Note that Mr. Fekete's article is a rebuttal to Paul Krugman who wrote , The Gold Bug Variations - The Gold Standard and the Men Who Love It
Mr.Fekete has challenged Mr. Krugman to open the columns of The New York Times to an impartial discussion of the future of the irredeemable dollar but has received no reply. If one were to read Mr. Fekete's response in its entirety, or even the article linked here, there's little wonder as to why.
From the link
What the United States did in 1971 was defaulting on its gold obligations to foreign creditors, the biggest act of bad faith in history theretofore. This default, and the making of the dishonored debt money, was the cause of the destabilization of interest rates, as well as the explosive growth in the volatility of prices that have been plaguing the world ever since and causing ever greater economic distress. Krugman's euphemism in calling the greatest default ever "the abandoning of the stabilization policy of the gold price", and calling the promotion of the dishonored paper as money "a measure designed to prevent deflation and the decline of prices" is doublespeak, the hallmark of dismal monetary science. Krugman suggests that an equilibrium now obtains that didn't before. What we have is not an equilibrium; rather, it is a burgeoning disequilibrium, one that will continue its devastating course.
We must remember that the financial annals do not record a single case in which a default has not been followed by a progressive increase in the discount on the paper of the defaulting banker, until it reached 100 percent - possibly several years or even decades later. Obviously, the defaulting banker would try to slow down the process by hook or crook. However, ultimately economic law was to prevail and the remaining value of the dishonored paper would be wiped out.
There is no reason to believe that the dollar default will end differently. Suppose that the price of gold is $420. Let us calculate the discount on the dollar.The gold value of the dollar has been reduced from 1/35 to 1/420 = 1/12ￗ35. Therefore the loss is
(1/35)(1 1/12) = (1/35)(11/12) = (1/35)0.9166...
In percentage terms the loss, also known as discount, is 91.66 percent. Not yet 100, but close enough. Small comfort, as the last 8.33 percent of the loss, coincident with the death-throes of the dollar, is likely to be most violent and painful, revealing the full extent of the devastation. Remember, the loss affects not only cash holdings, but all dollar-denominated assets, including bonds, annuities, pensions, insurances, endowments, etc. As the discount on the dollar approaches 100 percent, the dollar price of gold will approach infinity. To assert that the dollar is going to escape this fate is tantamount to asserting that the laws of economics and logic have been turned upside down, and the penalty for default has been replaced by reward in perpetuity.
I urge all of our viewers to re-read that last paragraph several times...particullary the part where he says:
"As the discount on the dollar approaches 100 percent, the dollar price of gold will approach infinity."