The Vortex Strategy

by Chuck Missler
The Decline of the U.S. - Economic and Social Realities
The failure of our public schools, a decimated military, a corrupt Executive branch, and an
ever-increasing involvement in the United Nations globalist agenda do not bode well for
America. Can we stop this downward trend before it's too late?
Events over the past few years have caused many informed observers to be concerned over
the increased precariousness of our strategic horizon. In addition to natural disasters-such as
Hurricane Katrina-and the continuing terrorist threats promising a major sequel to “9/11,” and
the probability of rogue nuclear attacks of various kinds, anyone who is relying on smooth
waters over the next 12-18 months is simply among the ranks of the under-informed.

To prepare for potentially volatile uncertainties, some years ago we published a series of
suggestions, which we called “The Vortex Strategy,” and in view of our current horizon, it
seems appropriate to review some of those ideas.

The next major terrorist event could prove to be an even more impacting sequel than “9/11”-
whether it is an Al Qaeda plot of some kind, or an EMP attack which threatens to plunge the
U.S. back into the 19th century. But without indulging in speculations regarding the challenges
that Homeland Security presently faces, many experts are also anticipating a possible
upheaval to emerge from the current debt debacle of the United States. What would be the
consequences to you and your family if America’s economic foundation was ripped out from
under you? We individually can’t change the probabilities of such an event, but what is your
action plan to protect yourself and your family?

The Impending Monetary Crisis

We need to understand the precariousness of the U.S. dollar and its role in the international
monetary markets: two-thirds of world trade is conducted in dollars; over 70% of central
banks’ reserves are held in the American currency; and, the U.S. dollar is the sole currency
used by international institutions such as the International Monetary Fund (IMF).

This has conferred on the U.S. a major economic advantage: the ability to run a trade deficit
year after year. It can do this because foreign countries need dollars to repay their debts to
the IMF, to conduct international trade, and to build up their own currency reserves. A move
away from the dollar could have a disastrous effect on the U.S. economy as the U.S. would no
longer be able to spend beyond its means.

Worse still, the U.S. would become a net currency importer as foreigners would seek to spend
back in the U.S. a large proportion of the estimated three trillion dollars which they currently
own. The U.S. would also have to run a trade surplus-the first time in a century-providing the
rest of the world with more goods and services than it was receiving in return.

The Oil Exporters

Up until the early 1950s, the U.S. dominated world oil production, so sales of oil and natural
gas on international markets had been exclusively denominated in dollars. The U.S. in those
days accounted for half or more of the world’s annual oil production. That, of course, has
drastically changed: we are entering a period in which we need to import almost 70% of our
requirements!

The tendency to price in dollars was additionally reinforced by the 1944 Bretton Woods
agreement, which established the IMF and World Bank and adopted the dollar as the currency
for international loans. The “gold exchange standard” was also established: the U.S. dollar was
to be convertible to gold by foreign governments. However, by the 1970s foreign dollar
holdings had grown to five times the available gold. So, in August 1971, President Nixon
suspended all gold payments. Today, depreciating paper dollars are backed only by the
“reputation” of the U.S. Government

The Quiet Game

While the denomination of oil sales is not a subject that is frequently discussed in the media,
its importance is certainly well understood by governments. For example: when President
Nixon took the U.S. off the gold exchange standard, OPEC considered moving away from dollar
oil pricing, as dollars no longer had the guaranteed value they previously did. The U.S.
response was various secret deals with Saudi Arabia in the 1970s to ensure that the world’s
most important oil exporter would stick with the dollar. What the Saudis did, OPEC followed.

The Think Tanks Warn

Countries switching to euro reserves from dollar reserves will bring down the value of the U.S.
currency. Imports would start to cost Americans a lot more… As countries and businesses
convert their dollar assets into euro assets, the U.S. property and stock market bubbles
would, without doubt, burst…

-The Foundation for the Economics of Sustainability

The dollar’s position is already on the decline in many countries.

-Federal Reserve Bank of San Francisco

China has officially declared that it will diversify a part of its foreign exchange holdings into oil
by building a strategic petroleum reserve. The construction of huge storage tanks has begun
and will take several years until completion.

On January 24, 2007, Kuwait announced that it is considering abandoning pegging its dinar to
the dollar for fear of an anticipated slide in the value of the dollar. Last year, the central banks
of Italy, Russia, Sweden, and the United Arab Emirates had announced similar shifts out of the
dollar and into other currencies, or gold, citing the United States’ “twin deficits” (federal deficit
and the trade deficit) as the reasons for the expected fall in the dollar’s value.

Our Trade
Balance
We buy more than we sell
(we always have). We
finance our purchases with
debt currency and our
current imbalance (deficit)
grows $850 billion per
year!

Our Federal
Deficit
Our government spends
more than it raises (in
taxes, etc.), so we finance
our government programs
with debt. The Bush
administration is
forecasting that the federal deficit for the 2007 budget year will total $244 billion (a slight
improvement from the $248.2 billion actual deficit in 2006). However, the improvement this
year is likely to be short-lived as tax revenue growth slows and spending begins to rise to deal
with increased Social Security and Medicare payments as the 78 million baby boomers start to
retire. Thus, the U.S. Treasury must borrow:

Federal deficit: $250 billion/year

Trade deficit: $850 billion/year

$1,100 billion/year

That’s $3 billion per day! It’s going to be interesting to see who is willing to pick up those
notes (and what interest and incentives we’ll have to offer)!

Consumer Debt
Mortgage companies are
knocking on doors, sending
letters and making phone
calls with a simple
message for struggling
homeowners: They’d
rather modify your loan
than foreclose. New
foreclosures hit their
highest ever level in the
fourth quarter of 2006,
according to the Mortgage
Bankers Association. With
home values falling in
some parts of the country,
none of the finance
companies want to be
stuck owning a house that
has depreciated in value.

Critics say lenders made loans to borrowers who weren’t credit worthy with terms that would
be impossible for them to meet. Whether the current wave of workouts will merely postpone
foreclosures-and delay bad loans hitting lenders’ books-is an open question…

David Walker
David M. Walker, Comptroller General of the United States, has publicly expressed his
professional opinion that the American public needs to tell Washington it’s time to steer the
nation off the path to financial ruin. The “accountant-in-chief” spoke on a Fiscal Wake-Up Tour
panel during a meeting at the LBJ School of Public Affairs in Austin, Texas, on September 28,
2006:

What they don’t talk about is a dirty little secret everyone in Washington knows, or at least
should. The vast majority of economists and budget analysts agree: The ship of state is on a
disastrous course, and will founder on the reefs of economic disaster if nothing is done to
correct it.

-David Walker

His basic message is this: If the U.S. government conducts business as usual over the next
few decades, a national debt that is already $8.5 trillion could reach $46 trillion or more,
adjusted for inflation. A hole that big could paralyze the U.S. economy; according to some
projections, just the interest payments on a debt that big would be as much as all the taxes
the government collects today. And every year that nothing is done about it, the problem
grows by $2 trillion to $3 trillion (yes, that’s with a “t”). It doesn’t take a genius to recognize
that an economic upheaval is in the making.

There are four traditional measures of the nation’s money supply: the M0, M1, M2, and-the
most comprehensive-the M3. The M3 is the primary “report card” of the nation’s money
management. However, the Fed is no longer publishing the M3, which economists have
traditionally used to monitor the liquidity of the U.S. [Congressman Ron Paul introduced H.R.
4892 in an effort to reinstate publication of M3.]

U.S.
Financial
Report
On December 15,
2006, the Treasury
issued the
Financial Report of
the United States
as released by the
U.S. Department
of Treasury. The
2006 federal
budget deficit was
$4.6 trillion, not a
previously
reported $248.2
billion. The
difference is that
the typical report
of the federal
budget deficit is on a cash basis, in which all tax receipts are applied to current liabilities when
received.

The Financial Report of the United States is calculated on a GAAP (“Generally Accepted
Accounting Principles”) basis, which includes accruals made for current year changes in the
net present value of unfunded liabilities in social insurance programs, such as Social Security
and Medicare. This official report showed that the GAAP accounted negative net worth of the
federal government has increased to $53.1 trillion, while the total federal obligations under
GAAP accounting now total $54.6 trillion, taking into account the present value of future Social
Security and Medicare liabilities. Put simply, this report shows that “arguments that the U.S.
government is bankrupt have increasing merit...” (their words).

Hyperinflation Ahead?
The threat of hyperinflation isn’t just theoretical. Germany, in 1920, saw food prices double
every 49 hours (a loaf of bread in 1920 cost 1 mark; in 1923 a loaf of bread cost 726,000,000
marks). (My grandparents sold a restaurant which, when the escrow was opened was worth
enough to retire on; yet, by the time escrow closed, the proceeds could only purchase a loaf of
bread.) In the 1990s, Russia’s currency devalued from 100/rubles/dollar in 1994 to 30,000
rubles/dollar in 1999.

The United States is now the largest debtor in the world ($48,000,000,000,000 in debt
instruments). These obligations will ultimately have to be met with much cheaper dollars.

The rich ruleth over the poor, and the borrower is servant to the lender.

Proverbs 22:7
This cursory review hasn’t dealt with the leveraging effects of the substantial “financial
derivatives” currently being employed, which would accelerate a potential crash even further!
Your personal stewardship plans need to maintain surveillance on the likelihood of serious
inflation ahead, and perhaps worse.

The Plot Thickens

There are serious people attempting to engineer the creation of a “North American Union,” and
the establishment of a consolidated North American currency called the “Amero.” Some of the
milestones which have been published would have no feasibility except under conditions of
extreme urgency; however, those specific extreme circumstances may be deliberately being
positioned for just such a purpose! Is our current debt debacle simply mismanagement? Or is
it being engineered with a stratagem in mind? “Stay tuned. Film at eleven.”

Another Tremor

The subprime mortgage mess metastasized into a full-blown global credit crisis last month,
crushing stocks in Europe as well as the U.S.

The meltdown began in France and forced the European Central Bank to inject more than
$130 billion into the continental banking system so that it wouldn’t seize up entirely. Standard
and Poor’s said that move was unprecedented.

The Federal Reserve (which is neither federal nor a reserve) put more than $60 billion into the
U.S. banking system. Unlike previous sell-offs, which were concentrated in specific sectors,
this one cut across the entire stock market. Investors increasingly seem to fear that the
problems among the big investment banks are proving bigger than expected.

International investors now own $672 billion of the $835.4 billion worth of Treasuries due in 3-
10 years.1 A record 80% of the Treasury notes due in 3-10 years are foreign owned. Not since
the 19th century have foreigners held so much American debt.2

Another way to examine our reserves is to take a look at our checkbook and compare it with
others:
Rank Current Account Balance3

1 China $179,100,000,000
2 Japan 174,400,000,000
3 Germany 134,800,000,000
4 Russia 105,300,000,000
5 Saudi Arabia 103,800,000,000
6 Norway 63,350,000,000
7 Switzerland 50,440,000,000
........
159 France -38,000,000,000
160 Austria -41,620,000,000
161 U.K. -57,680,000,000
162 Spain -96,600,000,000
163 United States -862,300,000,000

Out of 163 countries, we rank dead last. In fact, we are nine times worse off than the runner
up-Spain-who is recognized as a near-bankrupt nation in the financial press.

(I understand that Spain just sold off 80 of their remaining 90 tons of gold from their national
treasury to “stay afloat” a little longer.)4
The Federal Government recorded a $1.3 trillion loss last year-far more than the official $248
billion deficit-when GAAP accounting standards are applied.5

“The gap between future U.S. receipts and future U.S. government obligations now totals
$65.9 trillion, a sum that is impossible for the U.S. to reconcile, which means the U.S. is now
technically bankrupt.”6

But it gets worse. In fact, our most disturbing predicament is being prepared “under the
radar” and deliberately.

The Deliberate Destruction of America

That sounds like a conspiracy theory, doesn’t it? Well, it is. And it is really happening.7 There
is no intention of our present administration to enforce our borders.

There is a well-laid-out plan to merge the United States with Canada and Mexico. There are
several dozen working groups laying out the administrative regulations. There are extensive
construction projects preparing a “NAFTA Superhighway” to expedite goods from Lázaro
Cárdenas, on the Pacific Coast of Mexico, through Laredo, Texas, to the Kansas City
“SmartPort” (an electronic port of entry to be regarded as Mexican territory), on though
Duluth, Minnesota to Canada.

Most of these facilities are being built by foreign investors, so we will have to pay to use them.
They are being designed to expedite goods from China to the entire North American Union.

(China and Wal-Mart are investing $300 million just to upgrade the container handling
facilities at Lázaro Cárdenas. China already controls facilities at Long Beach, California, and at
both ends of the Panama Canal.)

What is particularly disturbing is that this is all being done covertly, without the benefit of
public discourse. It is being denied by the administration, and yet it would seem to be
treasonous-the very disenfranchisement of the entire electorate and its assets.

The primary whistle-blower on this is our dear friend, Jerry Corsi, whose blockbuster book,
The Late Great U.S.A., just came out. It is a must read for any American.

You and I aren’t likely to change the course of history, but we can exercise prudence in our
personal and family preparations.

A prudent man foreseeth the evil, and hideth himself: but the simple pass on, and are
punished.

Proverbs 22:3

What is your action plan to protect yourself and your family?

Our times are uniquely uncertain and impossible to predict. Will we have a depression? Will we
have hyperinflation? Will we experience logistic upheavals? The optimum strategy under
conditions of uncertainty is mobility. In financial terms, that’s called liquidity. So that leads us
to our basic four-step strategy, which we call “the Vortex Strategy.” It is disarmingly simple,
but absolutely essential:

The Vortex Strategy

1) Lower your cost of living
2) Get out of debt
3) Guard your liquidity
1. Lower Your Cost of Living

Don’t count on increases in your income. Live beneath your means so that you have
something extra at the end of each month. That will be your ticket to financial freedom.

A useful hint: review the allocations of your time. Are there indulgences that are expensive
and yet might not stand scrutiny from a cost/reward relationship? Often our most enjoyable
involvements are not necessarily tied up with capitalized indulgences. Simplify in order to win
what really counts.

2. Get Out of Debt

Debt is a presumption on the future and is contrary to God’s plan for your life: the borrower is
slave to the lender (Proverbs 22:7).

Use the increments from Step 1 to refinance variable rate mortgages and eliminate credit card
debt. Establish and control your budget as if your life depends upon it: it does!

3. Guard Your Liquidity

Once debt is under control, use the margin from Step 1 to establish reserves. Diversify your
holdings among different asset classes. Straddle industries, borders, and currencies.

Strive to maintain liquidity, not maximize earnings. That’s for later when the horizon is more
clearly in focus.

Lastly, get your assets out of reach from your adversaries: know who they are and take
precautionary steps before they’re needed. Some tactical alternatives for Step 3 will be the
subject of our article next month, “The Vortex Strategy: Part 3.”

**NOTES**
Notes:

1. Lawrence Dyer, HSBC Securities USA, Inc.

2. Alan Taylor, UC Davis.
3. CIA Website.
4. McAlvany Intelligence Advisor, P.O. Box 84904, Phoenix AZ, 85071. Excellent newsletter;
Don is an old friend.
5. Dennis Cauchon, USA Today, May 31, 2007.
6. St. Louis Federal Reserve Bank, Official Report, Dec 2006.
7. Jerome Corsi’s book, The Late Great USA, WND Books, 2007.
8. Gen 28:19-22; Lev 27:30-32; 2 Chr 31:4-6; Neh 10:34-37; Mal 3:7-10.
9. It also implied in the “Even so” of 1 Cor 9:13,14; the “lay by him in store” in 1 Cor 16:1,2
alludes to Mal 3:10; 2 Cor 8:14; Heb 7:5,6, etc.
10. Mal 3:10.
11. Gen 7:11, 1