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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (44442)1/13/2006 2:55:17 PM
From: Tommaso  Read Replies (3) of 116555
 
>>>someone tell me how that is even possible<<<

Well, Mish, maybe the mechanisms are not in place to devalue that efficiently. But in the 1930s, George Santayana was living very comfortably in Italy off the investments managed by his half-relatives, the Sturgis family, back in Boston. And then Roosevelt raised the price of gold in dollars from $20.67 to $35.00 an ounce. That meant that Santayana's dollars were worth 41% less. Fortunately for him, he was in the habit of spending only half his income anyway.

In 1959, France changed the exchange rate of the old franc to the dollar from 420 to 480, I think it was. The U. S. dollar overnight was worth 14% more.

Any sovereign state has the power to set exchange rates for its currency at whatever level it chooses. In practice, an overnight devaluation of 50% of the dollaragainst all other major currencies is extremely unlikely. A 50% decline over a period of several years is entirely possible.
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