Argentina recently announced that it had devalued its currency (pesos) by 50% in relation to the US dollar. With its huge debt/deficit problem, this was the only way to stabilize its money and reduce its liabilities. Can the US be far behind?
Argentina was able to do this by simply declaring a new exchange rate against the dollar. The US will be unable to do this because there is no other country's currency for which a fixed exchange rate could be established. Instead, the US will have to establish a fixed exchange rate against GOLD.
The US could cut its debt burden in half by reestablishing a gold standard at $2000 per ounce. Combined with reduced federal spending, this would provide a stable intrinsic value to the dollar which could actually lessen the interest rates paid on future borrowing. This may sound counterintuitive, but where else could new lenders get a more secure rate of return?
What are your thoughts?
Argentina was able to do this by simply declaring a new exchange rate against the dollar. The US will be unable to do this because there is no other country's currency for which a fixed exchange rate could be established. Instead, the US will have to establish a fixed exchange rate against GOLD.
The US could cut its debt burden in half by reestablishing a gold standard at $2000 per ounce. Combined with reduced federal spending, this would provide a stable intrinsic value to the dollar which could actually lessen the interest rates paid on future borrowing. This may sound counterintuitive, but where else could new lenders get a more secure rate of return?
What are your thoughts?
