Tuesday, September 29, 2009

The Future of the Dollar Explained, Why and How it Will Lose 50% of its Value

Jim Rickards, director of market intelligence for Omnis explains on CNBC that the fact that Fed Governor Kevin M. Warsh (the governor who acknowledged that the Fed is concealing records of its gold swap arrangements) wrote a piece on the Wall St. Journal on Friday, the same day the G-20 meeting, is no coincidence. The piece was entitled "The Fed's Job is Only Half Over".

Warsh wrote: "Equally, there are uncertainties about the performance of the monetary transmission mechanism and the operation of the Federal Reserve's unconventional policy tools.""For example, the level of asset prices and associated risk premiums, and gauging their trend and durability, will demand careful assessment.

Mr. Pickards takes the above "assets" to mean gold.

Mr. Pickard sees a quiet 'under the table'-like 50% devaluation of the U.S. Dollar versus a new "currency" controlled by the IMF.

Rickards understand Warsh's essay to mean that the Fed will regulating the gold price closely even as the Fed needs to devalue the dollar by about half over the next 14 years (he says about 4% per year) to restore solvency to the United States.

Rickards says the Fed's purpose is to inflate the dollar to prop up the banks; claims that the Fed's purpose is to achieve "price stability" are manifestly nonsense. Central banks plan to turn the IMF's SDRs' (Special Drawing Rights) into the new world reserve currency. In other words, a new round of money printing to create some stability during the dollar's steady but gradual and controlled devaluation.

Rickards said gold will go to $2,000 but "When you own gold you're fighting every central bank in the world."

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