Tuesday, July 7, 2009

Intentional Currency Devaluation

Not long ago I wrote a post to Bill Bonner at The Daily Reckoning. I explained why I thought the Fed would devalue the currency into near nothingness. Of all the reasons for doing this, and there are a few, one sticks out to me the most. It has to do with power. And when speaking of money and power, we are speaking of the same thing. Would devaluing the currency give the Fed power? Wouldn't it damage their credibility as the "Defenders of the Faith" (i.e., wards of the con)? On the surface it would seem that yes, it would be harmful to their institution. However, what if it was necessary to preserve it?

Consider: The US is approaching nearly 400% debt to GDP. If you do not know someone wading in the quagmire of debt you probably do not want to know them. Sad but true. It happens to be our way of life. Not saying it's the best way but there it is. Don't like it? Change it.

Sometimes on my way home from work I see this guy stopped on the side of the road. He's wearing old, dirty clothes and his tired and worn looking truck (surely paid off) is not far behind. Certainly it's there to store the bags of yummy grasses and weeds and whatever other edibles he's picking up. He's been doing this for years. Looks like a nice enough chap. Perhaps he could invite you to dinner. You could feast on "vegetable" soup and imbibe copious amounts of dandelion wine. And at what price? FREE! The stuff's everywhere!

See what I mean? So back to the point. What if the Fed was devaluing the currency in order to preserve power, not gain it? You see, me personally, when I look at my debt situation and look at the situation of others, I don't possibly see how this can be sustained. If more and more people keep getting further and further in debt and keep looking out further into the future and there's nothing there for them but servitude, how inspired will you be to serve your debt masters? You need more debt just to keep up with inflation. When does this break? Perhaps now? Perhaps.

I suggest that the Fed is devaluing the currency in order to give folks a way out of debt and protect their own froggy, reptilian throats from the lynch mob's noose. How will you escape debt? Well that depends on how much Silver and Gold you own. It's being telecast everywhere. If you don't pick up on it you will stay in debt becuase you are not one of the ones the Fed is worried about. You won't do anything to protect yourself now so why should you ever do anything to put yourself in danger? Revolt with the others? Ha!!!! Nay you say, read this article by Howard Katz and see what kind of images it conjures up.

On to the article......

"Why The Fed is Depreciating the Currency", by Howard Katz.

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