{"id":10880,"date":"2010-07-07T10:17:03","date_gmt":"2010-07-07T14:17:03","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=10880"},"modified":"2010-07-07T10:17:03","modified_gmt":"2010-07-07T14:17:03","slug":"20-questions-with-robert-prechter-devaluation-wont-work","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/07\/07\/20-questions-with-robert-prechter-devaluation-wont-work\/","title":{"rendered":"20 Questions with Robert Prechter: Devaluation Won’t Work"},"content":{"rendered":"

By Elliott Wave International<\/span><\/h3>\n

The following article is an excerpt from Elliott Wave International\u2019s free report, 20 Questions With Deflationist Robert Prechter<\/a><\/span>. It has been adapted from Prechter\u2019s June 19 appearance on Jim Puplava\u2019s Financial Sense Newshour.<\/p>\n

Jim Puplava<\/strong>: In 1933 at the bottom of the crisis, the Roosevelt administration comes in. In its first week they declare a bank holiday, they reopen the banks with the FDIC, they sever gold, they come in with massive fiscal stimulus and they devalue the dollar substantially. The result was from 1933 to1937 we have positive CPI, economic growth, a robust stock market. If fiscal and monetary measures fail to revive the economy and the market, could the government try devaluation to change the deflationary outcome the way they did 1933?<\/p>\n

RP<\/strong>: Well, you have to have a benchmark in order to devalue a currency. Our currency isn’t pegged to anything, so I don’t understand even what the term devaluation would mean. What would they do to do create a devaluation?<\/p>\n

Editor\u2019s Note: The article you are reading is just one small excerpt from Elliott Wave International\u2019s FREE report, 20 Questions With Deflationist Robert Prechter<\/a>. The full 20-page report includes even more of Prechter\u2019s insightful analysis on fiat currency, gold, the Fed, the Great Depression, financial bubbles, and government intervention. You\u2019ll learn how to protect your money — and even profit — in today’s environment. Read ALL of Prechter’s candid answers for FREE now. Access the free 20-page report here<\/a><\/span><\/strong><\/em>.<\/em><\/strong><\/p>\n

JP<\/strong>: Maybe they come out with a formal saying: the dollar is now worth a half a euro, X amount of yen or it\u2019s a formal statement. They just declare it formally.<\/p>\n

RP<\/strong>: Yeah, but everybody already knows what it’s worth, because it’s floating freely against these other currencies. And they certainly couldn’t fix it to a lesser currency like the euro. And then the managers of this other currency would simply make another decree and negate it. That\u2019s not going to work.<\/p>\n

Let’s take your example, because it’s very important. The whole idea of the government being ahead of the curve is bogus. You know the collapse was from September 1929 down to July 1932, right? The government did not act until it was over. They waited for the bottom of the collapse\u2014of course\u2014and then they finally decided they’re going to do something about it. So, months after the low in 1932, they finally shut the banks and pass laws such as Glass-Steagall, which created the FDIC, and the Securities and Exchange Act, and that sort of thing, to bring confidence back into the banking system. I think the same thing is going to happen here. They’re going to try the same old stuff, more and more lending, more and more borrowing\u2014which is the problem, not the solution\u2014until everything collapses, and then they’ll go, \u201cOh maybe we should try something else,\u201d and by that time we’ll already be at the deflationary nadir, and it’ll be time to look for an inflationary outcome.<\/p>\n

My whole thesis is exactly along those lines. We want to stay prepared for a deflationary crash, and when it\u2019s over, we’re going to convert whatever money we have to stocks, and raw land, and gold, and whatever else we want to buy. That’s when\u2014if the government makes a political decision to inflate through currency printing\u2014it would make the decision. They’re not going to make it before the bottom. The government has never acted before the bottom, never acted in a new way. Right now these bailouts and other schemes are simply pressing the accelerator harder on what we’ve been doing since 1913.<\/p>\n

Editor\u2019s Note: The article you are reading is just one small excerpt from Elliott Wave International\u2019s FREE report, 20 Questions With Deflationist Robert Prechter<\/a><\/span>. The full 20-page report includes even more of Prechter\u2019s insightful analysis on fiat currency, gold, the Fed, the Great Depression, financial bubbles, and government intervention. You\u2019ll learn how to protect your money — and even profit — in today’s environment. Read ALL of Prechter’s candid answers for FREE now. Access the free 20-page report here<\/a><\/span><\/strong><\/em>.<\/p><\/blockquote>\n

\n

This article, 20 Questions with Robert Prechter: Devaluation Won’t Work<\/strong><\/a>,was syndicated by Elliott Wave International. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts lead by Chartered Market Technician Robert Prechter<\/a> provides 24-hour-a-day market analysis to institutional and private investors around the world.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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