Devalue the dollar by all means, but against what? ... other fiat currencies have their own issues, could use a little devaluation of their own - the euros have an odd experiment, multiple countries quite varied in nature, with a single currency, you wonder how long that can work [precisely as long as germans are willing and able to support it, maybe] ... the japanese have difficult demographics, the chinese have never been through a business cycle before, may or may not handle it well
If the problem is excess of overhanging debt, for devaluation to be the solution it has to filter down quickly to people paying debt, it has to get translated fairly directly into wage improvement - how do you accomplish that, to sufficient degree, without completely losing control of inflation? ... you don't, imho, you just do what you can to beat deflation, the real killer, and worry about the rest later
Interesting bit in the Fekete piece you posted upthread, i've been wondering about this for some time, if perhaps the moment might come when They would see it in their interest to let PMs edge up a tich -
'... James Conrad argues that Bernanke is different. He understands that he needs a much higher gold price in order to increase the efficiency of his airdrops. There is no better way to distribute new money among prospective spenders than putting it into the pockets of the gold bugs. (Conrad admits that he is one.) This will induce a large spending spree, holding deflationary pressures back.
According to Conrad, Bernanke is well aware that the new money he is feverishly airdropping has not stopped and will probably not stop the bloodbath in the stock market. Further devastation of share prices will render pension funds insolvent. To prevent this, the dollar needs a massive devaluation, on the pattern of Roosevelt's tinkering with the value of gold. I quote:
Anyone who reads the written works of our Fed Chairman will know that Bernanke's long term plan involves devaluing the dollar against gold. This is the exact opposite of the position of most prior chairmen. He has overtly stated his intentions toward gold, many times, in various articles, speeches and treatises written before he became Fed Chairman. He often extols the virtues of F. D. Roosevelt's gold revaluation/dollar devaluation back in 1934, and credits it with saving the nation from the Great Depression. According to Bernanke, devaluation of the dollar against gold was so effective in stimulating economic activity that the stock market rose sharply in 1934, immediately thereafter. That is something that the Fed wants to see happen again....'
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... couple of overstatements in that imho, but overall makes sense ... and it's not the US dollar index at question, that's simply a measure of USD against other fiats and will fluctuate in any case, for the major part they all need to devalue fairly evenly or it becomes beggar thy neighbour again with tariffs and all |
