Credit Crisis Turning Into a Currency Crisis as Governments Devalue Currencies to Devalue Debt

Thursday, May 13, 2010
By Paul Martin

By: The Gold Report
Market Oracle

“We’re heading toward government devaluing its currency to devaluate its debt in order to survive. That means you need to protect yourself. You can’t just have savings accounts paying no interest. You need to go and buy gold,” says Bud Conrad, chief economist with Casey Research, in this exclusive Gold Report interview. Despite the grim outlook for the U.S. dollar and other paper currencies worldwide, Conrad believes he and other speakers at the recent Casey Research 2010 Crisis and Opportunity Summit have information you need to both prosper and protect yourself during the coming economic storm.

TGR: Today we are talking with Casey Research Chief Economist Bud Conrad who recently presented a riveting talk during Casey Research’s 2010 Crisis and Opportunity Summit. Here are four major points from his talk:
1.The world economy is in a calm between a credit crisis turning into a currency crisis as the collapse of the private debt bubble is replaced by a government debt bubble that will also collapse.
2.The world is at a point of no return for government debt as debt-to-GDP approaches 100%. When debt becomes too big, governments cannot control the interest rates and currency. The lead warning is Greece, much the same as Lehman Brothers was in the credit bubble crisis.
3.Peak oil. The wealth of humanity has been built on energy. Half the world’s conventional oil supply is already used. That means that the quantity of oil produced each year will not increase much from the current level even as demand from developing countries like India and China increases. Wars over oil have already started. Energy prices will rise. We will see a substantial rise in the cost of food, as food production requires energy.
4.The U.S. can prosper and stay ahead of the rest of the world by developing and investing in three forms of technology—the Internet and cell phones, new medicines through biological breakthroughs and new sources of energy. All are good investment opportunities and are necessary for human expansion.
TGR: What lens were you using as you developed these themes?

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