On Oct. 9, trends forecaster Gerald Celente was a guest on the Coast to Coast AM radio show to speak on the ongoing events tied to the government shutdown and upcoming debt ceiling deadline. In his update on the political and economic showdown taking place in Washington, Celente asserts that the potential crisis is so great, that there is a major risk of the government declaring a bank holiday, and using the crisis as a way to devalue the dollar.
Gerald Celente: I have to say George, I'm very concerned. If they don't do something with this debt ceiling issue, we could have problems that are going to make the panic of 2008 look like a picnic, and I'm serious about that.
The IMF is warning that this is going to jeopardize the entire global economy. So here's what I'm doing. I don't give financial advise. There may be a risk of a bank holiday, and I'm speaking only for myself, but this could be another Cyprus situation.
I got burned by the IMF scandal, and I remember back in 9/11 when they closed down Wall Street, and if you had CD's, you couldn't get them out.
George Norry: You couldn't get them out, you couldn't sell your stocks... you couldn't do anything.
GC: And I believe that there's an outside possibility that they may call a bank holiday, and this may be an excuse to devalue the currency, just like they did back in 1933. - Coast to Coast AM, Oct. 9, 2013
The IMF statement that Gerald Celente is referencing took place on Oct. 7 as the government shutdown and continued political game in Washington entered its second week. The primary reason behind this warning is due to the massive amounts of debt held by foreigners in Treasury Bonds that are due to mature, or be rolled over within the next 30 to 40 days. Between now and Nov. 15, over $440 billion in Treasuries are due for maturity, and if an agreement to raise the debt ceiling is not achieved by the Oct. 17 deadline, chances are very high that the government will default on its obligations and cause a global panic to dump trillions in bonds and dollar reserves.
The last true dollar crisis in the U.S. took place in 1971, when monetary policies by the Federal Reserve led foreigners to dump their dollar reserves, and demand the U.S. exchange them for gold at a time when America still had a gold backed currency. This crisis led to President Nixon's Executive Order removing the dollar from the gold standard, and begin the path of accelerated debt borrowing, and the pegging of the dollar to oil.
Now however, the world is quickly setting in place mechanisms to form a new reserve currency at the same time the U.S. is printing money and devaluing the dollar at record rates. And since the Fed has chosen a path of continuous Quantitative Easing, which likely be accelerated under the new Chairman of the central bank, strong opposition by nations that are currently forced to use the dollar could very well lead to a new banking crisis, and the subsequent calling of a bank holiday to stave off default.