E A Global Currency Reval Won't Be Easy

FX traders may not want it. Those rich in dollars and dollar-denominated assets may not want it, but who can doubt that those who are big lenders to the US would go for it.

The bush I'm beating around is the Great Global Currency Reval and Re-set that we keep hearing about. If and when such a thing happens it will occur soon after the global monetary system regurgitates massive toxic debt.

This will come as a shock to those who're expecting the event to mark a return to the gold standard. No doubt gold will still--and always--be considered a solid foundation of wealth, but I don't expect gold to be the single standard of wealth that it was from Adam Smith's day right up to Bretton Woods.

The process of revaluing global currencies is complex--much too complex to be gauged by gold alone. When the nations convene for revaluing and re-pegging each one should--and will--come to the table with minutely detailed inventories of existing national assets as well as projected annual wealth from undeveloped resources.

As an aside, I'm not even sure that when D-Day (Debt-Day) comes and gold prices start to rise, that they will rise as high as some theorize. Oh, I know how gold and silver are supposed to blast off when the next crisis explodes, but I'm not so sure that will happen.

Maybe for silver, but not for gold. Why? Because I'd bet that there are stacks, piles, mounds, and perhaps unimaginable tons of hoarded gold stashed away in dark, secret Chinese, Russian, Indian, Japanese, Indonesian, Turkish, Iranian, Iraqi, and Arabian places that will hit the market when the market starts looking like a free market again.

If I were overseeing the process (I haven't been employed to do so) I would want to take a good, hard look at each government's debt, and debt pattern and history. I would also want to rigorously examine per capita debt. And I'd want to see if and how the central banks of debtor nations encouraged debt.  I would not encourage nations that used debt to take advantage of other nations...and lenders, to expect a high re-val of their currency.

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