Peg the dollar to gold

In the next 20 years, you may get bored seeing more and more books analyzing the effects of the current economic crisis and what brought it on.In the United States you have the democrats and republicans seemingly hell bent on delivering mutually assured destruction with their “no compromise” stance on US treasury debt. The heart of the world economic system, U.S.A, reached its debt ceiling earlier this May. The European government financial woes are shown by the lack of stability in Greece, Italy, Ireland, Portugal, among others.There has been a lot of speculation going on in the world today that America is no longer able to suppress the inflation rate that has been going on in the world in the past years.

It seriously turns my stomach to read the newspaper or watch the television. Either form of media will have some sort of moaning about our “economic crisis”. The 2012 depression we are going to have beyond all doubt, according to an exponentially increasing number of economists, is on course to arrive before Christmas.Everyone is in agreement that the debt limit must be raised. Only problem is so far the President, Republicans and Democrats can’t see eye to eye on the solution.

In Europe the Greek crisis may appear to be over, but 8 banks have failed the stress test run by the EU to see if financial institutions can survive the economic collapse of a single member and Spain, Portugal, Italy, and Ireland are all looking increasing more vulnerable by the day.Today, Greece’s national debt is more than 150% of its Gross Domestic Product.The US has been printing more money in the past years alone then there has been in the history of the US dollar.The U.S. Congress still might have time to deal with their debt. While there is a large amount of political juggling, a large-scale crisis could delay the inevitable if the correct agreements are made.

There are a number of reasons why we, as a world, have ended up in this predicament. A growing number of people believe it is a crisis engineered right from the beginning; however whatever the reason for it, the point is that it’s about to wipe out anyone who is ignorant to the warnings, and takes no action.The US cannot sustain their current debt position. They have only delayed the inevitable so far by printing more and more money, and giving it to the big banks. Sadly, even if the debt limit is raised the economy will not be out of hot water. As the US continues spending more money than they bring in and the Federal Reserve keeps on printing more money (QE2) while keeping interest rates ultra-low, these actions are seriously causing more inflation and devaluation of the dollar.

We are no longer dealing with an economic crisis. It has become a confidence crisis. And, until the confidence of consumers-who make up 70% of the economy-returns, the economy will just continue to deteriorate.To really fix the current problem hard choices need to be implemented. Stop QE2 printing money now, raise Interest rates now and peg the dollar to gold once again. This would surely stop the roller coaster ride the economy is in from free falling.