Russia and China and others have called for a new currency standard separate and apart from the US Dollar. The recent economic storms have shown the weakness of our fiat dollar as the Federal Reserve prints money at an alarming rate and our Treasury Department spends it faster than it can be printed! The people who are stuck holding the bag are the American People who see their savings made valueless by government malfeasance and creeping socialism. The Chinese, the Arabs, the Russians, the Japanese and every other government on earth who holds much wealth in our ever deprecating dollar are fit to be tied as our policies devalue their wealth. They were assured that the dollar would remain stable and the government would never take the steps we’ve now taken, and continue to take, to debase the value of our currency. China has expressed alarm in recent weeks and the United Nations panel has openly called for a new world currency. Europe has been making plans along similar lines but we continue to pursue a course that can only end badly for our nation and our dollar.
The only sane thing to do is to find an international unit of wealth, like gold, or perhaps some other combination of commodities that will force discipline on a currency and force governments to live within their means. Having the dollar backed by the thin air has given too much power to the Federal Reserve and Congress to follow their own agenda by siphoning off the wealth of the people who believed in the dollar and the integrity of the American System. It may well be the case that investing in the US Government becomes indistinguishable from investing with Bernie Madoff because the result is the same.
There are many problems with trying to go back to a gold standard and Russia is the first major nation to suggest it. This will be a trend to watch because the world is quite serious about getting off the dollar and as our nation continues to debase our currency the world will change to something else. Here’s an article from the Telegraph.co.uk and its URL:
Russia has become the first major country to call for a partial restoration of the Gold Standard to uphold discipline in the world financial system.
By Ambrose Evans-Pritchard
Last Updated: 8:23AM BST 30 Mar 2009
Arkady Dvorkevich, the Kremlin’s chief economic adviser, said Russia would favour the inclusion of gold bullion in the basket-weighting of a new world currency based on Special Drawing Rights issued by the International Monetary Fund.
Chinese and Russian leaders both plan to open debate on an SDR-based reserve currency as an alternative to the US dollar at the G20 summit in London this week, although the world may not yet be ready for such a radical proposal.
Mr Dvorkevich said it was “logical” that the new currency should include the rouble and the yuan, adding that “we could also think about more effective use of gold in this system”.
The Gold Standard was the anchor of world finance in the 19th Century but began breaking down during the First World War as governments engaged in unprecedented spending. It collapsed in the 1930s when the British Empire, the US, and France all abandoned their parities.
It was revived as part of fixed dollar system until US inflation caused by the Vietnam War and “Great Society” social spending forced President Richard Nixon to close the gold window in 1971.
The world’s fiat paper currencies have lacked any external anchor ever since. It is widely argued that the financial excesses and extreme debt leverage of the last quarter century would have been impossible – or less likely – under the discipline of gold.
Russia is a major gold producer with large untapped reserves of ore so it has a clear interest in promoting the idea. The Kremlin has already instructed the central bank of gradually raise the gold share of foreign reserves to 10pc.
China’s government has floated a variant of this idea, suggesting a currency based on 30 commodities along the lines of the “Bancor” proposed by John Maynard Keynes in 1944.