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To: Hawkmoon who wrote (36294)	8/12/2012 12:13:02 PM
From: Wayners	1 Recommendation Read Replies (2) \| Respond to of 223348

A long drawn out devaluation as you point out doesn't work. It however does work if it's done suddenly overnite in one big swoop. Debts could be halved in real terms until the shock works its way through the system. My thinking on the debt/GDP ratio in the 1930s is that only tells part of the picture. Back then the Federal Reserve couldn't help itself to free money and printed a mountain of Gold Certificates that weren't backed by real Gold. Those Gold Certificates were a real liability on their balance sheet and as people figured this out, they went to their local bank and demanded gold. The banks in turn went to the Federal Reserve and demanded gold to make all the payouts. The Federal Reserve didn't have it. That was the REAL DEBT problem. Adding the Federal Govt's debt together with the Federal Reserve's debt and I think you have the answer to why they devalued and confiscated Gold and took back all the phoney Gold Certificates.