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Paul Brodsky continues:

 

“We figured you should take the monetary base and divide it by official gold holdings.  That would give you the price in terms of monetary inflation that it would be worth today.  Coincidentally, after we came up with that theory we went back and looked at what they used to use, the formula for arriving at the Bretton Woods dollar exchange value with gold at $35 and it was the same formula.  So if you were to divide base money by official gold holdings today, after QE2, you would come up with a price just north of $10,000 an ounce.”


When asked how he sees this playing out, Brodsky responded, “At some point the Fed will have to formally devalue the dollar vs gold and I think all central banks, economies and treasury ministries will have to fall in line with that.  The way this would be accomplished might look very similar to the way they have been targeting interest rates through the Fed funds market....


Continue reading the Paul Brodsky interview below...




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“We may go into a weekend and if confidence continues to erode to the point where global trade really falls off a cliff and commercial exchange drops dramatically because fewer people have confidence in the currencies they are receiving, then I could see the Fed or the Treasury opens the drawer and they take out plan B.


This would mean they say, ‘Ok, on Monday the Fed would be tendering all gold at $10,000 an ounce,’ or some number that would cover that debt.  So if the debt is $53 trillion and the monetary base is not quite $3 trillion, then they would come up with a number where bank assets or loans would be covered and that would be the magnitude of the devaluation. 


They tender for gold, using this example, at $10,000 an ounce.  The proclamation itself would not be inflationary, but the act of purchasing private sector gold at $10,000 an ounce would demand they print a bunch of money and that would be inflationary.  That is how the system would be de-levered.


That would have good ramifications, even though it’s highly inflationary and it devalues the dollar dramatically, it would have politically expedient benefits to debt holders.  So we see that as being the end game.”


This is why it is absolutely critical to own physical gold and silver.  When the monetary system is rebooted and gold is revalued, you don’t want to be left holding fiat money.


© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.


Eric King

KingWorldNews.com

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