Dollar Devaluation is Inevitable... Just Like in 1934
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Dollar Devaluation is Inevitable... Just Like in 1934
It is evident to all the US economic environment is an unmitigated disaster. In fact we seem to be hell bent for leather falling into another Great Depression (the recent Bear Market Rally in Wall Street notwithstanding). This begs the question: What can President Obama do to avert the excruciatingly sad events of the 1930s?
Here are the economic problems causing havoc today in the USA:
- The banking system is collapsing
- Tidal waves of foreclosures sweep the country
- Tumbling housing prices
- A bear market ravages Wall Street stocks
- Massive unemployment throughout the nation
- Overall we are in a deflationary spiral
- Interest rates are abysmally low
- Consumer confidence is bottomless
And what were the economic maladies causing economic havoc in 1933?
- The banking system was collapsing
- Tidal waves of foreclosures swept the country
- Tumbling housing prices
- A bear market ravaged Wall Street stocks
- Massive unemployment throughout the nation
- Overall we were in a deflationary spiral
- Interest rates were abysmally low
- Consumer confidence was bottomless
As Yogi Berra might have expressed it:
"It's déjà vu all over again!"
Any differences some ill-informed might mention are irrelevant and immaterial to the overall burdens weighing upon the USA today.
What Can the US Government Do To Avert Another Great Depression?
President Obama's Stimulus Plan is to spend our way out of the economic quagmire…i.e. unprecedented massive spending for the next 11 years. The chart below clearly demonstrates that our nation will incur on-balance Trillion Dollar Budget Annual Deficits until 2011.
Never in the history of our country have we suffered such a Herculean financial burden. To be sure, 11 years of humongous yearly deficits will have its 'hidden cost' - The Devaluation of the Currency.
Dollar Devaluation To Fix (ANOTHER) Great Depression
History is testament currency devaluation proved effective in ending the Great Depression. In 1930, Australia was the first to leave the gold standard, immediately devaluing the Aussie by more than 40%, and the economy quickly recovered. New Zealand and Japan followed suit in 1931, each with the same result. By 1933, at least nine major economies had enacted a devaluation of their currency by removing it from the gold standard, all of whom emerged from depression.
In 1933, through a series of gold-related acts, culminating in the Gold Reserve Act of 1934, America realized a dollar devaluation of 41% when the price of gold was adjusted from $20.67 per ounce of gold to $35 per ounce. America, like the others before, had its economy bottom and recover as a result. Of the larger economies, only the French and Italians continued to adhere to the gold standard, and their economies remained depressed until finally, in 1936, they allowed their currencies to devalue, and their economies then recovered.
I see no reason to believe we would have any different result today. Only debt would remain the same. All other assets would immediately be worth more (in nominal terms), whether it be a home, a stock, an ounce of gold or a used car...all would rise in price. Furthermore, Bank balance sheets would immediately improve, as many loans would be moved from non-performing to performing status. Banks would be paid with devalued dollars.
In my considered opinion the current use of government's multi-trillion dollar stimulus program through the creation of dollars will certainly lead to a similar or even greater devaluation, so this is likely a net gain for the banks too.
http://www.financialsense.com/editorials/v.../2009/0403.html
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@danamal said:
It's already been stuck in you,Obama is just trying to pull out.
seriously, i dont know how people continue to suck off obama.....you actually, really think he's trying to help people?
question: if he were truely wanting to make education better, why take away vouchers used by poorer families to send their kids to better schools? thats a social program, that apparently democrats like social programs. so why move funding from here, but expand it elsewhere? is it really that hard to figure out?
you may not cherish your freedom of choice.....but i do. just because the masses are too stupid or otherwise too lazy to take care of themselves should not make a case to nationalize everything.
being a moderate, i get to sit back and laugh that the current situation. past 8 years, liberals have been whining and crying about the ravages by the bush administration to civil liberties, the constitution, and right to privacy. now, the situation is almost reversed, and conservatives are crying and whining about the same things. you're a fool if you can't see whats happening. you're an even bigger fool if you believe the rhetoric from politicians. enslaving the population serves as a job security tool for all politicians.....and takes away our ability to engage in our gov't. then, there's nothing you can do when they take 70% of your paycheck.
its just a way to get more of your money, and stupid xxxxing liberals are willing to hand it over no questions asked with no forethought into what happens in 5, 10, a hundered years. but lifes unfair right? show me one service or product that the gov't can administer or manufacture better than the private sector, and i'll vote democrat the rest of my life.
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