View Full Version : Suppose there is a currency devaluation in US
04-22-2011, 11:05 AM
What if it does happen like Venuezela and the other countries, what happens to the debt people have? If you have 5k in debt and they do a one for two dollar job, is your debt now 2500k? If that were the case it's rather useless to do the deval isn't it. If debt stays the same it creates more value for tangibe assets wouldnt you think so.
04-22-2011, 11:44 AM
If you owe 5k in todays dollars debt and the dollar crashes (as it will and is doing ) Then you still owe 5k but it can be pid back in more worthless dollars. if a dollar was worth 100 cents today (and it is not in value) as it devalues it becomes worth say 50 cents in real value. if you pay back the 5k in newer dollars you are really paying back paper dollars that are worth less than when you borrowed them.
Now if you had borrowed 5k in silver or gold and was paying back in dollars....
04-22-2011, 11:48 AM
The kind of debt you have makes a difference also. If you have debt with a variable interest rate like a credit card, the interest rate will get jacked up sky high. The best debt scenario is debt with a fixed interest rate. I pity the folks who have adjustable rate mortgages when the dollar crashes.
04-22-2011, 12:22 PM
I suppose I'll choose my own adventure. Next "question".
04-22-2011, 01:04 PM
I think he's asking about a currency switch guys.
Either way, your debt is going to be insignificant by the time they switch currencies, unless you happen to borrow just before they bring out the new currency.
04-22-2011, 01:10 PM
There already is a devaluation. It has been on-going since 2000. It takes 10x more FRNs to buy an ounce of silver now or 5x an ounce of gold than it did 11 years ago.
How do you think the Fed/Treasury will end up paying off it's massive debt? With worthless dollars. If it works for them, it can work for you (y)
That is, assuming Congress doesn't pass some stupid law letting loan lenders raise the principle on your loan in accordance with the rate of inflation... that wouldn't surprise me at all.
04-22-2011, 02:04 PM
There's all these rumors of China revaluing the Yuan this weekend. This weird action in silver today... Monday could be very interesting.
As phideaux said, hasn't there been a devaluation happening since 1913?
04-22-2011, 02:04 PM
Usually the defaulting country just makes a new currency. Like in America during the Revolutionary and Civil Wars (get a clue!).
Of the 350 currencies that have failed over the last 300 years in the world - they just make another new one.
By the way the best TRANSITIONAL currency is physical - you know the drill.
The worst is the current one before being substituted with a 99% loss.
04-22-2011, 02:12 PM
well... here's a thought...
the Fed suddenly takes 2 zeros off the US currency... (like the French did to the Franc in the early 60s, 100 "old" francs became 1 "new" franc)
Suddenly the Silver Dollar is worth one "new" Dollar again...
100 "old" francs:
1 "new" franc:
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