The Two-Headed Monster.

There is an interesting interview with Jim Rickards on WTN. Rickards asserts that we are in a Depression brought on by excessive debt, resulting in tremendous Deflation (the loss of value of assets). Bernanke is trying to "cure" the condition by slowly devaluing the Dollar. In other words, creating Inflation. Rickards' solution is to devalue the Dollar all at once, pegging it to gold as 1 oz gold=$7,000. The US then would nationalize the banks and repudiate its debt. It would work like a reset.

There are several problems with Rickards' solution. Repudiation of US debt would wreck pension plans and leave the banks in government hands. Remember the US Post Office? Not exactly a thriving enterprise.

Fortunately, we already know how to cure a Depression. After WWI, the Country nosedived into a Depression. The President died in office and it was the Country's luck that Calvin Coolidge became President by succession. Silent Cal, as he became known, slashed government expenditures by 50% and ignited the "Roaring Twenties." That is the solution. While Medicare and Medicaid need some trimming (and Social Security should be privatized to increase returns), the problem resides in the Federal budget being too high causing Deflation. When the US entered WWII, Roosevelt got rid of "mark to market" which was an instrument to perpetuate the failure of banks.