Tuesday, March 13, 2012

Verbatim: "It's a Race to the Bottom"

From a recent article on currency wars at the Capital Research Institute:  "Since individuals purchase goods in the local currency the price impact of local exported goods is insignificant, since the price for those items at home does not change. The real impact is the loss of purchasing power for imported goods, since those now become more expensive due to the devalued currency that is used to import them. The two imported items that individuals spend most of their disposable income on besides housing are gasoline and food; both become more expensive due to competitive devaluation. Currency wars cause the standard of living of individuals to decrease as prices of imported goods increase. The excess liquidity from loose monetary policies leads to commodity price inflation and a loss in purchasing power of all major currencies since the end of the gold standard in 1971. Currency wars and competitive devaluation are the reasons why the Capital Research Institute recommends diversifying your wealth by buying gold and silver. We consider physical gold to be one of the best currencies as it holds its intrinsic value while fiat currencies decrease. Gold represents a thousand year old store of value, since 1971 currencies have lost purchasing power year over year as central banks continue to print money. It is a race to the bottom and individuals that hold fiat currencies will ultimately pay the price."