ve just created, then you’re probably working out the long term consequences in your own mind. I’m all for raising a glass and politely avoiding looking down when the leader walks past me, but I’ll confess my eyes are discretely scanning the banquet hall for signs of a way out. I have this feeling that the first ones out may be the few that survive the insanity about to hit the proverbial fan. The challenge, in my view, is to make it to the exit without looking like you’ve accidently noticed smoke and flames in the backroom and the executioner’s wagon drive up through the front window with some extra gallons of gas.

Information has never been so readily available. It’s everywhere, it’s on everything. I used to love sitting with my charts and drawing my little lines to find patterns in stocks. When it was just technical analysis, it was all great fun. A nice cup of tea and endless possibilities. See something? Now these trends are pushed and pulled by government policies making unwarranted and deep changes in investor moods and steering entire sectors at a whim. Combine these forces with inhuman computerized algorithms and you’ve got a dangerous recipe for a “black swan” event that is both steered and unintended at the same time.

I suspect these forces will push just a little too much or pull back too quickly one of these days and send the first silicon domino (electronic trading) flying. The triggers are independent, but the aim is always the same. It has to be clear as day to everyone that the aim of any computerized system is to reduce and avoid risk while capitalizing on opportunity. It is this risk aversion which will mess with us. A sharp fall in a sector or key series of stocks (or commodities for that matter) could cause one mutual fund to dump shares. This in turn triggers the overall market which in turn sends smaller and smaller players into automatic selling. Combine this with possible automatic margin calls on a mass of small investors and that’s a room filled with people running for their lives. That’s what will bring us “the perfect storm.”

How do I dare use that cliché, right? “The perfect storm”! If we get back to all the information I mentioned earlier, we start seeing that it’s not just the mechanics of the system that has changed. The large players, the governments and central banks are out there right now fighting a war. It’s not a war of missiles. It’s not EVEN a war of WORDS. It’s a physiological weapon designed to end up “not as bad as everyone else”. What in the world am I talking about? Let’s look at China for starters. They spend years accumulating US dollars. Everyone, including the Chinese at that point I’m sure, was comfortable with a United States dollar. Hey, it’s strong(er) and it’s needed for lots of American domestic products that foreign countries want and need. Need oil? We’ll need that in US dollars please. Need resources, yes, we quote those in US dollars as well. Want the US to defend you if your neighbor looks at you funny? Hint, Hint, YOU better have US dollars in your reserve.

I’ve been told over and over again that the dollar was the ultimate store of value. I naively accepted this as a fact until I discovered precious metals back in the early 2000s. If the dollar is the place to park your value, then why are so many central banks buying gold like the barns about to ignite? I’ll tell you why; money burns. China can hear the thunder of an impending disaster. They can’t ring a bell and scream or panic will set in, but they have done the equivalent while maintaining a resemblance of order. They have opened up gold investing in China on a grand scale and encourage their population to invest, to store their value, in this “medium” of value, namely gold!

I’d love to keep adding to this picture, and I have lots more to add, but the point is that you’d better start thinking about the “what ifs” for the sake of your family and your community. A friend once told me, when telling me there was a real estate crash coming, “if I’m wrong, you sold real estate for too little. If I’m right, you may not have to suffer a large loss on your savings.” My friend proved to be right, although I confess I was slow to see the ominous pattern forming. Once my mind was made up and I executed I discovered that I was nonetheless early in the later arriving panic, so it worked out.

Bit by bit, countries are starting to bypass the US dollar to buy world commodities such as oil. As these pillars of support for the dollar get taken away, you have to ask yourself just what it going to keep holding it in place? Some say the Federal Reserve Bank BUT How long can that last?

Perhaps, like the king’s cloths, a willingness of too many Americans to ignore the fact that there’s little more than air as support and they think it will be enough to hold up the dollar which classically represents all “fiat” paper money together. I don’t know about you, but you’ll find me slowly and calmly making my way to that exit behind the curtain, just in case I’m right. I may be a bit early again, but I can tell you that I sure don’t want to be late leaving for what is likely to happen. If you catch my eye on my way out ask yourself: is that guy crying or did he get smoke in his eyes?

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Bob Pellerin is the author of articles as well as several books including  “Death of A Sanitation Engineer” available at amazon.com and other online retailers.