DEVALUE THE DOLLAR BY 50%

[Beau]

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http://www.youtube.com/watch?v=KGoPbfo3NYY&NR=1



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[Beau]

Has this hit anyone yet that everything will double in price ?

groceries, gas plus what it going up to more than double.

everyone should go now and get the supplies you need.

anything you need now while you still have time.

[HoardCopperByTheTon]

You never have enough time. What are you doing besides hoarding PM's and Copper to best position yourself for a possible dollar devaluation?

[Kurr]

wouldn't a 50% de valuation lead to a real world price increase of 4 fold?

I.e if you had 100.00 cash and were going to get a 100.00 widget, and50% de valuation occured, wouldn't you have a 50.00 cash flow while the price of the widget would double to 200.00? Or would it drop to 50.00 "new money"?

[franklin]

kurr:
I am interested in knowing the answer to your question also. In addition, what will be the scenario if:
1) A retirement annuity is currently $3,000/month. Will it change?
2) What will be the status of a house loan with an outstanding balance of $50,000? Will it remain the same but take twice as long to pay off with devalued currency?
3) If you choose to provide owner financing on a piece of property you are selling, what strategies would protect you?
4) What about the value of coinage? Will it be inferred that it is 1/2 value? Wouldn't it be too expensive to remint all the coinage?
Just wondering.
I'm thinking obtaining tangible assets is a good strategy but you can't exchange all of your currency.

[Kurr]

To add to the confusion, paper dollars are "private money" (fed reserve notes) and coins are "public money" (United States "Hard Currency") minted and value regulated by congress, as I understand it.

How would that be addressed?

[Delawhere Jack]

To add to the confusion, paper dollars are "private money" (fed reserve notes) and coins are "public money" (United States "Hard Currency") minted and value regulated by congress, as I understand it.

How would that be addressed?

COINS BITCHEZ! QUARTERS, DIMES AND NICKELS! (and copper pennies, of course..)

Sorry, been spending too much time reading comments at zerohedge I guess.....

I'm ordering some coin from the bank whose building I work in tomorrow. LOTS of COIN!

[theo]

I've been hearing these theories about a sudden, deliberate devaluation for a couple years now and I have serous doubts. My first question is; what exactly will the dollar be devalued against? In 1933 the dollar was devalued against gold, however today the U.S. Government does not acknowledge any link between gold and the dollar. Secondly how could the U.S. Government see such a move as being in its best interest? A sudden, public currency devaluation would likely cause the Government to lose most of its power and all of its credibility. Wouldn't a stealthy, relatively slower devaluation be far more preferable?

[horgad]

"Wouldn't a stealthy, relatively slower devaluation be far more preferable?"

I can see advantages and disadvantages to both, but I am sure that I am only seeing a small part of it. Anyhow here are a few thoughts.

If you let the current "slow" devaluation continue, people will continue to start to notice and move more and more money outside of the country and/or into stuff like gold. This weakens the dollar, but does not necessarily benefit the Fed and friends. Always, the printers want to take best advantage of being the first to spend their newly printed money.

In other words, they benefit most if its their printing that causes the devaluation and not a public run from the currency. Which is why you always see them talking a strong dollar while the print and devalue. But once the jig is up and people are fleeing despite their strong dollar talk, a quick devaluation might be the best way to go for them. That way they can catch as many savers with their pants down as possible.

So the slow way is good to fool as many people as possible for as long as possible and the quick way is for when too many "fools" start to catch on to the game or something like that.

[Rodebaugh]

wouldn't a 50% de valuation lead to a real world price increase of 4 fold?

I.e if you had 100.00 cash and were going to get a 100.00 widget, and50% de valuation occured, wouldn't you have a 50.00 cash flow while the price of the widget would double to 200.00? Or would it drop to 50.00 "new money"?

I think of it this way:

Today $100 buys 2 widgets.
Tomorrow with 50% devaluation that $100 buys 1 widget.

Man oh man do I love me some widget!

[theo]

"Wouldn't a stealthy, relatively slower devaluation be far more preferable?"

I can see advantages and disadvantages to both, but I am sure that I am only seeing a small part of it. Anyhow here are a few thoughts.

If you let the current "slow" devaluation continue, people will continue to start to notice and move more and more money outside of the country and/or into stuff like gold. This weakens the dollar, but does not necessarily benefit the Fed and friends. Always, the printers want to take best advantage of being the first to spend their newly printed money.

In other words, they benefit most if its their printing that causes the devaluation and not a public run from the currency. Which is why you always see them talking a strong dollar while the print and devalue. But once the jig is up and people are fleeing despite their strong dollar talk, a quick devaluation might be the best way to go for them. That way they can catch as many savers with their pants down as possible.

So the slow way is good to fool as many people as possible for as long as possible and the quick way is for when too many "fools" start to catch on to the game or something like that.

I agree with everything you said except for the "official" devaluation. People think that since other nations seem to routinely devalue their currencies, the U.S. could do so as well. The problem is that most of those currencies were devalued against the U.S. dollar. What would the U.S. dollar devalue against?

Gold or silver? Fat chance. Can you imagine Geithner announcing that!?!?!

Oil? Not with the U.S. military presence in the Middle East.

A basket of other major currencies? Doubtful; once the Dollar fails most other fiat curriences will destabilize as well.

A scenario I find plausible is the U.S. riding the Dollar all the way down; until (as you put it) even the "fools" catch on. And then issuing a "new" currency at an exchange rate of something like 10 to 1. This would in effect be a 90% devaluation.

[HoardCopperByTheTon]

Gonna get me bags and bags of little brown circular widgets.

[Rodebaugh]

Gonna get me bags and bags of little brown circular widgets.

The best type of widget is a widget worth 2.5 times it's face value........ thats right widgets have face value now

[beauanderos]

I still say the best way to protect against this happening is 1) keep minimal money in the bank, just enough to pay bills 2) keep minimal cash (in the form of currency) outside the banks, 3) keep the greatest proportion of your cash in the form of coins. If, say, there were a 50% devaluation of the dollar... Friday night they announce that when the banks open on Monday you may redeem the current currency for "new dollars" and only have one month to do so, at the rate of $20 old for $10 new, you will instantly lose half of your spending power. But what if your $20 is in pennies? What are they going to replace it with? They can't. It would take years to mint replacement coins. And they can't recall all coins, enforced by threats. How could they determine that you were later using a predevaluation coin vs a postdevaluation coin? If a devaluation occurs, they will be forced to recognize existing coins as having the same fractional purchasing power as they did with the old currency. Thus, you won't make money by keeping coins instead of cash, but you will preserve your purchasing power rather than losing half. Your $20 equals 2,000 cents. If the same one-hundredth of a new dollar is attributed to the old cents, than you will have $20 new money, not $10 as everyone else who has no coins will experience. So don't be so quick to return those skunk boxes and zincs, they may prove handy yet.

[franklin]

beauanderos:
Thanks for your thoughtful reply. You answered at least one of my questions.

[Thogey]

I still say the best way to protect against this happening is 1) keep minimal money in the bank, just enough to pay bills 2) keep minimal cash (in the form of currency) outside the banks, 3) keep the greatest proportion of your cash in the form of coins. If, say, there were a 50% devaluation of the dollar... Friday night they announce that when the banks open on Monday you may redeem the current currency for "new dollars" and only have one month to do so, at the rate of $20 old for $10 new, you will instantly lose half of your spending power. But what if your $20 is in pennies? What are they going to replace it with? They can't. It would take years to mint replacement coins. And they can't recall all coins, enforced by threats. How could they determine that you were later using a predevaluation coin vs a postdevaluation coin? If a devaluation occurs, they will be forced to recognize existing coins as having the same fractional purchasing power as they did with the old currency. Thus, you won't make money by keeping coins instead of cash, but you will preserve your purchasing power rather than losing half. Your $20 equals 2,000 cents. If the same one-hundredth of a new dollar is attributed to the old cents, than you will have $20 new money, not $10 as everyone else who has no coins will experience. So don't be so quick to return those skunk boxes and zincs, they may prove handy yet.

You need to rethink what you wrote. Coins will maintain their intrinsic value and only if they can be melted.
Proof, look how Mexico devalued (demonetized) their pesos, and by the time they did that their coins were pretty much crap anyway. They demonetized their coins pretty darn fast. They just decreed an old peso to be worth 1/100 of a new one.

[beauanderos]

Franklin, in answer to another of your questions (I'm in the same boat)... the value of your annuity will drop in half. You would still receive the same amount, but it would only purchase half of what it did previously. The standard of living will undergo an immediate horrendous alteration should this occur. You can be sure they won't cut your credit card bills or mortgage in half to accomodate you. They certainly won't double your wages. The only way to combat this is to be sitting heavily in precious metals when this happens, and when a commensurate (or more) revaluation of silver and gold occurs, then you can sell enough to pay off your bills.

[Thogey]

I wish that Mexican guy who visited RC a few months back was still here, (the battery guy). His account of what happened was pretty interesting.

[beauanderos]

Eric... it would take the mint three or four years to replace existing circulating coinage. Mexico is a poor example, they had nowhere near the amount of coinage in circulation as does the US. I stand by my thesis.

[Thogey]

They don't have to replace the coinage, they just have to restate its value,...

and you don't have a thesis you have a hypothesis.

[beauanderos]

So then they would require people to spend twice the number of coins to accomplish the same transaction? Sounds like a half-baked scheme cooked up by someone who has been out in the Arizona sun for too long

[Thogey]

Look Ray I don't feel like arguing with a crusty old fart, I'm hungover and the concept is basic.

The whole point of this forum is to discuss exploitation of the intrinsic value [of the metal] in our coins. If the coins have no, or little metal value they can be devalued. They are being devalued now, thats why when the metal exceeds the FV they disappear.

Now you have no choice but to agree with me and go feed the pigeons in the park.

[Thogey]

You see, he dropped offline. I declare victory.

[beauanderos]