Wednesday, December 2, 2009

Dollar Drops 98%

On 1 December 2009 gold hit $1,200 in the Far East. In 1933 a $20 "double eagle" had .9675 ounces of gold, therefore the dollar's gold content was .9675 / 20 = .048375. At $1,200 it's now .000833, .000833 / .048375 = .0172. The gold value of the dollar has fallen 98.28% (1 - .0172) since 1933. That's a bear market where I come from. And it ain't over.

1 comment:

Anonymous said...

Even Wikipedia knows what is going on...

Reasons for debasement

The primary reason a government will debase its currency is financial gain for the sovereign at the expense of citizens.

By reducing the silver or gold content of a coin, a government can make more coins out of a given amount of specie. Inflation follows, allowing the sovereign to pay off or repudiate government bonds.[1]

However, the purchasing power of the citizens’ currency and standard of living[citation needed] has been reduced.

Modern currency debasement takes its form when central banks increase the money supply or “print money” as it is called in the common parlance (though the increase is primarily done electronically now).

Recently, in the U.S. the Federal Reserve has embarked on an action called quantitative easing.[2]"