The coming currency devaluation

Gold-Eagle.com ^ | Oct 10, 2003 | Cliff Droke

[Soren]

Here is an editorial posted at gold-eagle.com that rebuts Droke's article: Clif Droke Rebutted

[Starwind]

Thanks for the heads up.

Haynes writes:

Again according to Droke, Patterson asserts that the new bills will circulate domestically while greenbacks will circulate offshore all over the globe. "With the coming two-tiered currency system," Droke writes, "foreigners will continue to be allowed [sic] to use the greenbacks while U.S. citizens will be stuck with the 'crayola currency' which cannot be exchanged."

But Haynes has mis-attributed the quote. Droke cited 'commentator Terry Savage' on the issue of non-exchangability, not Patterson, though I quibble.

Some of Haynes points (like the reasonableness of advertising peachbacks) seem like straw-man arguments. Others, just seem to lack precision in their target?

Droke:
Patterson states, "I want every one...to think carefully about this...because we are coming very, very close to the end of the freely convertible domestic dollar. They cut in value could be as much as 50%...I believe those holding gold bullion bars offshore and bullion coins domestically will be very surprised to find that special regulations will prohibit them from profiting."

Haynes:
Supposedly, Patterson sees the value of the new dollar being cut as much as 50%, when convertibility to the old greenbacks is suspended. While I agree that the dollar will probably suffer horribly over the next few years, the loss will more likely come from the Fed's excessive printing and our FedGov's reckless spending. Everyone holding dollars, Americans and foreigners, will share the loss.

Neither writes very clearly, but I think Droke was saying that easy greenback convertibility to/from bullion would end and that bullion profitibility would lose 50% of it's value. Not that the Peachback would lose 50% as Haynes criticized.

I can't evaluate Haynes' dissection of Droke's quoting Patterson's patently inaccurate statements about reporting requirements on gold coin sales, FWIW.

Haynes does point out the $20 peachbacks are already being introduced into circulation now (actually a couple weeks ago) without fanfare or restrictions - verified with a google search. I wonder what will happen when these bills show up in Panama or internationally and how prepared are other exchanges and merchants to accept the peachbacks?

Regardless, neither Haynes nor Droke has added much information or insight.

In hindsight, this thread has been more informative.

[Cold Heat]

This is crap from the types of folks who are still pissed that we went off the gold standard.

Our currency value is quietly being allowed to drop so that exports can increase and the economy rebound strongly.

The Fed does this all the time, but denies it.

So do other countries that have trade imbalances.(Not China)

We have been begging China to stop propping up it's currency and allow it to float so that we do not have to do this stuff, as I understand.

They have thus far refused.

[AFreeBird]

Yes I would assume so. The existing mechanisms for recognizing worn out greenbacks would remain in force as well as be applied to the peachbacks. Exchange would simply be in accord with what is the 'allowed' currency based on domestic or international location. The treasury would retain responsibility for printing both currencies and dispensing new bills to (and collecting old bills from) banks domestic and international as they do now.

So let me see if I've got this straight: They're replaceing the "greenback" with "peachbacks" dometically while retaining the "greenback" overseas beacuse of countefeiting measures, even though greenbacks are probably counterfieted oveseas more than here?

This does not make sense.