Gold-backed world currency?

[katty]

-Excerpt/article: http://www.almartinraw.com

...Nobody wants to be left holding the bag. Nobody wants to be the last bag holder in a global economic collapse.

"So, what do you do when you're loaded up with dollars and dollar-denominated securities and you’re looking at a 5-to-10-year window of global economic collapse led by the scourge of Bushonomics?

"You need to diversify as soon as possible, but you can only diversify so much because of the liquidity problem. No other currency on the planet has anywhere near the international exchange liquidity of the U.S. dollar.

"What you do, therefore, is to begin to form an alternative to the U.S. dollar as a global reserve currency that can be sufficiently liquid to price commodities in and to maintain the planet’s trade.

"This is, by the way, the ultimate fiscal weapon the rest of the world has against the Bush-Cheney Regime -- the formation of a new reserve currency on the planet to price commodities in. This would create such economic stress in the United States that there would be $100/ barrel oil literally overnight.

"So what are the options for this new so-called global currency? I think the Russians will continue to take the lead and there will be some sort of gold-backed ruble. They probably won't call it a ruble in the end. They might call it a gold-backed SDR (Special Drawing Rights) for instance. I don't know what the ultimate name's going to be, but I think Russia will take the lead.

For the rest of this exclusive analysis by Al Martin, subscribe to Al Martin Raw.com (Political, Economic and Financial Intelligence)

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* AL MARTIN is an independent economic-political analyst with 25 years of experience as a trader on NYMEX, CME, CBOT and CFTC. As a former contributor to the Presidential Council of Economic Advisors, Al Martin is considered to be a source of independent analysis for financially sophisticated and market savvy investors.

After working as a broker on Wall Street, Al Martin was involved in the so-called "Iran Contra" Affair as a fundraiser for the Bush Cabal from the covert side of government aka the US Shadow Government.

His memoir, "The Conspirators: Secrets of an Iran Contra Insider," (http://www.almartinraw.com) provides an unprecedented look at the frauds of the Bush Cabal during the Iran Contra era. His weekly column, "Behind the Scenes in the Beltway," is published on Al Martin Raw.com

[baldguy]

1. You're a carpenter.

You go into the woods, select a tree, chop it down. Then drag the tree back to your shop, let it dry out. Measure & cut it for lumber. Further measure & cut the lumber for a chair. Trim the pieces with your saw, plainer & lathe. Fit the pieces together, peg & glue them. Sand, stain & varnish the piece.

Question: how much more gold have you created?

[mikelewis]

4. You then trade that chair for a measure of gold and trade that gold...

for food for your family, a house to live in and a society to interact with. Gold is not evil, greed is.

[baldguy]

8. Gold is a limited commodity - human creativity & labor are infinite.

Setting the value of any currency to the value of a precious metal of is a recipe for inflation. A limited supply of gold chasing an ever-increasing supply of goods & services.

People also hoard the gold, giving into greed by limiting the supply even further. This has happened in the past; by people attempting to increase their own wealth, thus depriving those who need it to enact business of a method to do so. People don't hoard chairs, even very expensive ones.

The chair has an intrinsic value - that of the materials & labor used to create it. And the carpenter can always create another chair.

Gold also has an intrinsic value - that of a scarce commodity. There is some value for its chemical and metallurgic properties - but no more so than aluminum, copper or other . The reason it is valuable is BECAUSE it is scarce.

But beyond that, gold has value not based in its scarcity. Uranium is more scarce, but not as valuable. Gold has value which is EXtrinsic, assigned to it by culture, history and - as always - greed. This value has nothing to do with the gold itself, and has everything to do with the IDEA of gold. People lust after gold because they believe it is the basis of wealth - even that hasn't been true since the '30s

"Do not crucify mankind upon a cross of gold."

[sweetheart]

6. Lets say you are reforming the US furniture market

.
.With more than 50,000 furniture manufacturers employing 50 million workers,
the Chinese furniture industry has increased exports by 335 percent from
1994 to 2001, replacing Italy as the world's largest furniture exporting country.
China is now the largest exporter to the U.S. market, with $2.8 billion in
exports in 2001. China's furniture exports to the U.S. have grown at an
average annual rate of more than 35 percent.
.
.

http://www.manufacturingnews.com/news/03/0703/art1.html

How much gold has china created relative to the United States?

Gold, like oil, is a fungible commodity that is arguably a currency
in its own right, storing value beyond the timespans of human endeavour
and political organization. Then, in the longer term, where we select the
"best" economic systems in future, we need a standard benchmark.

And though a wood chair, whether in oak, ash or beech, might fetch a
nonsense price in gold, the value of furniture production of chinese labour
and furniture production of US labour will show much more equivalency given
a global standard.

But given the american tendency to destroy value periodically under the
banner of "reform", the gold standard prevents the value from collapsing
like it did in argentina, russia, korea, thailand, indonesia and mexico
in more current currency crisis...

Given the reform tendency of neoliberal econmics:
reform: the modification or replacement of an existing
economic or political system, so as to create new corporate
investment opportunities -- it is not required that the new
system perform effectively, only that it deliver corporate
profits.
http://www.cyberjournal.org/cj/rkm/ND/mar96NWODoublespeak.shtml

... it makes a lot of sense to go for a long-term standard-of-value
that cannot be so easily undermined by neocon political expedience.

[mikelewis]

10. You're absolutely correct....

Our current faith-based currency creates more poverty and only serves the wealthy. However, a unilateral change by Russians or the Euro to a gold back currency would be an attack on the U.S. dollar. It would pose the greatest threat to world peace in history. The U.S. would not stand for it but (and this won't happen until we cease to be a superpower) if the U.S. were to change to the gold-standard in conjunction with the other major currencies, the transition would benefit everyone.

[mikelewis]

2. You want to see World War 3? Let them pull some shit like that...

A global currency would kick off a war that dwarfed WW2. You can't start shit like that over night. Hell, if the European union was backed by gold or some other stable commodity, we'd invade. We're already flooding Europe with drugs and terrorists because the Euro's done so well. If Putin wants about a thousand nukes shoved up his ass, he had better start looking for a new plan.

[Joe for Clark]

5. With what army??

Ours is pretty tied up at present.

Joe

[mikelewis]

7. Shit... the army that you'd rush out to join if your smart...

If they drop a gold back currency on the market, America will collapse faster than a house of cards. You're talking a flaming spiral into instant Third-world conditions. I can tell you right now, my kids aren't going to starve because they hate Bush. They better recognize that our currency is not only backed by our commodities, it's also backed by a history of being the only country isane enough to use a nuclear weapon and currently has a mountain of them. If they try to starve us out, I'll gladly press that button. Fuck em. We'll deal with Bush and try to be better neighbors but if they want to try and destroy this country, they had better remember who they're fucking with. And that ain't no joke.

I will fight for the all mighty dollar, I just won't fight for a ignorant lying fuck who has no interest in trying to make it stronger. Kennedy knew better, he knew our dollar was weakening so he signed an executive order bringing us back to the silver standard. Ironically, a few months later, that man got shot in the head and we never heard about it again. Putin had better learn from history, paybacks a mother-fucker.

[Joe for Clark]

9. I really do think a show down is coming with China,

I know Iran is nothing more than a bunch of "camel jockies" - I am not afraid of them. And I know they caused our kids much misery in Iraq.

China, however, is a different story. We compete for the same resources - China and us. The difference is, we can produce the food to support our population - they cannot.

I have always believed the quesion would turn on if the United States was prepared to use food as a weapon. I still do. You can't eat oil, afterall. And the repubs have too big a business interest in the selling to be reasonable.

Russia is not the problem. At every turn of our history, Russia and the US were on the same side.

On the other hand - in war we are 1-1-1 against Asian countries. Not a good record.

Why are they buying gold now!!! WHY??? Why isn't the country asking this question??

This is truly not a democratic or republican question. I think the fact that republicans play politics here will damn them for 50 years, and it should.

Where is the new FDR when you need him??? Cause we need him - NOW!!!

Best to you,

Joe

[sweetheart]

12. It might be time to take a chinese holiday...

then you can meet all those starving billions face to face. I'd wager, that after
your excursion to china, you'll discover a nation that has never waged agressive
imperial war in modern history, and even before, china has stuck to its own
home grown consistently. And even as it develops more as a world power, one
must credit the fact that the persons making the war invective are speaking
like you are here.

"we" are not 1-1-1 against asian countries. The racist neocon-nixon-southern-man
military aerospace establishment is not "we", (i hope)!

Then the list needs be more complete. The involvement in the russia 1920 was
a loss.

There is also the fact that we've already invaded and conquored china in past:
http://en.wikipedia.org/wiki/Boxer_Rebellion

You could say that was a win, or in the longer term, a loss, as american china
policy was instrumental in helping mao come to power.

Korea really was a loss, everyone lost. Then by my thinking you'd have:

russia - loss
korea - loss
vietnam - loss
phillipines - win
china - win & loss
japan - win

counting china as ultimately a loss, its 2-4.

But i don't accept your distrubing black and white logic about what is a grey
relationship. Both nations are interdependent, and neither can afford a war,
as a US-china war will be a boon to the rest of the world, like ww2 was a boon
to the united states. The only ones who were not in the war will be the winners.

The best way to win a war, is not to start one.

[Joe for Clark]

3. There is a problem with that, of course -

If you follow the gold buying - and I do - it is coming from China and the Middle East.

I would not be so afraid if it was just Russia.

He is basically right, though. A "backed" currency will be powerful to our dollar.

And what happens when the countries of this new currency hate us.

I wish it were Russia. Its not.

Joe

[rman]

11. There's a more fundamental problem imo,

there *needs* to be enough money in circulation in any economy to cover/represent the sum of the value of goods and services traded in that economy.

As economies shrink and grow, the amount of money in circulation needs to be adjusted. So the amount of money that is required changes - but the amount of gold is fixed.
Especially because globally economies tend to grow in the long run, it is fundamentally impossible to "back" all the required money by gold or any other commodity of which there is a fixed amount.