Russian Dollar Dump Could Crash Financial System-John Williams

John Williams: Gold Now, Russia-US Dollar and HyperinflationBy Greg Hunter’s  

Economist John Williams says if Russia sells its U.S. dollar holdings, it could trigger hyperinflation.  Could it collapse the financial system?  Williams contends, “Yes, it certainly has a potential to do that.  Looking outside the United States, there is something over $16 trillion in cash, or near cash.  That’s about the same size as our GDP.  . . Nobody has wanted to hold the dollar for some time.  The dollar, fundamentally, is weak.  It couldn’t be weaker.  All the major factors are against it.  It’s just a matter of what would trigger the massive selling.  Nobody wants to hold it.  The Russians start selling, and you have China indicating a general alliance here in terms of what’s transpiring.  If the rest of the world believes this is what’s going to happen, people who have been wanting to get out of the dollar for some time very easily could front-run the Russians.  The scare is on.  People will try to get out of it as rapidly as they can. 

What would happen if there was massive dollar dumping globally?  Williams says, “It would be disastrous for our markets.  All those excess dollars coming in, with bonds being sold, interest rates would spike.  The stock market would sell off and we’d see inflation.  To prevent that and try and keep things stable, the Fed would tend to buy up those Treasuries.  It would intervene wherever it could to stabilize the circumstance.  It’s going to be very difficult, and it’s going to be very inflationary.  Williams goes on to say, “You have to keep in mind, back in 2008, we had one of the greatest financial crises the United States had ever faced.  The system was on the brink of collapse at that point in time.  What the Fed and the federal government did was spend every penny they could, anything they could create or anything they could guarantee.  They did everything they could possibly do to keep the system from crashing.  They guaranteed all bank accounts.  So, they saved the system, but now what they did has not borne fruit.  We have not seen an economic recovery.  We have not seen a return of health to the banking system.  So, the system is very vulnerable; and if the Russians carry through with their threat, you have, indeed, the risk of it collapsing the system.” 

Is this the end of the world as we know it in the U.S.?  Williams says, “It does have the effect of creating a hyperinflation, which I think it would.  It’s the type of circumstance that will not allow life to continue as we know it because the U.S. is not able to handle hyperinflation.  We’re not structured for it.  Zimbabwe had one of the worst hyperinflations that anyone has ever seen.  They were still able to function for a while because they get paid in a rapidly depreciating currency.  It was so rapid it became like toilet paper overnight, but they would go to a black market and exchange it for dollars.  We (the U.S.) don’t have a black market to escape from our dollars.  Gold is probably the closest thing to that.  Gold will tend to rally here as the dollar sells off, baring very heavy intervention by the central banks which you may see.  The fundamentals will eventually dominate, and you will see a very weak dollar and very strong gold coming out of this.” 

Don’t look for the U.S. dollar as the safe haven because Williams says, “Historically the dollar has been the safe haven in a political or financial crisis, but that hasn’t been the case for four or five years now.  Instead, what you have seen is a flight to other traditional safe havens such as gold and the Swiss Franc.  The dollar has lost its magic.  Nobody wants to hold it.  So, if the Russians follow through and convince the rest of the world that they are going to do it and it looks like China may join them, a lot of countries will want to dump dollars and get out ahead of the crowd.”  

On the overall economy, Williams says, “It is rolling over, and the numbers are starting to show we are starting into a new recession.  You should have an actual quarterly contraction in the first quarter GDP.  One of the best indicators of that are retail sales, and they gave a clear recession signal in January.  That’s the strongest recession signal since September of 2007, which is three months before the ‘Great Recession’ took place, and I’ll contend it never ended.” 

Join Greg Hunter as he goes One-on-One with John Williams of 

(There is much more in the video interview with John Williams.) 

After the Interview: 
Williams says that some are blaming the bad economic numbers recently on bad weather.  Williams says that is nonsense and adds, “It is much more than bad weather.”  Williams told me he expects “gold to take off in response to the flight from the U.S. dollar.”  Williams says the flight from the U.S. dollar would have happened without the Russia/Ukraine crisis.  Williams says, “The Fed will likely intervene to mitigate dollar problems but the effects are doomed,” and went on to predict the Fed taper of bond purchases would likely continue to help support the dollar.   (Click here for the home page.)

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    • orin

      My degree and area of study is the end of Empires. I know most people in their right minds believe that G.W. Bush took us into war for unknown personal reasons. But what I’m finding out the more that I study, is that he just may have been trying to keep our way of living in the USA from crashing. He may have bought us a little time before the shit hits the fan with our economy. Remember that all oil sold on the planet is sold in dollars. The first thing that was done by US Troops when they captured the capital of Iraq was to go in the the Ministry of Oil and change their books from trading in Euros back to selling oil in dollars. Why did Gaddafi suddenly get over thrown after 40 or so years?
      He wanted to sell oil in a different currency. A gold coin that he planned to mint. The US Government armed his opposition and away he went. Remember Chavez in Venezuela?
      He wanted to sell oil in another currency and out of the blue he gets cancer. Once oil is sold in another currency other than the dollar, this country will collapse like no other in history. The best way to explain it was at the end of the movie “Three Days of the Condor” Cliff Robertson was talking to Robert Redford. He said something like ” don’t you understand the American people don’t care about how or why we do it, they just want to turn on their electric lights and know they will come on, when they start their cars to know that they have gasoline in the tank.” What one must remember is no one in the history of the planet has ever lived like we have in the USA. If China wants to live like us they will need two more planet earths just to get the raw materials. It is simply unsustainable. I myself most likely won’t have to live through the future problems that will befall us all as I’m a senior and will check out hopefully before the shit hits the fan.

  1. Coalburner9

    Good but spooky interview.
    People need to listen to one of your regulars, Dr. Paul Craig Roberts interview.
    It will reinforce what Mr. Williams says. Another failured medling disaster for Washington.
    Putin’s interview on JSmineset today leaves an open end about whether he is upset enough to blast our dollar now or wait. Shrewd as he is, my guess he will wait until he needs to take more into his empire. But as Williams says some smaller holders of dollars may jump the gun. Doesn’t look real cheerful.
    I have a question for you. Do you subscribe to the same plan as Jim Sinclair to get out of debt rather than hold paper or electrons in the bank?

    • Greg Hunter

      The truth is the scariest of all things to hear. Thank you for your comment.

    • Mike

      I think the USA has done a great deal of good around the world over the last 60 years but they have also in the view of many undermined their importance and effectiveness by breeding deceit.

      Power breeds arrogance…Arrogance breeds deceit… and Deceit always comes back to burn you.

      In the end we all need to atone for our mistakes. Maybe it is time for the US to focus on their own mistakes and begin the slow process of re-building America within it’s own borders.

      • sam

        “the USA has done plenty of good around the world…”
        Tell that to the Iraqis, Afghanis, Vietnamese, Libyans, Palestinians