Keith, there are two problems here. One is inflation and the value of currencies, the other is the state of the economy. I see the latter as the far larger problem now, particularly in the US but throughout the western world as well. It has to be dealt with. Fixing the value of a currency to a commodity, e.g. gold but perhaps silver as well, would greatly hamper the ability to infuse money into key economic sectors in order to combat unemployment and generally depressed conditions. I simply don't see any sense in moving backward into history to a gold standard at this time of growing global crisis. Once the economic crisis is dealt with, moving money back into some kind of commodity backed system might be considered, though I see it as unnecessary. What is important is that real incomes continue to rise or are at least maintained, whatever the number we attach to them to describe their value.
Ed ----- Original Message ----- From: Keith Hudson To: RE-DESIGNING WORK, INCOME DISTRIBUTION, ,EDUCATION Sent: Saturday, October 15, 2011 4:54 AM Subject: [Futurework] This week-end's G20 impasse America, the UK and China, not members of the Eurozone, and other countries will be asked at the G20 this week-end to generously chip into a new mammoth fund to save Greece, Portugal, Spain, Italy and, if the truth is to be told, France also. The reason is that Germany, Finland, Slovakia and Netherlands, which manage to control their budgets like any good housekeeper, will not be able to save the Eurozone by themselves. China, which has already invested a quarter of its reserves in the Eurozone, says it won't subsidize it any further until it shows evidence of serious budget control. The UK, whose government debt is already quite as bad as Portugal's proportionately, is only sustained at present by its past reputation and the grace and favour of its AAA credit rating given (reluctantly) by Fitch, Moody and S&P. Even now its debt is getting worse and it can only help the Eurozone by going further into debt at a faster rate. America, already downgraded one notch by S&P (and due for other downgrades quite soon) is, if anything, in an even worse state than Portugal proportionately. But, maybe, America will help. It's already the world's most prolific printer of money and Bernard Bernanke is a stuck-needle Keynesian. At least, Bernanke says he is. He's also a highly intelligent economist. Despite telling a Congressional Committee some three months ago that he knows little about the history of gold currency, he will be thoroughly acquainted with the agonies of President Nixon and his advisors in 1971 when deciding to go off the gold standard because Fort Knox was losing too much bullion to European exporting countries. Like scores of central bankers all round the world, particularly China, he is probably now quietly buying gold -- of that I am becoming increasingly convinced. If the Eurozone doesn't repair itself one way or another in the next few weeks it threatens to collapse and initiate a new world-wide depression far worse than the '30s. America will revert to a gold standard at the midnight hour. China, Russia, Brazil and other countries have been calling for this for years. Robert Zoellick, President of the World Bank, suggested this last November. One of Bernanke's present central bank Governors and a past economic advisor to President Bush, Larry Lindsey, is calling for it. Two of the Republican contenders for presidential candidacy are calling for it. Several US State governments are already drafting legislation for this. Eminent voices are now rising even as the price of gold continues to rise. America is still such a lynch pin of the world economy that once America decides to go back onto the gold standard, the rest will have to follow (in the same way that all their currencies inflate when the dollar inflates). It could be done quite as simply and rapidly (that is, overnight) as when President Nixon took the US dollar off the gold standard. Announced with a fancy flow of words by Obama and Bernanke the American public will accept a gold-standard dollar in just the same way as they accepted Nixon's decision to go off it -- that is, in a totally non-plussed state of mind. Although the idea (and practice) of a gold standard currency is simple enough, it has certainly foxed the minds of politicians so far, hitherto preferring to take the easy way out of difficulties by printing money. If the Eurozone gets out of its impasse in the coming weeks by causing China, America and the UK to print even more money (and thus invite the danger of hyperinflation), then going back onto the pre-1914 gold standard might have to be left to the next President in 2013 and maybe his appointment of a new US central banker when the next extreme crisis occurs. Whatever, and whenever, the present mayhem cannot go on for much longer. Keith Hudson, Saltford, England http://allisstatus.wordpress.com/2011/10/ ------------------------------------------------------------------------------ _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
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