Posted on 11/14/2008 3:36:35 AM PST by Beloved Levinite
The G-20’s Secret Debt Solution by Larry Edelson 11-13-08
If you think this weekend’s G-20 meetings in Washington are only about designing short-term fixes to the financial system and regulatory reforms for banks, hedge funds, brokers, mortgage companies and investment banks … think again.
Behind the scenes, a far more fundamental fix is being discussed — the possible revaluation of gold and the birth of an entirely new monetary system.
I’ve been studying this issue in great depth, all my life. And given the speed at which the financial crisis is unfolding, I would be very surprised if what I’m about to tell you now is not on the G-20 table this weekend.
Furthermore, I believe the end result will make my $2,270 price target for gold look conservative, to say the least. You’ll see why in a minute.
First, the G-20’s motive for a new monetary system: It’s driven by and based upon this very simple proposition …
“If we can’t print money fast enough to fend off another deflationary Great Depression, then let’s change the value of the money.”
I call it …
The G-20 may propose devaluing all currencies, including the U.S. dollar and the euro. “The G-20’s Secret Debt Solution”
It would be a strategy designed to ease the burden of ALL debts — by simultaneously devaluing ALL currencies … and re-inflating ALL asset prices.
That’s what central banks and governments around the world are going to start talking about this weekend — a new financial order that includes new monetary units that helps to wipe clean the world’s debt ledgers.
It won’t be an easy deal to broker, since the U.S. is the world’s largest debtor. But remember: Debts are now going bad all over the world. So everyone would benefit.
Fed Chairman Ben Bernanke … Treasury Secretary Paulson … President Bush … President-elect Obama … former Fed Chairman Paul Volcker … Warren Buffett … and central bankers and politicians all over the world agree a new monetary system is needed.
So they’ll start hashing out the details to get the new financial architecture deployed as quickly as possible.
If you think I’m crazy or propagating some kind of conspiracy theory, then consider the historical precedent …
To end the Great Depression in 1933 Franklin Roosevelt devalued the dollar via Executive Order #6102, confiscating gold and raising its price 69.3%, effectively kick starting asset reflation.
Only this time, it won’t be just the U.S. that devalues its currency. The world is too interconnected. Instead, the world’s leading countries will propose a simultaneous and universal currency devaluation.
This time, they will NOT confiscate gold. There would be riots all over the globe if they even mentioned the “C” word.
But they don’t have to confiscate gold. Here’s one scenario …
They cease all gold sales and instead, raise the current official central bank price of gold from its booked value of $42.22 an ounce — to a price that monetizes a large enough portion of the world’s outstanding debts.
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That way, just like in 1933, the debts become a fraction of re-inflated asset prices (led higher by the gold price).
And this time, instead of staying with the dollar as a reserve currency, the G-20 issues three new monetary units of exchange, each with equal reserve status.
The three currencies will essentially be a new dollar, new euro, and a new pan-Asian currency. (The Chinese yuan may survive as a fourth currency, but it will be linked to a basket of the three new currencies.)
The new fiat monetary units would be worth less than the old ones. For instance, it could take 10 new units of money to buy 1 old dollar or euro.
New names would be given to the new currencies to help rid the world of the ghost of a system that failed. Additional regulations and programs would be designed and implemented to ease the transition to a new monetary system.
The IMF would be at the center of the new monetary system. The International Monetary Fund (IMF) would implement the new financial system in conjunction with central banks and governments around the world.
Keep in mind that the IMF is already set up to handle the transition, and has had contingency plans allowing for it since the institution was formed in 1944.
Included in the design and transition to a new monetary system …
A. A new fixed-rate currency regime. Immediately upon upping the price of gold and introducing the new currencies, a new fixed exchange rate system would be re-introduced. The floating exchange rate system would be tossed into the dust bin along with the old currencies.
This would kill any speculation about further devaluations in the currency markets, and drastically reduce market volatility.
B. To sell the program to savers and protect them from the currency devaluation, compensatory measures would be enacted. For instance, a one-time windfall tax-free deposit could be issued by governments directly to citizens’ accounts, or, to employer-sponsored pensions, to IRAs, or Social Security accounts.
Income taxes may subsequently be raised to pay for the give-away, or a nominal global type of sales tax could be enacted to help pay for the new system and the compensatory measures.
C. Additional programs would be designed to protect lenders and creditors. Lenders stand a much higher chance of getting paid off under the new monetary system — but with a currency whose purchasing power would now be a fraction of what it was when the loans were originated.
So programs would have to be designed to help lenders offset the inflationary costs of their devalued loans, probably via the tax code.
Naturally, all this is a bit more complicated than I’ve spelled out above. But that gives you a big-picture outline of what the plan could look like. And I think major changes like these are going to be set in motion at this weekend’s G-20 meetings in Washington.
Would they work?
Yes. They would help avoid a repeat of the deflationary Great Depression. But don’t expect even a new monetary system to put the U.S. or the global economy back on track toward the high rates of real growth that we’ve seen over the last several years. That’s simply not going to happen. Not for a while.
(Excerpt)
What he writes is plausible only if things get worse.
If it happens, the right move is to buy gold and gold stocks.
The consequences are difficult to figure out because the complexity is overwhelming.
What is clear is that it would diminish the US weight in the world. This might be inevitable anyway. And this would be a last opportunity to establish a peaceful reordering that takes into account what has happend in the last 60 years since the end of WWII.
If change in the system is inevitable, and the US strength is relatively weakening(and it is) , it is better to change it from the current weighting than from the future.
Sodom and Gomorrah riots in California, and now a one world currency trial balloon.
Time is running out.
bookmark
Looks to me like we’re heading for a dual-parallel economy —
1) The controlled, manipulated, politicized, bent/folded/mutilated economy of the bankers, financiers, and gummints...
and
2) Barter economy for us ‘Great Unwashed’ down here in the weeds....
A Vanity from a few days ago:
http://www.freerepublic.com/focus/news/2130877/posts
Compare this thread from earlier this year http://www.freerepublic.com/focus/f-chat/1994684/posts
With this article & recent history... http://www.cnbc.com/id/27641538
Interesting read. It has the feel of an ‘infomercial.’ I think I”ll study up on this a little bit.
I agree, hence my disclaimer. However this guy is very smart & I believe he knows what he is talking about. He spent his whole adult life studying the the financial & commodities markets, especially gold.
this looks like a Matt Furey production or one of those other links you find on newsmax.com
LLS
No way in the world. If they really have in mind to do this, they will first deprive the sheeple of gold.
Tight now gold is no better than a commodity traded on global exchanges. They’d have to fix the price of gold, thus removing it from exhanges.
Secondly, this will never happen for the same reason the gold standard was abandoned in the first place. They can’t devalue currency so readily under a gold regime.
No, folks, this article is just another gold bug who’s wishful thinking is to reflate the value of his gold stock.
ping
Democrats may achieve what bin Laden failed to do—destroy capitalism.
This guy was TOTALLY wrong about the price of oil, and published a forecast at the peak of oil prices telling us why it was going to continue to go up...
Governments won’t agree without war
(/sarc tag off)
This one flew around the internet at light speed
And Larry Edelson is not just shilling his new letter
He gives away lots for free and can be found at Martin Weiss’s money and markets free newsletter. Which is where I saw this first
This guy was TOTALLY wrong about the price of oil, and published a forecast at the peak of oil prices telling us why it was going to continue to go up...
__________________
Dennis Gartman called oil right at $115. It rose some more of course but he was out and he was right. I got out too. Out of oil stocks
Normally it would be Us that would fight the war to protect a monetary system that benefited us far more than anyone else.
Unfortunately, We are to be slaves to bankers who create money out of nothing and charge interest for the act of bookmaking.
Onward to serfdom. I weep for my country.
I don’t think this is happening yet, but it wouldn’t be a shocker.
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