too hard to use one money for everyone, same reason that the euro is under threat and the same problems india currently faces. too hard to control growth and you end up with deflation pressures in some areas and inflationary in other regions. not to mention the trouble of budget balancing between countries.
Saudi's bought $3.5 BILLION worth of Gold in LAST 2 WEEKS
- Thread starter thriftybob
- Start date
The necessity of funding US debts with non-US "participation" makes that extremely difficult. But if you want to think outside the box on what might happen...
There is only one significant member of the G20 without a freely-traded currency. That member also happens to hold massive amounts of foreign reserves due to an astounding trade deficit with virtually every other member of the G20. Obviously that's China.
So - the 20-minus-1 arrange a coordinated partial default on their sovereign debt. All debt owed to each other is NOT defaulted unless it can be matched dollar for dollar in both directions - the defaults are assigned to what is held by China. The pretext for public consumption is that the idea of undoing the default will be revisited if and when China joins the community of nations in floating its currency.
It'll take a little pencil-to-paper work to sort out exactly how much can be written off in this way, but it should be fairly substantial, perhaps as high as 5% of outstanding sovereign debt. That leaves a lot of room for stimulus. Of course, it would be a temporary fix at best without structural reforms in both trade and derivatives, but something like this could buy enough breathing room to work out such reforms.
I'm not saying this is the smartest path in the world - I'm saying these are genuinely desperate times at the Central Banker level and it would not be prudent to underestimate just how far or how creative those guys and gals can get.
That IS way outside the box.
Could be possible if they reframed it for China to save face - "China rescues the world by accepting defaults". Definitely a hard sell. Maybe WWIII material.
Of course they could just let the economies adjust thru free market mechanisms and BK courts like it always has and will eventually no matter what they do at the G-20. Nahhh.
Guess we'll all find out soon. The bond and equity markets are just waiting to overpower the PPT next time.
Could be possible if they reframed it for China to save face - "China rescues the world by accepting defaults". Definitely a hard sell. Maybe WWIII material.
Of course they could just let the economies adjust thru free market mechanisms and BK courts like it always has and will eventually no matter what they do at the G-20. Nahhh.
Guess we'll all find out soon. The bond and equity markets are just waiting to overpower the PPT next time.
For a chuckle here's a post by scam artist perm-bear/gold nut Larry Edelson who goes into detail about this theory of all currencies being devalued against, YOU GUESSED IT - GOLD. Yes folks, the world will be going back to a fixed exchange rates and gold prices. This guy is a known scammer who makes predictions and then reposts the articles with the original date when they don't happen without any mention of changing the article. Have fun finding all the bizarre inaccuracies and contradications in Uncle Larry's article.
Almost forgot - Uncle Larry thinks Gold is GOING TO THE MOON! So buy now at his favorite gold dealer.
-----------------------------------------
The G-20âs Secret Debt Solution
by Larry Edelson 11-13-08
Larry Edelson
If you think this weekendâs G-20 meetings in Washington are only about designing short-term fixes to the financial system and regulatory reforms for banks, hedge funds, brokers, mortgage companies and investment banks ⦠think again.
Behind the scenes, a far more fundamental fix is being discussed â the possible revaluation of gold and the birth of an entirely new monetary system.
Iâve been studying this issue in great depth, all my life. And given the speed at which the financial crisis is unfolding, I would be very surprised if what Iâm about to tell you now is not on the G-20 table this weekend.
Furthermore, I believe the end result will make my $2,270 price target for gold look conservative, to say the least. Youâll see why in a minute.
First, the G-20âs motive for a new monetary system: Itâs driven by and based upon this very simple proposition â¦
âIf we canât print money fast enough to fend off another deflationary Great Depression, then letâs change the value of the money.â
I call it â¦
The G-20 may propose devaluing all currencies, including the U.S. dollar and the euro.
The G-20 may propose devaluing all currencies, including the U.S. dollar and the euro.
âThe G-20âs Secret Debt Solutionâ
It would be a strategy designed to ease the burden of ALL debts â by simultaneously devaluing ALL currencies ⦠and re-inflating ALL asset prices.
Thatâs what central banks and governments around the world are going to start talking about this weekend â a new financial order that includes new monetary units that helps to wipe clean the worldâs debt ledgers.
It wonât be an easy deal to broker, since the U.S. is the worldâs largest debtor. But remember: Debts are now going bad all over the world. So everyone would benefit.
Fed Chairman Ben Bernanke ⦠Treasury Secretary Paulson ⦠President Bush ⦠President-elect Obama ⦠former Fed Chairman Paul Volcker ⦠Warren Buffett ⦠and central bankers and politicians all over the world agree a new monetary system is needed.
The G-20 may propose devaluing all currencies, including the U.S. dollar and the euro.
So theyâll start hashing out the details to get the new financial architecture deployed as quickly as possible.
If you think Iâm crazy or propagating some kind of conspiracy theory, then consider the historical precedent â¦
To end the Great Depression in 1933 Franklin Roosevelt devalued the dollar via Executive Order #6102, confiscating gold and raising its price 69.3%, effectively kick starting asset reflation.
Only this time, it wonât be just the U.S. that devalues its currency. The world is too interconnected. Instead, the worldâs leading countries will propose a simultaneous and universal currency devaluation.
This time, they will NOT confiscate gold. There would be riots all over the globe if they even mentioned the âCâ word.
But they donât have to confiscate gold. Hereâs one scenario â¦
They cease all gold sales and instead, raise the current official central bank price of gold from its booked value of $42.22 an ounce â to a price that monetizes a large enough portion of the worldâs outstanding debts.
That way, just like in 1933, the debts become a fraction of re-inflated asset prices (led higher by the gold price).
And this time, instead of staying with the dollar as a reserve currency, the G-20 issues three new monetary units of exchange, each with equal reserve status.
The three currencies will essentially be a new dollar, new euro, and a new pan-Asian currency. (The Chinese yuan may survive as a fourth currency, but it will be linked to a basket of the three new currencies.)
The new fiat monetary units would be worth less than the old ones. For instance, it could take 10 new units of money to buy 1 old dollar or euro.
New names would be given to the new currencies to help rid the world of the ghost of a system that failed. Additional regulations and programs would be designed and implemented to ease the transition to a new monetary system.
The IMF would be at the center of the new monetary system.
The International Monetary Fund (IMF) would implement the new financial system in conjunction with central banks and governments around the world.
Keep in mind that the IMF is already set up to handle the transition, and has had contingency plans allowing for it since the institution was formed in 1944.
Included in the design and transition to a new monetary system â¦
A. A new fixed-rate currency regime. Immediately upon upping the price of gold and introducing the new currencies, a new fixed exchange rate system would be re-introduced. The floating exchange rate system would be tossed into the dust bin along with the old currencies.
This would kill any speculation about further devaluations in the currency markets, and drastically reduce market volatility.
B. To sell the program to savers and protect them from the currency devaluation, compensatory measures would be enacted. For instance, a one-time windfall tax-free deposit could be issued by governments directly to citizensâ accounts, or, to employer-sponsored pensions, to IRAs, or Social Security accounts.
Income taxes may subsequently be raised to pay for the give-away, or a nominal global type of sales tax could be enacted to help pay for the new system and the compensatory measures.
C. Additional programs would be designed to protect lenders and creditors. Lenders stand a much higher chance of getting paid off under the new monetary system â but with a currency whose purchasing power would now be a fraction of what it was when the loans were originated.
So programs would have to be designed to help lenders offset the inflationary costs of their devalued loans, probably via the tax code.
Naturally, all this is a bit more complicated than Iâve spelled out above. But that gives you a big-picture outline of what the plan could look like. And I think major changes like these are going to be set in motion at this weekendâs G-20 meetings in Washington.
Would they work?
Yes. They would help avoid a repeat of the deflationary Great Depression. But donât expect even a new monetary system to put the U.S. or the global economy back on track toward the high rates of real growth that weâve seen over the last several years. Thatâs simply not going to happen. Not for a while.
Instead, Iâm talking about a massive asset price reflation, negative real economic growth in the U.S. and Europe â but continued real GDP gains in Asia.
The Big Question: What gold price would be legislated to reflate the U.S. and global economy?
I canât tell you what gold price the G-20 would ultimately agree to. But hereâs what they will be looking at â¦
* To monetize 100% of the outstanding public and private sector debt in the U.S., the official government price of gold would have to be raised to about $53,000 per ounce.
* To monetize 50%, the price of gold would have to be raised to around $26,500 an ounce.
* To monetize 20% would require a gold price a hair over $10,600 an ounce.
* To monetize just 10%, gold would have to be priced just over $5,300 an ounce.
Those figures are just based on the U.S. debt structure and do not factor in global debts gone bad. But since the U.S. is the worldâs largest debtor and the epicenter of the crisis, the G-20 will likely base their final decision mostly on the U.S. debt structure.
So how much debt do I think would be monetized via an executive order that raises the official price of gold? What kind of currency devaluation would I expect as a result?
I would not be surprised to see the G-20 monetize at least 20% of the U.S. debt markets. THAT MEANS â¦
* Gold would be priced at over $10,000 an ounce.
* Currencies would be devalued by a factor of at least 12 to 1, meaning it would take 12 new dollars or euros to equal 1 old dollar or euro.
The return of the Gold Standard?
âBut Larry,â you ask, âhow could this be accomplished when we no longer have a gold standard? Further, are you advocating a gold standard?â
If the G-20 monetizes at least 20% of the U.S. debt markets, gold could easily hit $10,000 an ounce.
(cont)
Almost forgot - Uncle Larry thinks Gold is GOING TO THE MOON! So buy now at his favorite gold dealer.
-----------------------------------------
The G-20âs Secret Debt Solution
by Larry Edelson 11-13-08
Larry Edelson
If you think this weekendâs G-20 meetings in Washington are only about designing short-term fixes to the financial system and regulatory reforms for banks, hedge funds, brokers, mortgage companies and investment banks ⦠think again.
Behind the scenes, a far more fundamental fix is being discussed â the possible revaluation of gold and the birth of an entirely new monetary system.
Iâve been studying this issue in great depth, all my life. And given the speed at which the financial crisis is unfolding, I would be very surprised if what Iâm about to tell you now is not on the G-20 table this weekend.
Furthermore, I believe the end result will make my $2,270 price target for gold look conservative, to say the least. Youâll see why in a minute.
First, the G-20âs motive for a new monetary system: Itâs driven by and based upon this very simple proposition â¦
âIf we canât print money fast enough to fend off another deflationary Great Depression, then letâs change the value of the money.â
I call it â¦
The G-20 may propose devaluing all currencies, including the U.S. dollar and the euro.
The G-20 may propose devaluing all currencies, including the U.S. dollar and the euro.
âThe G-20âs Secret Debt Solutionâ
It would be a strategy designed to ease the burden of ALL debts â by simultaneously devaluing ALL currencies ⦠and re-inflating ALL asset prices.
Thatâs what central banks and governments around the world are going to start talking about this weekend â a new financial order that includes new monetary units that helps to wipe clean the worldâs debt ledgers.
It wonât be an easy deal to broker, since the U.S. is the worldâs largest debtor. But remember: Debts are now going bad all over the world. So everyone would benefit.
Fed Chairman Ben Bernanke ⦠Treasury Secretary Paulson ⦠President Bush ⦠President-elect Obama ⦠former Fed Chairman Paul Volcker ⦠Warren Buffett ⦠and central bankers and politicians all over the world agree a new monetary system is needed.
The G-20 may propose devaluing all currencies, including the U.S. dollar and the euro.
So theyâll start hashing out the details to get the new financial architecture deployed as quickly as possible.
If you think Iâm crazy or propagating some kind of conspiracy theory, then consider the historical precedent â¦
To end the Great Depression in 1933 Franklin Roosevelt devalued the dollar via Executive Order #6102, confiscating gold and raising its price 69.3%, effectively kick starting asset reflation.
Only this time, it wonât be just the U.S. that devalues its currency. The world is too interconnected. Instead, the worldâs leading countries will propose a simultaneous and universal currency devaluation.
This time, they will NOT confiscate gold. There would be riots all over the globe if they even mentioned the âCâ word.
But they donât have to confiscate gold. Hereâs one scenario â¦
They cease all gold sales and instead, raise the current official central bank price of gold from its booked value of $42.22 an ounce â to a price that monetizes a large enough portion of the worldâs outstanding debts.
That way, just like in 1933, the debts become a fraction of re-inflated asset prices (led higher by the gold price).
And this time, instead of staying with the dollar as a reserve currency, the G-20 issues three new monetary units of exchange, each with equal reserve status.
The three currencies will essentially be a new dollar, new euro, and a new pan-Asian currency. (The Chinese yuan may survive as a fourth currency, but it will be linked to a basket of the three new currencies.)
The new fiat monetary units would be worth less than the old ones. For instance, it could take 10 new units of money to buy 1 old dollar or euro.
New names would be given to the new currencies to help rid the world of the ghost of a system that failed. Additional regulations and programs would be designed and implemented to ease the transition to a new monetary system.
The IMF would be at the center of the new monetary system.
The International Monetary Fund (IMF) would implement the new financial system in conjunction with central banks and governments around the world.
Keep in mind that the IMF is already set up to handle the transition, and has had contingency plans allowing for it since the institution was formed in 1944.
Included in the design and transition to a new monetary system â¦
A. A new fixed-rate currency regime. Immediately upon upping the price of gold and introducing the new currencies, a new fixed exchange rate system would be re-introduced. The floating exchange rate system would be tossed into the dust bin along with the old currencies.
This would kill any speculation about further devaluations in the currency markets, and drastically reduce market volatility.
B. To sell the program to savers and protect them from the currency devaluation, compensatory measures would be enacted. For instance, a one-time windfall tax-free deposit could be issued by governments directly to citizensâ accounts, or, to employer-sponsored pensions, to IRAs, or Social Security accounts.
Income taxes may subsequently be raised to pay for the give-away, or a nominal global type of sales tax could be enacted to help pay for the new system and the compensatory measures.
C. Additional programs would be designed to protect lenders and creditors. Lenders stand a much higher chance of getting paid off under the new monetary system â but with a currency whose purchasing power would now be a fraction of what it was when the loans were originated.
So programs would have to be designed to help lenders offset the inflationary costs of their devalued loans, probably via the tax code.
Naturally, all this is a bit more complicated than Iâve spelled out above. But that gives you a big-picture outline of what the plan could look like. And I think major changes like these are going to be set in motion at this weekendâs G-20 meetings in Washington.
Would they work?
Yes. They would help avoid a repeat of the deflationary Great Depression. But donât expect even a new monetary system to put the U.S. or the global economy back on track toward the high rates of real growth that weâve seen over the last several years. Thatâs simply not going to happen. Not for a while.
Instead, Iâm talking about a massive asset price reflation, negative real economic growth in the U.S. and Europe â but continued real GDP gains in Asia.
The Big Question: What gold price would be legislated to reflate the U.S. and global economy?
I canât tell you what gold price the G-20 would ultimately agree to. But hereâs what they will be looking at â¦
* To monetize 100% of the outstanding public and private sector debt in the U.S., the official government price of gold would have to be raised to about $53,000 per ounce.
* To monetize 50%, the price of gold would have to be raised to around $26,500 an ounce.
* To monetize 20% would require a gold price a hair over $10,600 an ounce.
* To monetize just 10%, gold would have to be priced just over $5,300 an ounce.
Those figures are just based on the U.S. debt structure and do not factor in global debts gone bad. But since the U.S. is the worldâs largest debtor and the epicenter of the crisis, the G-20 will likely base their final decision mostly on the U.S. debt structure.
So how much debt do I think would be monetized via an executive order that raises the official price of gold? What kind of currency devaluation would I expect as a result?
I would not be surprised to see the G-20 monetize at least 20% of the U.S. debt markets. THAT MEANS â¦
* Gold would be priced at over $10,000 an ounce.
* Currencies would be devalued by a factor of at least 12 to 1, meaning it would take 12 new dollars or euros to equal 1 old dollar or euro.
The return of the Gold Standard?
âBut Larry,â you ask, âhow could this be accomplished when we no longer have a gold standard? Further, are you advocating a gold standard?â
If the G-20 monetizes at least 20% of the U.S. debt markets, gold could easily hit $10,000 an ounce.
(cont)
Uncle Larry (cont)
---------------------------------
My answers:
First, you donât need a gold standard to accomplish a devaluation of currencies and revaluation of the monetary system.
By offering to pay over $10,000 an ounce for gold, central banks can effectively accomplish the same end goal â monetizing and reducing the burden of debts, via inflating asset prices in fiat money terms.
Naturally, hoards of gold investors will cash in their gold. The central banks will pile it up. At the same time, other hoards of investors will not sell their gold, even at $10,000 an ounce. But the actual movement of the gold will not matter. It is the psychological impact and the devaluation of paper currencies that matters.
Second, I do NOT advocate a fully convertible gold standard. Never have. There isnât enough gold in the world to make currencies convertible into gold. It would end up backfiring, restricting the supply of money and credit.
What should you do to prepare for these possibilities?
Itâs obvious: Make sure you own some core gold, as much as 25% of your investable funds.
Also, as Iâve noted in past Money and Markets issues, you will want to own key natural resource stocks, and even select blue-chip stocks that will participate in the reflation scheme.
For more details and specific recommendations to follow, be sure to subscribe to my XXX YYYY (redacted by me) Report.
---------------------------------
My answers:
First, you donât need a gold standard to accomplish a devaluation of currencies and revaluation of the monetary system.
By offering to pay over $10,000 an ounce for gold, central banks can effectively accomplish the same end goal â monetizing and reducing the burden of debts, via inflating asset prices in fiat money terms.
Naturally, hoards of gold investors will cash in their gold. The central banks will pile it up. At the same time, other hoards of investors will not sell their gold, even at $10,000 an ounce. But the actual movement of the gold will not matter. It is the psychological impact and the devaluation of paper currencies that matters.
Second, I do NOT advocate a fully convertible gold standard. Never have. There isnât enough gold in the world to make currencies convertible into gold. It would end up backfiring, restricting the supply of money and credit.
What should you do to prepare for these possibilities?
Itâs obvious: Make sure you own some core gold, as much as 25% of your investable funds.
Also, as Iâve noted in past Money and Markets issues, you will want to own key natural resource stocks, and even select blue-chip stocks that will participate in the reflation scheme.
For more details and specific recommendations to follow, be sure to subscribe to my XXX YYYY (redacted by me
) Report.Snip>
For a chuckle here's a post by scam artist perm-bear/gold nut Larry Edelson who goes into detail about this theory of all currencies being devalued against, YOU GUESSED IT - GOLD. >End Snip
Gold is not an option to back world currencies... but the article does bring up an interesting concept (devaluation) of the currencies.
As far as the history for the Larry Guy... looks like he has spent some time and money with the SEC http://www.sec.gov/litigation/admin/2007/34-56011.htm
For a chuckle here's a post by scam artist perm-bear/gold nut Larry Edelson who goes into detail about this theory of all currencies being devalued against, YOU GUESSED IT - GOLD. >End Snip
Gold is not an option to back world currencies... but the article does bring up an interesting concept (devaluation) of the currencies.
As far as the history for the Larry Guy... looks like he has spent some time and money with the SEC http://www.sec.gov/litigation/admin/2007/34-56011.htm
If the world returns to a gold standard, then gold will be confiscated at whatever price the state decides to "buy" it at. And you can bet it won't be $5300/oz or whatever other fantastical number pops into Mr. Larry's head.
Leaders with armies at their backs don't pay retail...
Thread title reminds me of an old movie.."Rollover", with Kris Kristofferson.
Saudi's started trading all their T-Bills for gold, and did it so much the dollar crashed, then everything went over the cliff.
Saudi's started trading all their T-Bills for gold, and did it so much the dollar crashed, then everything went over the cliff.
I'd like to see that movie. Just reminds you that things seemed bleak in 1981 when the movie came out and it turned out the next year was the start of a twenty year bull market. Go figure.
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http://www.youtube.com/watch?v=iicB80Mwz8w
<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/iicB80Mwz8w&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/iicB80Mwz8w&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>
http://www.youtube.com/watch?v=iicB80Mwz8w