Showing posts with label Carmen Reinhart. Show all posts
Showing posts with label Carmen Reinhart. Show all posts

Monday, October 7, 2013

Be Careful, Default Is A Venerable Old Liberal Democrat Specialty, Exponentially Imitated By Liberal Republicans

The Atlantic stumbles into the truth, here:


In 1933, President Roosevelt devalued the dollar against gold. That violated the so-called gold clause, which required that all public debts be paid in gold coin of a fixed weight. (America’s overwhelmingly pro-Roosevelt Congress simply declared all gold clauses null and void.) The 1933 devaluation effectively amounted to paying off debts with devalued currency, which is widely viewed as a default. In fact, in her exhaustive research on sovereign debt, economist Carmen Reinhart clearly classifies the 1933 devaluation as a domestic default.


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Imagine waking up on a Monday morning only to find out you now needed almost 15 more greenbacks to get back the same ounce of gold which on Friday the government basically confiscated from you for 20 of them, and they wouldn't let you. That's the legacy of the Roosevelt Democrats.

30 million ounces of gold were handed over to the government in exchange for $600 million, and then the price of that gold was effectively raised to $1.05 billion.

The price of gold was kept close to $35 an ounce for 31 of the next 38 years, when at length Nixon closed the gold window in 1971 when gold averaged about $45 an ounce.

Since then dollar devaluation to date has come to an additional almost 97%.

Total dollar devaluation since 1933 as of this very hour now comes to 98.43%.

Sunday, November 27, 2011

The 2010s Will Be Grim, a Depression of Spectacular Severity

So says Martin Hutchinson (who blames the Federal Reserve for the Great Depression) for the Asia Times:

[T]he 2010s will be a grim decade, because the transitional and wealth effects of eliminating the government debt markets that have formed the centerpiece of the last three centuries will be enormous - a Reinhart/Rogoff depression of spectacular severity.

Bond market investors, take note.

Read the rest here.