Socio-Economics History Blog

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Massive US Dollar Devaluation Against Gold During 2009

  • John Browne writes in : Massive US Dollar Devaluation Against Gold During 2009
     
    The Federal Reserve estimates that in the past year losses in real estate, stocks and mortgages have sucked out some $7.2 trillion of wealth from the U.S. economy. Some are now putting the figure at $20 trillion.Investors should also especially be concerned as to who will repay these massive debts. The conventional answer of politicians is “taxpayers”. But this is a serious understatement. Any depreciation of the U.S. dollar means that every American citizen and every single holder of U.S. dollars throughout the world will suffer from monetary loss and a severely reduced standard of living. “
      
  • As mentioned in my previous blogs, the solution undertaken by FDR in the 1st Great Depression was : 
     
    In 1934, facing a depression President Roosevelt first confiscated gold from every American. Then, he unilaterally devalued the U.S. dollar by 75 percent against gold.At a stroke, FDR wiped out 75 percent of the dollar denominated debt of the U.S. Treasury.As both President-Elect Obama and Fed chairman Bernanke are students of FDR, we face the real possibility of a massive devaluation of the U.S. dollar against gold in 2009.
     
  •  America is Bankrupt ! There is no way the debts can be repaid. Here is how bad it is :  America’s liabilities equal assets, …the report showed “an estimated $56.4 trillion in debts, liabilities and promises for Medicare and Social Security versus a total household net worth of $56.5 trillion.” 
     
  • Some kind of financial engineering sleight of hand will have to be used to pay off the debts.
     
    –  America owes something like US$15T (not including Social
        Security and Medicare)
    –  America has 8100 tonnes of Gold. At current prices worth about
        US$250B based on US$800/ounce.
    –  So what kind of Black Magic is the government going to use to pay
        the debts off ?
    –  How about simply declaring that the 8100 tonnes of Gold is now
       worth US$15 T ?? This means that gold prices have to rise ie
        revaluation of Gold, devaluation of USD .
    –  Voila ! Problem solved !
     
  • When the USD is devalued,  foreign countries have to decide : devalue their own currencies or they will not be competitive against America. Imagine if USD is devalued 75% against gold, it means that cost in USD will be a lot cheaper by up to 75%.  Countries will embark on competitive devaluation or they will be priced out of economic competitiveness.
     
  • With developed countries basically bankrupt or close to it, these countries IMO will opt to devalue all their currencies against gold to pay off their debts. Why not? It is the least costly solution!
     
  • Such an act worldwide will be reflationary. It will fight deflation. So why not ? The only problem is that, it may stir the hyper-inflation pot too much. After FDR’s act of devaluing against gold, the US economy was re-inflated but went into another downturn until WW2 started in 1939. ie Devaluation against Gold will not solve all problems. There is still a major rebuilding of the economy needed and a fight against inflation.
     
  • Just what amount of price rise are we talking about for Gold? Possibly 10x – 20x to be effective in reducing the national debt. Many analyst are conservatively targeting $2000-5000/ounce.
     
  • Adrian Ash says in Gold Stock Vs Paper Fiat Asset Valuations :  
     
    In short, the mass people choosing to Buy Gold today remains tiny compared to the value which the world still puts on paper. And it’s only when paper collapses in value – an event you might expect during the worst post-WWII crisis – that gold is likely to hit its true peak for this investment cycle.
     
  • That is : Buy Gold ! See also :
     
    Gold About to SkyRocket ! China Worries about Treasuries and Diversify into Gold !
    Gold Price Set to Soar !
    Dollar Devaluation, Debt Default & Gold
    Great Gold Rush of 21st Century
    Economic Depression and Gold
    Global Monetary Meltdown in 2009 ?
    What’s not to Like about Gold ?
    Obama, Roosevelt, Gold Confiscation and Dollar Devaluation
    Gold Rush Worldwide!

end

Disclaimer : This is not an advice to Buy or Sell or Hold . I have been wrong before so what do I know.

December 20, 2008 - Posted by | Economics | , , ,

22 Comments

  1. Hello.

    I would like to put a link to your site on my blog roll if you want to do the same for mine. It would be a good way to build up both of our readerships.

    thank you.

    Hi,

    Thanks ! Sounds good to me. Just give me sometime to figure out how to do this as I am just online for about 1 week. Still learning. Hope you like the blog.

    Rgds

    Comment by Stacey Derbinshire | December 20, 2008

  2. gold …..$40,000 oz

    Comment by john | January 11, 2009

  3. [...] See also :   Massive US Dollar Devaluation Against Gold During 2009 [...]

    Pingback by Obama, Roosevelt, Gold Confiscation and Dollar Devaluation « Socio-Economics History Blog | January 21, 2009

  4. [...] also :   Massive US Dollar Devaluation Against Gold During 2009 Gold Rush Worldwide! Obama, Roosevelt, Gold Confiscation and Dollar Devaluation Economic [...]

    Pingback by What’s not to Like about Gold ? « Socio-Economics History Blog | February 2, 2009

  5. [...] also :   Massive US Dollar Devaluation Against Gold During 2009 Gold Rush Worldwide! Obama, Roosevelt, Gold Confiscation and Dollar Devaluation Economic [...]

    Pingback by Dollar Devaluation, Debt Default & Gold « Socio-Economics History Blog | February 5, 2009

  6. We are screwed!! And we have elected a light weight buffoon.

    Comment by diagnut | February 14, 2009

  7. When Gerald Ford RE-gave Amererican the right to own gold in 1976, a very large amount of bullions coins were minted. Can any out there estimate the total amount of bullion coins minted from 1976 to2008 AND SOLD TO THE AMERICAN PUBLIC AT LARGE?? That 42 years at 3,000,000 oz per year i’d guestimate. Would equal 120,000,000ozsTIMES $10,000 AN OUNCE= 1.2 trillion, THAT CONFISCATION WOULD PAY OFF THE CHINEES, AND WE WOULD HAVE TO GIVE PART OF OUR BASE RESERVES TO THWE sAUDIS

    Comment by DarthVadar | February 17, 2009

  8. [...] Set to Soar ! What’s not to Like about Gold ? Dollar Devaluation, Debt Default & Gold Massive US Dollar Devaluation Against Gold During 2009 Gold Rush Worldwide! Obama, Roosevelt, Gold Confiscation and Dollar Devaluation Economic [...]

    Pingback by Gold Primed to be ‘Mania Asset’ « Socio-Economics History Blog | February 21, 2009

  9. [...] Set to Soar ! What’s not to Like about Gold ? Dollar Devaluation, Debt Default & Gold Massive US Dollar Devaluation Against Gold During 2009 Gold Rush Worldwide! Obama, Roosevelt, Gold Confiscation and [...]

    Pingback by Demand for Gold Coins Soar! « Socio-Economics History Blog | February 27, 2009

  10. [...] Set to Soar ! What’s not to Like about Gold ? Dollar Devaluation, Debt Default & Gold Massive US Dollar Devaluation Against Gold During 2009 Gold Rush Worldwide! Obama, Roosevelt, Gold Confiscation and [...]

    Pingback by Gold Price to go Parabolic! « Socio-Economics History Blog | March 9, 2009

  11. [...] Set to Soar ! What’s not to Like about Gold ? Dollar Devaluation, Debt Default & Gold Massive US Dollar Devaluation Against Gold During 2009 Gold Rush Worldwide! Obama, Roosevelt, Gold Confiscation and [...]

    Pingback by Gold is Ready to Go Very High Very Fast! « Socio-Economics History Blog | March 13, 2009

  12. [...] Set to Soar ! What’s not to Like about Gold ? Dollar Devaluation, Debt Default & Gold Massive US Dollar Devaluation Against Gold During 2009 Gold Rush Worldwide! Celente – Code Red ! Economy in Collapse ! GEAB : Systemic Economic Crisis: [...]

    Pingback by Let the Currency Wars Begin? « Socio-Economics History Blog | March 16, 2009

  13. [...] Set to Soar ! What’s not to Like about Gold ? Dollar Devaluation, Debt Default & Gold Massive US Dollar Devaluation Against Gold During 2009 Gold Rush Worldwide! Obama, Roosevelt, Gold Confiscation and [...]

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  14. [...] Set to Soar ! What’s not to Like about Gold ? Dollar Devaluation, Debt Default & Gold Massive US Dollar Devaluation Against Gold During 2009 Gold Rush Worldwide! Obama, Roosevelt, Gold Confiscation and [...]

    Pingback by Gold to Soar as the US Dollar and then Treasury Bonds Collapse ! « Socio-Economics History Blog | March 20, 2009

  15. [...] Economic Meltdown Global Monetary Meltdown in 2009 ? Dollar Devaluation, Debt Default & Gold Massive US Dollar Devaluation Against Gold During 2009 Obama, Roosevelt, Gold Confiscation and [...]

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  16. [...] Economic Meltdown Global Monetary Meltdown in 2009 ? Dollar Devaluation, Debt Default & Gold Massive US Dollar Devaluation Against Gold During 2009 Obama, Roosevelt, Gold Confiscation and [...]

    Pingback by Gold Soars by 8% as Fed Shocks Market Announcement of Dollar Debasement ! « Socio-Economics History Blog | March 21, 2009

  17. [...] Economic Meltdown Global Monetary Meltdown in 2009 ? Dollar Devaluation, Debt Default & Gold Massive US Dollar Devaluation Against Gold During 2009 Obama, Roosevelt, Gold Confiscation and [...]

    Pingback by Gold New Upleg as Lunatic Fed Creates $1 Trillion Dollars Out of Thin Air « Socio-Economics History Blog | March 21, 2009

  18. The writer says ‘lets take 8100 tons of gold, and convert to debt payments’…uh, that is (at troy wt) $77160 per USD debt. Converted to existing debt, that would cause hyperflation at the rate of 7700%, instantly! Nice. CocaCola = $77, Chewing gum=$70, Sneakers=$7000, Chevy=$700,000 Nice…but I’ve never seen Chevrolet’s worth more than $100,000…Of course, Zimbabwe and Argentina both saw hyperinflation far in excess to this…great investment advice: Colt, Remington, Smith&Wesson…hold real merchandise on these, also…possibly some Remington or Federal munitions stock as well…plan to go long, expect short actions.

    Comment by outlook | August 19, 2009

  19. [...] & Gold Gold About to SkyRocket ! China Worries about Treasuries and Diversify into Gold ! Massive US Dollar Devaluation Against Gold During 2009 Obama, Roosevelt, Gold Confiscation and Dollar Devaluation Gold and the Impending Market Meltdown [...]

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  20. [...] Gold About to SkyRocket ! China Worries about Treasuries and Diversify into Gold ! Massive US Dollar Devaluation Against Gold During 2009 [...]

    Pingback by China, Bernanke, and the Price of Gold ! « Socio-Economics History Blog | September 8, 2009

  21. [...] on this one, but there are lots of interesting articles out there, like this one, or this one, or this one, or this [...]

    Pingback by So Here’s The Thing About the US Dollar, and Gold — Buy-High-Sell-Higher.com | September 26, 2009

  22. [...] Street Journal: The Message of Dollar Disdain Forbes Magazine: Inflation and Dollar Devaluation Massive Devaluation of The US Dollar vs. Gold in 2009 No Way Out of a 50% Dollar Devaluation Federal Spending Soars 25% Before Bailouts [...]

    Pingback by Can Someone Answer a Question? - Page 6 - Dallas Dance Music - Dallas nightlife, music, tickets, and more | October 14, 2009


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