Friday, August 21, 2009

Zimbabwe Considers Gold Standard

The headline is shocking, but yet it is true. Zimbabwe, the world's poster-child for hyperinflation is considering an alternative to its tragically devalued currency. That alternative is of course SOUND MONEY. Zimbabwe is looking to change its image from the never-ending printing press and children holding stacks of billion dollar bills to stable money backed by in Zimbabwe Central Bank Governor Gideon Gono's words, "credible, tangible and locally available assets."
Could this be an image of the past in Zimbabwe?Wouldn't that be the turnaround story of the century? If they actually follow through with the consideration of sound, stable currency it would be a huge step in the right direction for this impoverished country that once offered so much promise. Another step in the right direction would be to get Mugabe out of office, but one step at a time.In the United States, the false concern of deflation despite the obvious inflation of the money supply is now becoming a concern among the mainstream. The "Oracle of Omaha" used some left-wing language to try to reason with the current powers that be when he stated, "The United States is spewing a potentially damaging substance into our economy — greenback emissions." It is nice that Buffett has finally come along somewhat on this issue, but it is too little, too late. The debt and liabilities are just too much to overcome. Taxes will not be able to address the need to make the payments and still keep up or create government programs. Increasing taxes would drive revenues, production, employment, and the population down.
Sounds about right.Inflation is the only solution for the statists, due to the country's debtor status. The U.S. is a debtor that has to pay off its debts in its own currency to other nations, but yet has the ability to print as much of the money as it wants. The U.S. holds all the cards here, but yet the ability to print the money is a double-edged sword. Hyperinflation to treat fiscal irresponsibility would pay down the debt, but it would ultimately create chaos within the country and distrust on a global level. The U.S. Government & the Federal Reserve made their own bed here and they do not wish to take their medicine. The longer they try to hold off on treating this problem, the more chaotic it will get.

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