Ed,
More comments below:
At 16:15 04/08/2011, you wrote:
A brief response in this colour, Keith.
Ed
----- Original Message -----
From: <mailto:[email protected]>Keith Hudson
To: <mailto:[email protected]>RE-DESIGNING WORK, INCOME
DISTRIBUTION, ,EDUCATION
Sent: Thursday, August 04, 2011 5:34 AM
Subject: [Futurework] Goodbye warfare: Welcome Gold
The future of gold as currency actually rests on one foundation --
the absence of wars. By this I mean major wars between major nations
when their economies gear up to the maximum extent to produce heavy
artillery and when a high proportion of their young men are
conscripted into armies in order to kill other young men. Actually,
both of these are relatively recent innovations from the 18th
century, so we have had only three major wars as I define them --
the Napoleonic wars, WWI and WWII.
Well, yes, I agree that it's unlikely that we'll have the kinds of
wars that were fought in the 19th and 20th centuries, but it's
difficult to conceive of prolonged periods without some form of
major war -- perhaps theological, perhaps ideological, perhaps
economic (trade)?
We already have the simmerings as between a "Christian" America and
an atheistic China. and much the same for the ideological difference
-- both pots calling the kettle black. The third one is the really
dangerous one -- if America, the Eurozone and China start putting up
trade barriers. We'd then be back in the 1930s, having lost even the
little economic enlightenment we've had since then.
The last of these major wars finished in 1945 when America and its
Allies defeated Germany and Japan. Since then, during periods when
tensions between the major powers rose to almost fever pitch, we
might have had three other major wars. America versus Russia. China
versus Russia. America versus China. That these didn't happen was
fortunate because all concerned were only just recovering
economically from WWII. If any of these had taken place we would
probably be in a much worse economic state today than we are now
because, almost certainly, the initial third party in any of them
would have joined one side or the other in order to protect its own
interests, and thus we would all have been involved.
Wars will continue, of course. It's very much part of our human
nature to fight. We might very well have future wars of major
nations against medium or small nations, such as America versus
Korea or Vietnam, China against Cambodia, or Russia against Chechnya
in the past. Or we might have wars between medium or small
countries, such as seems probable in the Middle East sometime or in
South America or Africa unless the big powers jointly put a stop to
them. Also, we could all put a major bet on about 30 minor wars
taking place internally every year in various parts of the world, as
they have for decades past.
There'll be no more major wars because, quite simply, all the major
nations are, in fact, already bankrupt in one way or another and,
besides, young men and their mobile phones and their growing
contempt for politicians are moving on culturally. They would
probably refuse to be enthusiastic cannon fodder on a large scale as
they were before. If there are to be any major wars between the
great powers, or even by small and medium nations against big ones,
then it will be cybernetic warfare which hardly costs anything at
all. Even an individual hacker with an ordinary PC can bring down
major defence or corporate computer systems. This why governments
are becoming hysterical about them. Scores of these hackers are
being expensively bought-off every year in order for our present
financial and governmental systems to continue at all.
More specifically, major nations can no longer go throw the gold
standard over and go into massive money printing as they did during
the Napoleonic wars and WWI and WWII.
But, you might say, we no longer have a gold standard financial
system to throw over! Oh, but we have. Advanced country governments
have never entirely thrown gold out with the bathwater, despite what
official spokesmen and politicians have manipulated the masses into
believing. Despite saying that gold is useless as a currency, and
despite America forcing the (mostly) European countries to sell a
great deal of their gold, the central banks never entirely got rid
of their bullion. And America has certainly hung onto its own gold!
And, since the Eurozone, with its new Euro, challenged the supremacy
of the American Dollar in 1999, central banks have been buying gold
again. It was slow and tentative at first but, today, increasing
numbers of those countries which aspire to economic growth, are now
buying gold.
Gold is quietly restoring itself. When its price is high enough and
when the value of the Dollar, Euro and Renminbi become low enough,
the gold standard will return. It will recapitulate its several
thousand year-old history. About five thousand years as it graduated
from being a precious status item to becoming a reliable currency
for trading (Greek merchants in the Mediterranean at about 500BC).
About two thousand years as it was adopted throughout the world as
currency and then as it evolved to became the fulcrum of the most
sophisticated financial system yet known to man in pre-1914 England.
I doubt very much that there will be a revival of the gold
standard. The international economy is too unstable.
It's precisely why it's now unstable that we need a world currency
which stops governments printing banknotes ad lib..
Single currencies or tieing currency to a particular commodity no
longer makes sense, if it ever did. Countries need the latitude to
not only make debilitatiing mistakes, but the ability to manoever
their way out of them and not be tied down by a prescribed monetary
and value system.
Yes, but if there was a stable world currency (such as Keynes
proposed with his 'Bancor') then individual currencies automatically
adjust from time to time according to the balances of its exports and imports.
For example, if the PIIGS were not tied to the Euro and the EU, they
could try to get out of the mess their in by e.g. inflating their
currencies and defaulting on some of their debt, or whatever else might work.
Yes, indeed. But they lost that facility when they joined the
Eurozone for the sake of the lavish subsidies that they were offered.
The illogical thing about the Eurozone is that while new joiners lost
their ability to change their currency they were still allowed to
borrow money individually from outside the Eurozone! Because all
these invidual borrowing went under the same generic name
("Eurobond") then outside investors were tempted to assume that ,
say, Greece's Eurobonds were as reliable as, say, German Eurobonds --
or at least that the Euopean Central Bank would compensate them in some way.
Keith
That is, when we had absolutely no currency inflation for a century
beforehand. One day -- and probably very soon -- governments will
be forced back to that desirable state of affairs.
Keith
Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/08/
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Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/08/
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