The Continued Depreciation of Currencies

During our recent holiday in Australia, we were beat up severely with the exchange rate from US Dollars to Aussie Dollars.  Arrrgh!  We give them $100 for about $90,,, so much for the published rate.  On top of that, prices reflect rates of yesteryear, a double whammy.  $21 breakfast anybody?  No refills on coffee. 

The decline of the U.S. dollar has been substantial without most Americans realizing the impact.  In the end, gold IS the barometer and this is why there is so much energy and resources spent attempting to manipulate its price.  August 15th, 2011, was the 40 year anniversary of being off the gold standard.  For one generation, governments decided what money was worth, a dangerous reality.  How can a small group of men have the wisdom to determine how global economics ought to work?  How can they set aside self-interest motives for the benefit of mankind?  They haven’t.

Economic cycles require ebb and flow.  Any attempt to interfere only makes the next aspect of the cycle more severe in its correction.  Man’s attempt to control these natural cycles will backfire with unintended consequences.  History has shown there is no escape from this reality for various empires have attempted this only to see the same outcome.  Each generation thinks they are smarter than the previous assuming that more information yields greater wisdom.  Not!

I expect gold to hit $10,000-$12,000.  Silver will rise proportionately with gold.  This does not bode well for those who maintain a trust in currency but there does not appear to be any way out unless Our Heavenly Father intervenes utilizing some other method of monetary reality yet to be revealed.  We could easily see a rise to $4,500 with extreme gut-wrenching volatility accompanying the move.  $1,000 dips could be in the cards as we move to new highs.

A well respected retired investor put it in these terms:


  1. The slate needs to be wiped clean and a new sound monetary system introduced.
  2. That will require the elimination of all debt, deficits, unfunded social entitlements, the US Dollar as Reserve currency, and the big one, the $600 trillion of derivatives.
  3. To eliminate these problems by default and deflation will cause a banking collapse and untold economic pain, leading to riots and political change.
  4. Politicians are appointed for relatively short terms and opt for the easy solutions.
  5. While politicians continue to have the ability to create new money at will, they will do so in order to prevent a melt down on their watch.
  6. Consequently the odds point to governments wiping the slate clean by generating enough new money to eventually destroy their currencies.
  7. The new international monetary system is likely to involve precious metals. It will have to be money that people trust and that governments cannot create at will.

I agree.  Cinch the saddle up tight, It’s going to be a wild ride!

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