That's what I thought. I can only see the US$ being devalued in the market in the normal way, unless the US decided to go back on a gold standard at, say, $5000 an ounce. That would be an overnight devaluation against hard assets which would generate a lot of inflation in commodity prices, real estate etc as their dollar prices moved back in line with historical ratios with the gold price.

I sometimes wonder if that is what Jim is alluding to when he half answers this question. If you really wanted to kick start the economy with a swift bout of inflation to lift the banking system out of insolvency, this would be the obvious way to achieve it in my view. Of course, once back on the gold standard, the deficit spending and the money printing would then have to stop for good.