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France's Sarkozy "We Need A New Bretton Woods System"
Sarkozy is quoted as demanding what is certainly the Fed's greatest nightmare: a return to Bretton-Woods. He furthermore notes, logically, that undervaluation of currencies counters trade, and that the financial system can not tolerate monetary dumping.
"The G20 prefigures the planetary governance of the 21st century,"
Mr. Sarkozy said, taking particular care to single out the new global
accounting rules being worked out under the auspices of the G20.
Mr. Sarkozy's comments come amid concern the reforms promised by G20
members are beginning to lose momentum as the economic crisis recedes.
They also come less than a week after U.S. President Barack Obama
announced plans to reform the U.S. banking system which appeared to
threaten the consensus forged in G20 meetings in London and Pittsburgh
last year. However, Mr. Sarkozy said he supports Obama's plans.
Elsewhere in his speech, which departed frequently and extensively
from a prepared text distributed locally, Mr. Sarkozy renewed his
attacks on "monetary manipulations" in general and the supremacy of the
dollar in particular.
"It cannot be that...we have a multipolar world and a single world
currency," Mr. Sarkozy said. "We need a new Bretton Woods," he added,
in a reference to the system of fixed but variable exchange rates
established after the Second World War.
Mr. Sarkozy also repeated that France would place the quest for a
new global monetary order at the center of its agenda in its
chairmanship of the Group of Eight next year. The undervaluation of
"certain currencies," Mr. Sarkozy said is bad for fair trade and
competition could result in protectionism. "We will not allow monetary
dumping," he said.
The French leader's comments come as the euro, whose perceived over
valuation has angered most French governments in recent history, hit
its lowest level in nearly a year against the dollar, as fears for the
sustainability of the euro zone increased in the wake of Portugal's
announcement that its budget deficit had topped 9% of gross domestic
product.
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What?! Gold and silver, commodities designated money by popular consent (unlike fiat money - designated money by force), are not "barbaric relics"?
Only way it works is if Silver is used as an asset base, otherwise it'll fail.... again.
Why silver instead of gold, or copper, or tin, or oil?
In my mind a new asset backed currency would fail anyway no matter what the backing is. This is not a fault of the asset, it is the fault of the central banks. They are used to a world where they are only restrained in how much money they can print by how much debt the world can generate. We would need to first correct the system of central banks because we have any hope of a sound currency, otherwise they will just force us into a free fiat float again.
copper and tin have industrial uses, silly to save and take up that much space. Silver is still too large to corner the market in any way and the industrial demand isn't enough to be hit. Oil.... Considering the weight the middle east would have in any decision then? Hell no.
No need. Use a weighted basket of gold, silver, platinum, palladium, and crude oil. That makes it far less subject to fluctuations in any one commodity.
I wouldn't argue with that proposal. Interesting note though is that we already have legislation in place for silver -
http://en.wikipedia.org/wiki/Executive_Order_11110
For all you Fed bashers (like me), read that wiki entry. I do believe Kennedy was assassinated because of that order.
http://www.publiceye.org/conspire/flaherty/flaherty9.html ?
Now there is an organization I could get behind.
With a flamethrower...
Edward Flaherty, a professor of economics at the College of Charleston in South Carolina, wrote an essay entitled Debunking the Federal Reserve Conspiracy Theories, in which he argues that Executive Order 11110 is quite infamous among conspiracy theorists, such as Jim Marrs, who believe President Kennedy was killed by the men who have control over the Federal Reserve Board, based on arguments that, according to Flaherty's view, have been proven to be false.
*shrug* I said I believe. I also don't believe it could be proven either way, but all presidents who have taken power away from Central Banks have been assassinated except for Jackson, who actually had two pistols misfire during that attempt.
But the key here "according to Flaherty's view" and "proven" - if it's according to his view, it isn't proven.
The fact is Kennedy was assassinated and nobody knows why. The other fact is that nobody knows the true motivations of the Fed, perhaps not even those on the board.
Not that it would have necessarily worked on Jackson anyway - he stood still and took a bullet to the chest in a duel so that he would be able to kill his opponent. He was one tough SOB.
LOL.... I guess that's why he carried two pistols (the assassin)
That is pretty chingon
surely no sane person believes the US would give up manufacturing,textiles,technology,and the lead in the world without somebody getting rich and pulling the strings.The rothschilds been running the world fore ever.Throw in the rockefellers,in japan and china and you get a pretty good presciption.They took away the guns in europe and canada,i wonder why?Kill a politition today and save the world.
Not to mention the lincon assassination and his green back that would have made then central bank obsolete
AGREED!!!!!
The free market has chosen gold and silver throughout history. Let it's choice stand. No need for government interference.
+1
"No need for government interference." - exactly. Too bad they keep interfering.
we ought to support Dr. Paul's proposal to legalize competing currencies... to those of you who don't believe in an asset backed currency, what could it hurt? what are you afraid of?
allow it, and watch it fail if you like... just join us and allow it.
Yes, but won't ever happen,too much fiat currency printed v.s. physical metals available above ground, plus in our Gv't's possession. IF the stds were left the same, (as to weights).Unless the value was made commensurate, with the available metals ( imagine the price of both metals if this were to happen), and adjusted as quanities were added.
Then you have the rest of the worlds fiat currencies...................
There is only one Mona Lisa above ground and I'm sure that it attracts an insured value in fiat. The Mona Lisa probably doesn't carry much value though because if you exchanged dollars for it, you couldn't eat it, right?
+1 w/ golf clap
There's really no need for any of this.
The solution is to stop creating money made of debt; that is the fundamental problem, not the fiat nature.
If a nation were to overprint, their currency would go to crap and this would be reflected in FX and general price levels.
Let the market determine the true value of currencies...having an asset backed currency can leave a nation exposed to speculative attack unless everyone is asset backed.
I would prefer Real Bills Doctrine where bills against real things of any kind trade against each other. This would allow grain exporters with little gold to have a strong currency effectively backed by grain. This could be true for any production, even intellectual property.
The market will sort out how much grain an oz of gold buys or how many barrels of oil equal a chunk of platinum or a TEU filled with lead-painted plastic toys
An excellent idea. But, pray tell, what would outfits like Goldman Sachs do, since they produce no real product, only pulled out of the backside derivatives and other financial voodoo. Geez, I think Blankfein would melt like the Wicked Witch if he had to produce a real, exchangeable product!
Goldman Sachs would fuck off and die
People who can't figure out what to do with Wall Street...well, you just do the same thing you do with ticks and leeches.
In the Real Bills Doctrine universe, bankers would be useful as holders of capital who could then discount bills against future production. But this isn't a glorious inflation racket and their bills would compete against others' bills in the marketplace.
A banker known for kiting would see his bills reduced to worthless. Bankers' purpose under RBD is to issue the bills themselves, against production to be delivered to market within 90 days.
Adam Smith was a very bright man, who came up with this doctrine in response to contemporary concerns with metallism and fiat. His response was that all real things should trade as "money." This is not a debt-based monetary system, nor was it a metals standard.
What will be the impact on this basket as the crude oil portion gets burned at 83MM bbls/daily? A medium of exchange that includes backing by a substance that is rapidly consumed seems a but unstable by design. The value of exotic metals like platinum / palladium depends upon continued demand for them in a high technology economy, which in turn requires crude oil. All of these baskets of things are overly complicated - in 100 years, between a warmer planet and a lot less energy, ice might be worth more than the lot of this stuff :-)
Correct. It does not matter what they "back" any currency with. They will just issue paper that promises "payable on demand" and use fractional reserve tricks just like they always do.
The best tricks are the oldest tricks.
IOY is the oldest trick...
I think he is really referring to the Chinese yuan and the weak dollar too !!
Why return to Bretton-Woods would be a nightmare for the FED?
Someone educate me please. Thanks
Because we have (so far) successfully avoided the repercussions of reneging on B-W in 1971, by the slamming of the gold window. The Fed doesn't want to enter negotiations in a weakened state, lest the chicken comes home to roost.
only way it works is if Gold is allowed to float against currency. Gold/paper peg won't work, the gold will always run out. Let it float and have it there as a wealth reserve, not as Money!
You are talking about Freegold.
http://fofoa.blogspot.com/2009/07/bondage-or-freegold.html
Caught me
everybody should pay attention to the words of FOFOA and A/FOA
Why return to Bretton-Woods be a nightmare for the FED?
Someone educate me please.
The FED likes unconstrained money creation
http://www.youtube.com/watch?v=YyhGtKAkNTo&feature=related
Historically bi-metallic standard does not work - Greshams Law.
Historically Silver lost the free market fight vs. Gold.
Silver has other uses other than just a store of value, which makes Gold a better candidtate.
Bretton Woods is not ideal as it still allows for fiat money within a country; gold redeemable to settle internationally. This is just a set of pegged interest rates with a base currency redeemable in Gold which failed the first time. We assume that USD continues to be the anchoring currency.
France is interesting here. They demanded Gold for Sterling reserves many moons ago when Gold was redeemable in Britain AND they demanded Gold for USD causing US to close the gold window.
No conclusion here just Frances role is an interesting one.
Historically a fixed exchange bi-metallic standard does not work - Greshams Law.
Silver didn't lose any free market fight, gold was adopted by fiat at fixed exhange rates.
Yep. You do NOT want to play relative valuation games with liars. They will win every time.
This flat isn't true.
Bimetallism was killed by the Bank of England, which had the Sterling Bill, a means by which they could flood paper gold into markets and then withdraw it.
A pure gold standard is not materially different from fiat. The BOE offered a different silver/gold ratio than the latin union in order to suck all the gold into Britain so that they could begin fractional gold using the Sterling Bill.
This was the lynchpin of the entire British Empire. It was a fractional reserve scam from its outset. A bimetallism standard *cannot* be faked with unbacked bills
The flaw in a bi-metallic standard is if they are linked in value per weight, ie. a certain amount of either is equal to one dollar. Bi-metallism would work if products were priced independently in either gold or silver by weight. Once the relative valuation of gold vs. silver is removed there is no advantage is demanding one over the other as payment and Greshams Law does not apply.
"Historically bi-metallic standard does not work - Greshams Law.
Historically Silver lost the free market fight vs. Gold."
In the 19th century there were times under bimetallism that silver was considered more valuable (and thus was sucked out of circulation) and times where gold was. Ultimately the issue was the setting of the fixed silver:gold ratio. To work we should have bi or multi-metallism based on a free market basket price of metals and/or other commodites. The market would need to be completely free and transparent to work (unlike COMEX or LBMA for instance).
Gold as a non-rusting conducting metal has industrial uses too, especially in the new electronics age. Even your car is now electric and resemble more and more like you cellphone and laptop computer.
Also, historically before gold there was aluminum. Before invention of electricity, there is no cheap way to turn aluminum oxide into pure aluminum, so aluminum is even more rare and precious than gold. Guess what technology do to aluminum as a store of wealth.
Nothing is eternal in the free market and there is no fool-proof store of wealth. Technology has recently given us artificial diamond. All those liquid gold in the Earth's core is just waiting for the right technology too.
Why would this be a nightmare? This makes no sense.
His quote is for fixed currency exchange rates - not to back every currency with gold.
"It cannot be that...we have a multipolar world and a single world currency," Mr. Sarkozy said. "We need a new Bretton Woods," he added, in a reference to the system of fixed but variable exchange rates established after the Second World War.
As well, remember the source, per WSJ:
"The French leader's comments come as the euro, whose perceived over valuation has angered most French governments in recent history, hit its lowest level in nearly a year against the dollar, as fears for the sustainability of the euro zone increased in the wake of Portugal's announcement that its budget deficit had topped 9% of gross domestic product."
Taking a stab you all, what implications would this have in the financial markets?
Bad for USD hegemony.
Bi-metallic standards fail only where the government fixes the ratio of silver to gold, because either silver or gold will be in higher private demand than the fixed ratio indicates.
If you allow both gold-backed money AND silver-backed money to circulate jointly without fixing the rate of exchange between them, it can work, but everyone would be required to adapt to to dealing in two sets of prices.
France probably wants to see an end to asian currency ponzi manipulation which is destroying entire industries all across the developed world.
Trade flows must be forced to normalize
From the point of view of the Asian countries, they are at a disadvantage as they are not considered reserve currency (commodities are denominated in USD). So, they make up by cornering jobs via outsourcing (the surplus USD generated allows to buy commodities for local consumption, etc.). As long as any country's currency is solely used as reserve currency, this situation cannot be fixed.
Exactly.
Have you had a chance to read Richard Duncan's newest book,The Corruption of Capitalism: A strategy to rebalance the global economy and restore sustainable growth?
This is one of the most comprehensive reads on the current economic crisis, which essentially started with the end of the gold standard in the 60s and early 70s.
My favorite quote (paraphrased) if there is hell for violating sound economic principles, then there will special rooms reserved for Johnson and Nixon.
The currency imbalance is a result of saving imbalance. The currency imbalance is not cause by direct manipulation. The financial crisis is a natural result of Asians having around 30% saving rate and Americans having around 2% saving rate. All the combined savings by the Asian countries distort the US treasury market and in turn make the risk and credit market unhealthy.
Had the Asian countries use gold/silver/copper/iron/platinum/palladium/zinc/nickel/aluminum/etc. in their currency reserves instead of the dollar, a simple economic slump won't be turned into a massive financial crisis, which is now in danger of turning into a currency crisis.
A new Bretton Woods, where currency is actually backed by basket of hard commodities would prevent future financial crisis and head off any potential currency crisis. National savings should ideally be accumulated in the form of hard tangible stuff and not phantom paper anyway.
The so-called poison twist that the US & China are entangled in destroys everybody else alongwith more so the Japs & the Euros.
How much would a French Franc be worth without the euro,Mr Sarkozy?
When is the last time France posted a balanced budget ?
1979 at the time of G d Estaing and R Barre
You're gonna knock France with OUR fiscal picture???
Actually M. Sarkozy, its a "bi-polar" world, made up of America and a country not named "France."
Short the euro.
The most important thing is that the Government setup a credit, not monetary system.
Sarkozy: “We need a new Bretton Woods.” Ah, the poison pill; and none dare call it…on a planet blackened by recession…the ultimate grab for all the world’s finance marbles.
And contrary to this article, a return to Bretton-Woods is NOT “the Fed's greatest nightmare.” The Fed’s role at Bretton Woods, as it is now, was to bring about its hidden agenda behind its new arm, the IMF/World Bank, i.e., the building of world socialism.
As Fed historian G. Edward Griffin put it:
“The game began at an international meeting of financiers, politicians, and theoreticians held in July of 1944 at the Mount Washington Hotel in Bretton Woods, New Hampshire. Officially, it was called the United Nations Monetary and Financial Conference, but is generally referred to today as simply the Bretton Woods Conference. Two international agencies were created at that meeting: The International Monetary Fund and its sister organization, the International Bank for Reconstruction and Development – commonly called the World Bank…
The announced purposes were admirable…the World Bank was to make loans to war-torn and underdeveloped nations…The IMF was to promote monetary cooperation between nations by maintaining fixed exchange rates between their currencies… But the method was less admirable:
The IMF was to terminate the use of gold as the basis of international currency exchange and replace it with a politically manipulated paper standard. In other words, it was to allow governments to escape the discipline of gold so they could create money out of nothing without paying the penalty of having their currency drop in value on world markets [i.e. exchange ratios of the various currencies would no longer be set by supply and demand]…
The method…was exactly the method devised on Jekyll Island to allow American banks to create money out of nothing without paying the penalty of having their currencies devalued by other banks. It was the establishment of a world central bank which would create a common fiat money for all nations and then require them to inflate together at the same rate…a kind of international insurance fund which would rush that fiat money to any nation that temporarily needed it to face down a ’run’ on its currency…”
The theoreticians who drafted the plan were a socialist, John Maynard Keynes and a later to be discovered Communist, the Assistant Secretary of the U.S. Treasury, Harry Dexter White.
Thanks for the history. Interesting.
The deeper you dig the darker it gets.
And France is bitching about this now, on the heels of the AIG back door bailout of their banks? Geeez, you'da thunk they would be greatful that the American Taxpayer put up, but no they won't shut up.
Yes! As Jefferson said here on 01/21/2010 - #200759 regarding “the final destination of the journey into debt oblivion upon which our central bankers have embarked”:
“Governments, businesses and households are being systematically rendered insolvent and forced to borrow against inflated asset values in order to service debt obligations on ponzi units of finance. Simultaneous universal default is the ultimate objective of this exercise in apparent central banking insanity. There is a method to the madness.
“The globalists have already made clear they plan to transition the world economy into an international monetary regime with SDRs as the core currency administered by the BIS/IMF/FSB cabal. Only by bankrupting everybody can the owners of the central banks force nations states to hand over their sovereignty to international global governance aka tyranny.”
This is laughable...SDRs will never work as the IMF is a fiction.
Nobody will respect a paper fiat like SDR after a universal bankruptcy.
The Ruble was still legal tender in the USSR or what remained after their collapse. But you can't legislate value
It won't be fiat paper money. It will be replaced with digital money. No more printing of paper money. This time they will use the keyboard to create money.
too true. this is the thrust of sarkozi's statement. what he is saying is that the dollar needs to be replaced with a global currency that does not favour one nation (the us ).the goal of one global central bank has taken a step forward. imho.
Greatful???????ß The USA in first front run the world in the ground with boundless use of goods aout of thin air!
No other nation on this world living on credit of the cost of pure chinese worker! Think bevor you open a big moul!
Another End of Euro precursor.
Can someone tell me what the fuck just happened? Its 2:20 in NY and my FX spreads went illiquid followed by immense dollar strength.
this is the 5-10 minute bar that the big boyz algos get turned on.
I am both amused and annoyed at this. Amused as it possibly indicates a recognition that this fiat system cannot continue? Does Sarkozy want to go back to a gold exchange...article did not specify. Annoyede, because Bretton-Woods was predicted to fail by the Austrians, because it is inherently flawed as some posters here have commented and did indeed fail. Why return to something that already failed once, who is going to prevent the Fed from inflating on top of it's reserves and other countries cashing in the FRNs for gold? Who?
This piece of news is making me bi-polar.
Just remember that Sarkozy, like 99.9% of politicians out there, has ZERO competence in business or economy. This guy never even worked a SINGLE day of his life at an honest job, he has no clue, no ideas, nothing. When it comes to the economy, he is just spouting his mouth.
He talks about "Bretton Woods" because it was, for many Europeans, associated with the expansion that came with the reconstruction of Europe after WWII.
In other words, he is an idiot, who has no idea what he is talking about. Is that enough to make you unipolar again? ;-)
Sarkozy is such a clown.
He should call it Ponzi Woods instead.
The only way it works is if it's a New Bretton Woods CREDIT SYSTEM.
The monetary system can be gamed, just like it was in the late 60's/early 70's.
We need a fixed exchange, CREDIT system. Sarkozy is 1/2 way right. But it won't 1/2 way fix the problem.
beta test!
Or perhaps we will see more dissenters emerge?
Until now the supremacy of the Fed and the world banking powers has never been questioned. The sawdust eating trolls from around the globe just accepted this reality as unquestionable. This crap is taught in universities as economic gospel. Now we see a minority that is hopefully growing to a majority that wants the Fed ended.
100 years plus of ass fucking should be enough for a lesson to be learned. No?
Sarkozy's speech constitutes nothing less than a shout out and rallying cry for fellow globalists to "seize the opportunity" created by the manufactured global financial crisis and institute "reforms" necessary to complete the subjugation of the world's population to a modern age plutocracy. The globalists have successfully brainwashed the useless eaters into believing that free markets are responsible for the present wealth inequality and financial instability when in reality these outcomes are a direct consequence of government meddling and regulation (Fannie, Freddie, FOMC, FDIC, 401Ks, Medicare, SS) combined with the activities of crony capitalist sycophants.
The G20 foreshadows the planetary governance of the 21st century. It symbolises the return of politics whose legitimacy was denied by unregulated globalisation.
In just one year, we have seen a genuine revolution in mentalities. For the first time in history, the Heads of State and government of the world's 20 largest economic powers decided together on the measures that must be taken to combat a world crisis. They committed themselves, together, to adopting common rules that will radically change the way the world economy operates.
Without the G20, trust could not have been restored.
Without the G20, we would have had the triumph of "every man for himself." Without the G20, it would not have been possible to envisage regulating bonuses, closing down tax havens and changing the rules of accounting and prudential standards.
These decisions will not solve every problem, but just one year ago, would anyone have thought they were possible?
Now, however, they must be implemented!
I would like to seize the opportunity to say this: the signs of recovery that seem to herald the end of the global recession should not encourage us to be less daring; rather, we must be even bolder. If we do nothing to change world governance, nothing to regulate the economy, if we do not reform our systems of social protection, pensions, education and research, if we do not clean up our public finances, if we do not stringently prosecute the war against tax fraud, if we do not invest to prepare for the future, this recovery will be only a respite. The same causes will produce the same effects. Look at the new bubbles that are already starting to form. Here, we cannot be certain that the States will still have the means to guarantee trust.
http://www.weforum.org/pdf/Sarkozy_en.pdf
It is apparent the globalists are going after what remains of the entrepreneurial class under the guise of helping out the workers and middle classes. The bad acts and rampant greed of the financial class made possible by government induced malinvestment and shady central banking practices are now being used to justify the complete destruction of free market capitalism and the handing over of local and national sovereignty to the gnomes in Basel. I hope you like the taste of jackboots.
Welcome to the beginning of 21st century feudalism!
OK! I agree...
So what`s the solution?
jgcvdl
As money is a means to make bartering simple, it is useful to have money units that have the same value for everybody. That value should remain reasonably the same over periods of time, so the material the money is made of must be free from corrosion or evaporation, should not be edible or burnable and be sufficient scarce so as to be small for a rather high amount of value. It must be easily made in several sizes.
As far as I can see, only gold fills the bill.
All the ideas about a sinister Fed (in my view kind of mafia of the bankers) and fiat currencies are good. What I miss to read about is the shadow market of credits. When a credit card company allows me to buy something without money to back it up they "create" money.
My credit does not matter but what the various financial players did, that matters.
"Creative products" and lack of oversight did the world in. The US needs the dollar to manipulate the markets. No wonder Sarkozy wants to curtail that power. I support him wholeheartedly.
To bad the world still believes in the "nice Americans" who help them and provide a safe haven. Yes, the general American is a good person, but the market players are not. It is not that they need the money, they are like sociopathic gambling addicts who just want to score bigger than everyone else. These sickos don't give a damn about a country or it's people.
Its just a threat for USA to allow Euro to tank to give them exporting benefits.ie USA you better maintain your dollar and stop debasing...for now its our turn Bennie
We need to abolish the world system of Central banking altogether or at least restrict them to private lending. The Breton Woods system worked well for three decades until the U.S. Federal reserve insisted upon loading the world up with debt by printing fiat paper in excess of assets and productivity.Closing the gold window was the ultimate insult.
The ability to create its own money is the most basic natural resource that a nation has. When a nation abandons this right and gives it to a Central bank, without even charging a fee for this privilage, the nation becomes tributary to the Central bank just as the borrower is servant to the lender. A nation that does this is no longer sovereign. Central banks are in effect, an instrument of totalitarianism because they load nations of the world up with debt reducing them to serrvitude and serfdom.
James MacInnis
Canada