Is Bernanke Pulling an FDR and Planning a 60% Devaluation of the Dollar?

On the even of Bernanke's renomination hearing, some very pertinent thoughts from David Rosenberg of Gluskin Sheff:

The U.S. government is clearly attempting to reflate its way out of its debt morass and U.S. dollar devaluation is certainly going to be a primary tool. Consider that the U.S.A. is 233 years old and yet half of the monetary base has been created since Helicopter Ben took over as pilot back in 2006, and, after saving us from a 1932 disaster, he now has his sights set on avoiding a 1938 relapse. If FDR could manage to devalue the U.S. dollar by 60% to create some inflation — what debtors desperately need — then why can’t this government embark on a similar policy? And send more troops overseas just to add to the intrigue (and this is “stimulus”).

It does appear after gleaning the Bloomberg news reports this morning that Japanese officials are becoming increasingly edgy over the strength of the Yen. Some sort of intervention cannot be ruled out and there are few other painful trades out there for the bulls on risk assets than a countertrend rally in the U.S. dollar.

Not only has half the money stock been created since 2006 but the amount of taxpayer-supported debt that will have been created from 2009 to 2012 under current projections will have matched the entire accumulation of government debt through in the last 233 years as well. Alexander Hamilton is rolling over in his grave in Lower Manhattan right about now. With gold at $1,200/oz, bond yields at 3.2%, and the S&P 500 at 1,100, these are not — repeat not — a sustainable trio. Something is going to give at some point, and we don’t think it’s going to be bullion (outside of a near-term correction at most).