Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Amazon Black Friday vs Prime Day vs Cyber Monday, Which are Real or Fake Sales - 1st Dec 20
The No.1 Biotech Stock for 2021 - 1st Dec 20
Stocks Bears Last Chance Before Market Rally To SPX 4200 In 2021 - 1st Dec 20
Globalists Poised for a “Great Reset” – Any Role for Gold? - 1st Dec 20
How to Get FREE REAL Christmas Tree 2020! Easy DIY Money Saving - 1st Dec 20
The Truth About “6G” - 30th Nov 20
Ancient Aztec Secret Could Lead To A $6.9 Billion Biotech Breakthrough - 30th Nov 20
AMD Ryzen Zen 3 NO UK MSRP Stock - 5600x, 5800x, 5900x 5950x Selling at DOUBLE FAKE MSRP Prices - 29th Nov 20
Stock Market Short-term Decision Time - 29th Nov 20
Look at These 2 Big Warning Signs for the U.S. Economy - 29th Nov 20
Dow Stock Market Short-term and Long-term Trend Analysis - 28th Nov 20
How To Spot The End Of An Excess Market Trend Phase – Part II - 28th Nov 20
BLOCKCHAIN INVESTMENT PRIMER - 28th Nov 20
The Gold Stocks Correction is Maturing - 28th Nov 20
Biden and Yellen Pushed Gold Price Down to $1,800 - 28th Nov 20
Sheffield Christmas Lights 2020 - Peace Gardens vs 2019 and 2018 - 28th Nov 20
MUST WATCH Before You Waste Money on Buying A New PC Computer System - 27th Nov 20
Gold: Insurance for Prudent Investors, Precious Metals Reduce Risk & Preserve Wealth - 27th Nov 20
How To Spot The End Of An Excess Market Trend Phase - 27th Nov 20
Snow Falling Effect Christmas Lights Outdoor Projector Amazon Review - 27th Nov 20
4 Reasons Why You Shouldn't Put off Your Roof Repairs - 27th Nov 20
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The Push for a Phony Gold Standard

Commodities / Gold and Silver 2010 Aug 28, 2010 - 11:31 AM GMT

By: Michael_S_Rozeff

Commodities

Best Financial Markets Analysis ArticleAt Davos in January of this year at a G20 meeting, President Sarkozy of France called for a new global reserve currency. At the 2009 meeting, Russian President Medvedev suggested a new reserve currency to replace the dollar. A Chinese central bank governor has supported a similar idea. The United Nations Conference on Trade and Development wants to replace the dollar.


The G20 has moved in this direction using the International Monetary Fund (IMF). The Bank for International Settlements is a potential institutional vehicle for a global central bank and a global currency. On April 26 of this year, Jean-Claude Trichet, President of the European Central Bank, addressed the Council on Foreign Relations. He strongly emphasized the goal of uniformity and uniform global governance of banking.

Clearly, important political figures throughout the world are agitating for changes in the international financial system. These changes would (i) reduce the role of the dollar, (ii) increase the role of developing states, (iii) reduce the role of the United States, (iv) aim for a global currency, (v) increase the role of international financial institutions, (vi) increase the role of France, Germany, and the BRIC countries, and (vii) aim for global uniformity.

These changes would maintain the existing system of central banks and fiat currencies. They are designed to shore up the existing fiat money system, not replace it. They are designed to perpetuate the existing system of government-controlled currencies being used as money. They are clearly steps in the direction of a world central bank and world government.

Heads of State such as Sarkozy and Medvedev have seen their economies be adversely affected by the actions of American central bankers. They want an international system that insulates them from American monetary and fiscal policies. They want greater control over their currencies, even if this means a world currency that they jointly manage or control.

Moreover, such leaders are dedicated socialists who relish power and control. In his speech, Sarkozy managed to call for international labor, health, and environmental standards. He proposed a tax on financial transactions, which would have to be international to be effective. He called again for a "moral" capitalism, which is code for being anti-free market. He also called for world climate control. One must have the deepest suspicion of any monetary program proposed by this man.

France, Germany, the European Central Bank, Russia, India, and China are all much more favorable toward gold as a reserve asset than is the United States. They have shown this through their actions in holding or adding to their gold reserves. China has promoted gold as an investment. Although they have not spoken openly of gold, they are moving toward the increased importance of gold in the international monetary arrangements.

In other words, they are aiming at some version of a gold standard. The idea seems to be to go back to a pre-1971 system while bolstering the roles of the IMF and the BIS and reducing the dollar standard to a standard of a basket of currencies linked to gold.

The idea is to prolong the life of national central banks and fiat currencies by a gold linkage.

This, I say, is something we don’t need. We don’t need no stinkin’ gold standard that is another version of government-controlled currencies, accompanied by government suppression of monetary freedom and privately or market-produced money.

What we need is market-produced money. This may take a number of possible forms, such as e-money backed by metals such as silver and gold, or silver coin, or gold coin and bullion for larger transactions.

Market-produced money differs radically from government-controlled and government-produced money. With market-produced money, there cannot be a systematically injurious deflation or harmful shortage of money. If the demand for money exceeds the supply to the point where the costs of a money shortage to demanders are exceeding the costs of producing more money, the market will produce more money and eliminate the shortage.

By the same token, with market-produced money, there cannot be a systematically injurious inflation or excess of money. If the supply of a money exceeds its demand at a given price, the market will reduce the supply and demanders will seek alternative money, thereby eliminating the excess demand.

With market-produced money, variations in the demand and supply of money will be of no greater consequence than the analogous variations of any other of the thousands of goods and services that the government does not control and whose prices are market-determined.

With market-produced money, there cannot be a money-caused business cycle of any substantial consequence, because prolonged alterations in money supply and interest rates caused by government control of money will be absent.

This means that with market-produced money, we can say goodbye to unemployment caused by business cycles induced by government mismanagement of currencies.

The Great Depression occurred at a time when the gold backing of government money was extensive. The current hardships are occurring at a time when gold is far, far less important in America’s monetary system. The common feature of these large depressions is not the presence or absence of gold backing. It is the presence of government-controlled money, with or without gold backing.

The most common meaning of "gold standard" associates this term with government-controlled money, not privately-produced money. This is why we don’t need no stinkin’ gold standard.

See here for an excerpt from The Treasure of the Sierra Madre that explains the language used to express this conclusion.

Michael S. Rozeff [send him mail] is a retired Professor of Finance living in East Amherst, New York. He is the author of the free e-book Essays on American Empire.

© 2010 Copyright Michael S. Rozeff - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules