Radical Solution to the Global Financial Crisis?
The G-20 nations met with President Bush over the weekend trying to collectively solve the global financial crisis. At this point, nothing much was accomplished, but they’ll be meeting again shortly after Barack Obama becomes President. In the meantime, it looks like the short-term solution of the day seems to be continuing to throw money at the problem and hoping against hope that all that money will somehow cause the major economies of the world to catch fire.
I’m no economist, and I honestly don’t know if it will work. But I read an article that got me to thinking about some of the more radical solutions they might decide to implement if all that cash doesn’t catch a friendly spark and a favorable wind that reignites the economy in the meantime.
In 1933, President Roosevelt used the power of his Executive Order pen to simultaneously devalue U.S. currency and confiscate gold. He then raised the value of gold by about 70% which revalued all financial assets. It worked back then. Would a similar idea – implemented on a global basis – work today?
I’m not suggesting they would confiscate gold – and the author of the article wasn’t either. What he was suggesting is that if they were to simply restate the value of gold that it could have the same effect. By skyrocketing the value of gold, they would basically be raising the value of everything of value – gold, real estate, etc.
Would it work? I have no idea.
What I do know is that governments around the world can’t seem to print money or IOU’s fast enough to keep up with demand. Nothing they’ve tried has worked. About all they haven’t tried is giving every man, woman, and child in America a check for a million dollars and ask that they please start buying stuff.
Who knows, that may be next.
Like I said, I don’t know if this will work or not. But it will be interesting to see how it all shakes out.
Until then, invest right and invest smart. We don’t know what the future holds, but the coming weeks and months promise to be a wild ride.
Blessings!
Charrissa Cawley
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