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All Signs Indicate Currency Devaluation Ahead

1 December 2009 No Comment

For the objective minds and non-brainwashed folks who are curious about the economy, one thing is clear, this recession is different.  The insane hole of debt that we were tethered to when we began this recession has only grown.  The results of this increase in debt can be debated but there are definitely no clear signs that we’re actually on the road to real recovery.

The path ahead at least for the next couple years seems to be clear.  More stimulus, more printing of money, more quantitative easing, more government incentives and programs to beg individuals to spend money.  Meanwhile, there are falling tax revenues so one has to wonder where the continued funding of these programs will come from?  I don’t see how there can’t be continued currency devaluation in the future.

What is crazy is how many countries around the world, or how many governments around the world are doing the same thing.  Basically, all major governments are all printing money in an attempt to prop up a failing global economy.  The currency destruction is just getting started.  Think about it, how does a government manage an impossible level of debt that can never be repaid?  You devalue the currency and the debt load shrinks.

Honestly, I hope to be wrong.  I just don’t see how I am.  What is the alternative?  Real economic growth to where we can grow our way out of this?  All “green shoots” have been the result of government stimuli.  Those green shoots wither when the stimuli is pulled away.  An American economy that has been destroyed slowly over decades cannot be rebuilt over a period of several months, and we can’t even address the real issues until we acknowledge them which we haven’t done yet.

I’d say the course of action for individuals is to be skeptical of real recovery and to continue to buy gold on dips.  If gold goes to where it would go in a currency crisis, a short term drop in gold of $100 or even $200 will be irrelevant.

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