Upcoming S&P Downgrade & A Crumbling Dollar But “America is Back!”

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This Wall Is Tumbling Down

The U.S. is facing a new S & P downgrade if we do not reach a budget deal. Obama and Reid will not allow a budget deal – it’s not happening. It’s been over a 1000 days since we have had a budget and it won’t happen because people might notice the disastrous deficit spending of the Obama administration. They are counting on us being idiots. Read more: Money News

While all this is going on, we can continue to watch the dollar depreciate as the Feds print trillions of dollars. Soros will have his wish – he wants to crash our currency as he did the British Crown.

Forbes: The Federal Reserve Open Market Committee (FOMC) has made it official:  After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years.  The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.

An increase in the price level of 2% in any one year is barely noticeable.  Under a gold standard, such an increase was uncommon, but not unknown.  The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged.  A dollar 20 years hence was still worth a dollar.

But, an increase of 2% a year over a period of 20 years will lead to a 50% increase in the price level.  It will take 150 (2032) dollars to purchase the same basket of goods 100 (2012) dollars can buy today.  What will be called the “dollar” in 2032 will be worth one-third less (100/150) than what we call a dollar today.

The best the Fed can do — an average debauch in the dollar’s value of 2% a year while producing recurring financial crises and a more cyclical economy — is demonstrably inferior to the results produced by the classical gold standard.  Here’s just one example.   The largest gold discovery of modern times set off the 1849 California gold rush and increased the supply of gold in the world faster than the increase in the output of goods and services.  The price level in the U.S. did increase by12.4 percent over the next 8 years.  That translates into an average of just 1.5% a year.  The gold standard at its worst was better than the best the Fed now promises to do with the paper dollar.

The Fed’s best is hardly good enough.  The time has arrived for the American people to demand something far better — a dollar as good as gold.

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