Here Are four reasons why the US is on the verge of full collapse.

1. The Bait Effect

Terrorists, and al Qaeda in particular, are fascinated with the idea of destroying the U.S. economy. An economic meltdown in the United States could serve as bait of sorts for a terrorist attack, as plotters calculate that a strike now could have a 'force multiplier' effect because of the already skittish U.S. stock market.

2. The Chinese own more than $500 billion worth of U.S. Treasury bonds, and billons more in the debt of other U.S. entities such as those held by Freddie Mac and Fannie Mae.

And in the meantime, their holdings give the Chinese incredible power over American decision making.

It gives the Chinese de facto veto power over certain U.S. interest rate and exchange rate decisions, For example, there's a limit to how much dollar depreciation the Chinese would tolerate.

That potentially closes off one American economic strategy: allowing the dollar to decline in value in order to help boost U.S. exporters. And China's leverage is only growing as each federal bailout adds to the U.S. deficit.

3. The Existential Crash. He sees an epic disaster scenario in which the U.S. gross domestic product declines by a staggering 35 percent over the next six to seven years. Crippling deflation could take hold. Unemployment, he says, could approach 15 percent. In this scenario, the possibilities for global unrest increase dramatically as a staggering United States retreats from foreign aid and global diplomacy and the list of dangerous failed states grows sharply.

4. The Alternate-Dollar Nightmare

The Number One vulnerability is the dollar itself. We're printing them and shoving them out the door, and the Fed is basically out of bullets. So why hasn't the dollar collapsed? The short answer is, global investors don't have any other choice. That is, there simply aren't enough Euro- or Yen-backed securities for investors to shift their money out of dollars and into some other currency.

But what if some kind of global coalition - say a trillion-dollar sovereign wealth fund allied with several countries around the world - banded together to create a gold-backed alternative to the dollar?

Author: John S

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