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Venezuela Davalues Currency 46% Overnight

The Venezuelan government decided to devalue it's currency the bolivar 32% against the dollar. This has the immediate impact of making it's exports cheaper and be able to pay off its debts in cheaper currency. On the flip side, it will cause massive inflation.

Welcome to a country run by a socialist government.

So overnight if you were a hard working Venezuelan middle class person, all of your hard earned bolivars has now suddenly lost 46% of its value. If instead you had held your savings in gold instead of bolivars you would have had at least preserve your wealth.

The same thing is happening here in teh United States, just not overnight. Someone could have $20,000 in the bank and be able to buy lets say $20,000 worth of wheat, or oil, or cotton, gold, or some other commodity. However, if there were a massive Venezuelan currency devaluation, then you would still have the $20,000 in your ban and you would still be able to buy $20,000 worth of commodities. However, if inlfation hits in the $20,000 you would not get as much of the commodity after the devaluation than before it.

Today socialist or socialist leaning governments are in charge of the United States, Europe, Japan, and may other parts of the world. As long as they remain in power, we will have more currency devaluation.

Peru - A model economy

Peru's GDP has consistently grown 6-9% every year, unemployment is relatively low, inflation is low,  there is a thriving tourism industry in an are of South America with not  alot of tourist, and foreign investment money is pouring into the country.

Compared to the rest of the world, Peru is thriving. What are they doing right? They have low tax rates and relatively low government intervention in business or anywhere else. In other words Peru is allowing free enterprise to work its magic.

Argentinians Flocking to Dollar not Gold

At about 25% a year, Argentina has one of the highest inlfation rates in the world. With such large uncertainty in Argentine currency, Argentinians are fleeing their peso and sekking alternatives. At this point, you would think gold or silver would be a great alternative. Instead, Argentinians are seeking the US dollar. The US dollar is in high demand in Argentina because they know it will hold its value. Also, with large government intervention, high taxes, and rising inflation people are resorting to the black market. They know that the black market is undocumented formally to the government. So that means, the government cannot collect their taxes.

Why am I mentioning Argentina in this post. Because the situation Argentina could be a preview of what is to come in the United States.

For more on the Dollar demand in Argetina read Dollar Fever.

Brazil increases gold holdings by 32% in one month

According to Bloomberg: "Brazil’s holdings expanded 17.2 tons last month to 52.5 tons, the most since January 2001, according to data on the International Monetary Fund’s website."

There was no reason specified as to why Brazil bought so much gold. Could it be that they are starting to see cracks in the gravity defying moves of central banks to artificially hold up their fiat currencies. How long can Japan and the US keep interest rates near zero? How long can those countries and most of the rest of world continue debt financed deficit spending? The manipulations by cenral banks of the world will not hold up.

At some point fear will start a panic. When that panic comes, faith in fiat currencies will crumble. Could it be that Brazil is being proactive before the panic happens.