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THE GREENSPAN – GUIDOTTI RULE

THE GREENSPAN – GUIDOTTI RULE

By: Christine von Liederbach
August 4, 2016
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In 1999, Alan Greenspan – former chairman of the Federal Reserve Board of the United States, and Pablo Guidotti – former Argentine deputy minister of finance stated what has come to be known as “The Greenspan-Guidotti Rule”

Simply put this rule states:  “The ratio of a nation’s reserves to external debt is a relevant predictor of an external crisis.”

Greenspan and Guidotti worked to define the amount of foreign reserve liquidity that debtor nations need to maintain in order to avoid the risk of default.

The following standard was established:  “At a minimum, a nation needs to maintain hard currency reserves equal to it’s short-term (maturing within 12 months) foreign debt obligations.”

Currency speculators use this rule as an important indicator as to when a nation is at high default risk and close to collapse.

The U.S. Treasury says it has approximately $500 billion in hard currency on hand based on 8,100 metric tonnes of gold.

The United States has approximately $2 trillion in debt maturing in the next 12 months.

Based on these numbers, our nation has only 25% of the minimum hard currency necessary to avoid defaulting on its debt.

Of further concern – there has been no recent audit of America’s gold at Fort Knox.

America used to hold over 20,000 tons of gold, and we were the world’s wealthiest and largest creditor nation.  Our U.S. dollar became the world reserve currency.  Sadly, today we have become the world’s largest debtor nation, and our U.S. dollar is at risk of loosing it’s status as the world’s reserve currency.

According to usdebtclock.org our national debt continues to soar by the second.

What would happen to you or I if we promised to pay our creditors back, continued to borrow huge sums of money regularly , yet had no means to ever pay off the debt?

This is why it is so important to have real, tangible, hard assets like gold and silver in your portfolio as a strong back up and a prudent reserve for safety, diversification, and peace of mind.

If you have a retirement account, IRA or a 401K, call us today at 800-759-0948 for your free phone consultation.


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Although the information in this commentary has been obtained from sources believed to be reliable, The Gold IRA Company does not guarantee its accuracy and such information may be incomplete or condensed. The opinions expressed are subject to change without notice. The Gold IRA Company will not be liable for any errors or omissions in this information nor for the availability of this information. All content provided on this blog is for informational purposes only and should not be used to make buy or sell decisions for any type of precious metals.
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