Ben Bernanke "it's worth noting that there have been times when exchange rate policy has been an effective weapon against deflation. A striking example from U.S. history is Franklin Roosevelt's 40 percent devaluation of the dollar against gold in 1933-34, enforced by a program of gold purchases and domestic money creation. (domestic money creation equals the Federal Reserve printing money) The devaluation and the rapid increase in money supply it permitted ended the U.S. deflation remarkably quickly. If nothing else, the episode illustrates that monetary actions can have powerful effects on the economy, even when the nominal interest rate is at or near zero, as was the case at the time of Roosevelt's devaluation."
Bernanke quoting this in his speech shows what the template it. Get ready for a 40% devaluation in the dollar.
The entire speech is available here.
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