A Solution
The only way the US's debts can ever be seriously addressed is to devalue the dollar.
The US owns the world's greatest hoard of gold. Here's what I think the authorities have to do. They should unilaterally, overnight raise the price of gold to a high value, maybe around $10,000 an ounce. Thus, each dollar would be worth one ten-thousandth of an ounce of gold. This would allow our enormous debt to be paid off with vastly devalued dollars.
This would be inflationary, since everyone who owned gold would own a pile of devalued dollars. The huge increase in the number of dollars would drive prices up, and that would work against the current forces of deflation.
Nations owning gold would in turn (in order to compete) -- devalue their own currencies, and thus be able to pay off their own "impossible" debts. In the end, a new world monetary system would have to be established, but the terrible problem of a planet choking on debt would be solved.
I think this is the only way the world-debt problem is going to be solved. It will, in the end, be solved by devaluation (as Roosevelt did in 1933, when he suddenly and unilaterally raised the price of gold from 20 to 35 dollars an ounce). Interestingly, we now hear an increasing amount of talk regarding gold entering the world monetary system. Furthermore, I think we are going to hear even more about gold in future months. Smart, wealthy, well-informed investors will start accumulating gold. (Soros and Paulson are doing it already. I don't doubt that Soros has inside information.)
Richard Russell
PS Careful because the Goverment can try to confiscate the Gold you have before it raises the price. Spread it around.
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