Paul Ferraresi

The massive government stimulus package and additional future programs are slated to increase our debt load to $10-12 trillion.
To the average American they can not understand the magnitude of this huge number. For simplicity, take one trillion one dollar bills, line them up end to end and it would reach to the moon (240,000 miles) and BACK (total of 480,000 miles). Not just once, but over 200 round trips. Get it???
With all the new money being printed to fund these programs will lead to good ol’ inflation. That is, too many dollars chasing too few goods. Well, when we have too much of something it looses its value, so, watch for the dollar to devalue, or lose value. That means the cost of inflation will increase.
Inflation hedging mechanisms for people include investing in real estate, commodities, natural resources, other currencies and, in gold. Experts predict gold to easily trade from $1,650 to $2,000 in the near future from the current $900 levels.
The U.S has borrowed massive amounts from foreign investors like the Chinese, Japanese and Europeans to fund our needs and entitlements. We are asking these same people to lend us more for these huge socialistic programs. Once we have their monies, well, there is an easy way for the U.S. Government to pay back the debt by NOT paying back any money. That is, by a devaluation of the dollar. So those that have lent money to the U.S., foreigners, and also you, by buying Government Bonds will be in trouble. That is, everyone will be paid back in cheaper dollars after devaluation that will buy less, cutting your standard of living. So, senior citizens with Government Bonds are probably going to be hurt the most, since they hold the largest amount of “safe” government paper.
This is not the first Government devaluation. The currency devaluation was effective in ending the Great Depression. In 1930, Australia was the first to leave the gold standard, immediately devaluing the Aussie by more than 40% and the economy quickly recovered. New Zealand and Japan followed suit in 1931, each with the same result. By 1933, at least nine major economies had enacted a devaluation of their currency by removing it from the gold standard, all of whom emerged from depression.
In the United States, our devaluation occurred in 1933, when gold was confiscated and the dollar was devalued by 41%.
The only thing that would remain the same or drop in value would be debt. All other assets would immediately be worth more (in nominal terms), whether it be a home, a stock, an ounce of gold or a used car.
My own view is that currently devaluation would also help relieve the imbalance we have with Social Security and Medicare. Since the dollar would be devalued, the liability on those claims would be reduced by the same percentage. Doing so would make those obligations bearable and feasible. Consequently, a formal devaluation of the dollar would achieve many goals, all of which would be beneficial to those who are debtors.
However, currency devaluation would be detrimental to those with cash instruments such as savings accounts, CDs treasury bills, bonds, money market funds, or other forms of cash assets. This is one of the reasons I advise people to diversify with gold which traditionally appreciates during times of inflation and currency devaluation. All other inflation hedges mentioned above would be beneficial also.
A word for the wise.