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World Bank President Robert Zoellick Calls For Return To "Old Money" Gold Standard

Tyler Durden's picture




 

One of the most serious condemnations of the race to the currency bottom to date comes not come from some peripheral media, but from the head of the World Bank itself, who in a just released Op-Ed in the Financial Times says that since the system of floating currencies established by the 1971 Bretton Woods II system, has broken down, it is time to look to a new international system of commerce, one which "should also consider employing gold as an international reference point
of market expectations about inflation, deflation and future currency
values.
" In other words, welcome back gold standard 2. Of course, this proposal will never attain more than a casual academic reference, as even a partial gold standard will immediately establish a lower bound on how much any given monetary authority can debase its (and, by retaliation, others') currencies. What, however, if very curious, is why this proposal is being floated precisely 3 short days after the Fed has launched its most ambitious attempt to reflate global asset prices and devalue fiat paper. And as is well-known, the IMF has also been quietly proposing a return to an ven more powerful version of the SDR.... Just what will take for the scales to tip, and for the dollar to remain a reserve currency just in retrospect.

From the FT:

Writing in the Financial Times, Robert Zoellick, the bank's president since 2007, says a successor is needed to what he calls the "Bretton Woods II" system of floating currencies that has held since the Bretton Woods fixed exchange rate regime broke down in 1971.

Mr Zoellick, a former US Treasury official, calls for a system that "is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalisation and then an open capital account". He adds: "The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values."

His views reflect disquiet with the international system, where persistent Chinese intervention to hold down the renminbi is blamed by the US and others for contributing to global current account imbalances and creating capital markets distortions.

Of course, with a market primed to discount every inflationary possibility, it would not be surprising to see precious metals to continue their near parabolic move higher over the past few days. Silver is already flirting with the $27 in the spot market tonight.

Full comments by Zoellick:

With talk of currency wars and disagreements over the US Federal Reserve’s policy of quantitative easing, the summit of the Group of 20 leading economies in Seoul this week is shaping up as the latest test of international co-operation. So we should ask: co-operation to what end?

When the G7 experimented with economic co-ordination in the 1980s, the Plaza and Louvre Accords focused attention on exchange rates. Yet the policy underpinnings ran deeper. The Reagan administration, guided by James Baker, the then Treasury secretary, wanted to resist a protectionist upsurge from Congress, like the one we see today. It therefore combined currency co-ordination with the launch of the Uruguay Round that created the World Trade Organisation and a push for free trade that led to agreements with Canada and Mexico. International leadership worked with domestic policies to boost competitiveness.

As part of this “package approach”, G7 countries were supposed to address the fundamentals of growth – today’s structural reform agenda. For example, the 1986 Tax Reform Act broadened the revenue base while slashing marginal income tax rates. Mr Baker worked with his G7 colleagues and central bankers to orchestrate international co-operation to build private-sector confidence.

History moved on after the huge changes of 1989 and the experience of the 1980s is still being debated, but this package approach was significant for its combination of pro-growth reforms, open trade and exchange rate co-ordination.

What might such an approach look like today? First, to focus on fundamentals, a key group of G20 countries should agree on parallel agendas of structural reforms, not just to rebalance demand but to spur growth. For example, China’s next five-year plan is supposed to transfer attention from export industries to new domestic businesses, and the service sector, provide more social services and shift financing from oligopolistic state-owned enterprises to ventures that will boost productivity and domestic demand.

With a new Congress, the US will need to address structural spending and ballooning debt that will tax future growth. President Barack Obama has also spoken of plans to boost competitiveness and revive free-trade agreements.

The US and China could agree on specific, mutually reinforcing steps to boost growth. Based on this, the two might also agree on a course for renminbi appreciation, or a move to wide bands for exchange rates. The US, in turn, could commit to resist tit-for-tat trade actions; or better, to advance agreements to open markets.

Second, other major economies, starting with the G7, should agree to forego currency intervention, except in rare circumstances agreed to by others. Other G7 countries may wish to boost confidence by committing to structural growth plans as well.

Third, these steps would assist emerging economies to adjust to asymmetries in recoveries by relying on flexible exchange rates and independent monetary policies. Some may need tools to cope with short-term hot money flows. The G20 could develop norms to guide these measures.

Fourth, the G20 should support growth by focusing on supply-side bottlenecks in developing countries. These economies are already contributing to half of global growth, and their import demand is rising twice as fast as that of advanced economies. The G20 should give special support to infrastructure, agriculture and developing healthy, skilled labour forces. The World Bank Group and the regional development banks could be the instruments of building multiple poles of future growth based on private sector development.

Fifth, the G20 should complement this growth recovery programme with a plan to build a co-operative monetary system that reflects emerging economic conditions. This new system is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalisation and then an open capital account.

The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.

The development of a monetary system to succeed “Bretton Woods II”, launched in 1971, will take time. But we need to begin. The scope of the changes since 1971 certainly matches those between 1945 and 1971 that prompted the shift from Bretton Woods I to II. Serious work should include possible changes in International Monetary Fund rules to review capital as well as current account policies, and connect IMF monetary assessments with WTO obligations not to use currency policies to remove trade concessions.

This package approach to economic co-operation reaches beyond the recent G20 dialogue, but the ideas are practical and feasible, not radical. And it has clear advantages. It supplies a growth and monetary agenda that parallels the G20 financial sector reforms. It could be built upon prompt incremental actions, combined with credible steps to be pursued over time, allowing for political dialogue at home. And it could help rebuild public and market confidence, which will remain under stress in 2011. Perhaps most importantly, this package could get governments ahead of problems instead of reacting to economic, political and social storms.

Drive or drift? How the G20 decides could determine whether multilateral co-operation can achieve a strong economic recovery.

Little can be added here except for one recent popular quote, which explains why we eagerly welcome more and more high level individuals condemning the fiat system, and petitioning to a reversion the system that actually worked without creating quadrillions in imaginary debt-money (and the inevitable fiat devaluation that always follows): "What is the most resilient parasite? Bacteria? A virus? An intestinal
worm? An idea. Resilient... highly contagious. Once an idea has taken
hold of the brain it's almost impossible to eradicate. An idea that is
fully formed - fully understood - that sticks; right in there somewhere."

 

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Sun, 11/07/2010 - 21:30 | 707302 MsCreant
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Gordon? Chumba?

Sun, 11/07/2010 - 21:36 | 707315 DoChenRollingBearing
DoChenRollingBearing's picture

I saw Gordon reply not long ago (a week?).

There are just rumors about Chumba.  I for one would really like to have him back.  A real shoot first ask questions later kind of guy.  I hope he is OK.

Sun, 11/07/2010 - 21:45 | 707335 MsCreant
MsCreant's picture

I have it on fairly reliable authority that Chumba is okay. Would love to tell you more, but I would betray a back channel confidence to do it, unless that person, while cruising the threads, were to speak up on the topic?

Oh yeah, Gold you female dogz in heat. Ow Ow Owooooooooo!

Sun, 11/07/2010 - 21:55 | 707354 boricuadigm-shift
boricuadigm-shift's picture

Way too funny! Female dog! :-)

Sun, 11/07/2010 - 21:56 | 707357 DoChenRollingBearing
DoChenRollingBearing's picture

Don't say a thing!  Glad to hear that he may be OK.

Mon, 11/08/2010 - 08:01 | 707750 breezer1
breezer1's picture

yeah, be nice to see gordo back here. what is he supposed to be ok from?

Mon, 11/08/2010 - 02:38 | 707638 Miles Kendig
Miles Kendig's picture

And the Buck's (GG & Chumba included) are goin' into rut for all that doe .. Good thing since some of that tree bark needs to get rubbed in a way only they can

Meanwhile, the echo "I Will Not Obey (but I will represent)" still rings from the digital landscape ..

Sun, 11/07/2010 - 21:30 | 707303 JimRogers
JimRogers's picture

HONESTY BITCHEZ!!!!!!!

Sun, 11/07/2010 - 22:07 | 707371 MsCreant
MsCreant's picture

Jim eh? So how's your buddy Krugman? 

Mon, 11/08/2010 - 08:46 | 707772 Freewheelin Franklin
Freewheelin Franklin's picture

SDRs, bitchez.

 

(that's not really Jim, is it?)

Sun, 11/07/2010 - 21:30 | 707304 philgramm
philgramm's picture

screw the gold standard.  just go to gold!!!!!!!!!

Sun, 11/07/2010 - 21:38 | 707323 DoChenRollingBearing
DoChenRollingBearing's picture

Yeah, um, I am becoming more "fofoa like", in that a gold standard is probably not workable.  And that gold should be viewed as the best wealth protector.

fofoa.blogspot.com

Sun, 11/07/2010 - 21:53 | 707340 Internet Tough Guy
Internet Tough Guy's picture

Zoellick is describing Freegold, not the old pre-1933 gold standard. It's coming. A/FOA were right about this more than 10 years ago.

Sun, 11/07/2010 - 22:07 | 707367 DoChenRollingBearing
DoChenRollingBearing's picture

I missed that in Zoellick's commentary, I'll have to back and re-read it (zzzz...).

At his blog, I have seen some commentators say that since A/FOA wrote a rather long time ago that things may have unfolded differently than they foresaw.

But, Bearings don't have brains, just a hole there in the middle.  I certainly do not KNOW what is going to happen, but FOFOA's gold to $55,000 argument is persuasive.  When I first went to his site (2008), I looked at that number and thought WTF?  It does take a lot of time and thinking (for me anyway) to grasp his arguments, but he may be the most on the money guy on the 'Net.

Sun, 11/07/2010 - 23:03 | 707475 saulysw
saulysw's picture

"...but he may be the most on the GOLD guy on the 'Net"

I know it's not the common phrase, but that seems more accurate.

Mon, 11/08/2010 - 08:03 | 707751 breezer1
breezer1's picture

fofoa, ' gold may be priced at $1000 but try to get some '.

Sun, 11/07/2010 - 21:32 | 707307 High Plains Drifter
High Plains Drifter's picture

Et tu Brutus?

Sun, 11/07/2010 - 21:33 | 707309 LeBalance
LeBalance's picture

Why? Good Cop / Bad Cop.

Divide and Conquer.

Polarize, raise ire, stir the chaos.

Ordo ab chao!

SOP.

(Just barter with your new local friends and minimize the use of any money.  Just cut Big Brother's margins and he dies.)

Mon, 11/08/2010 - 01:01 | 707623 l1xx3r
l1xx3r's picture

I could not agree more.

Sun, 11/07/2010 - 21:34 | 707311 57-71
57-71's picture

Good luck with that, Bob.

Sun, 11/07/2010 - 21:37 | 707316 hamurobby
hamurobby's picture

I was laughing when I saw this, and silver briefly touched $27.

Sun, 11/07/2010 - 21:39 | 707324 MsCreant
MsCreant's picture

One of those GATA types I believe called for silver to go to $30 in 18 days. That was last week some time. Making good time so far.

Sun, 11/07/2010 - 21:53 | 707350 hamurobby
hamurobby's picture

And now the dollar is SOARING! reversal exactly at 8pm, amazing.

Mon, 11/08/2010 - 08:05 | 707755 breezer1
breezer1's picture

james turk said it and the 14th will be the 18th day.

Mon, 11/08/2010 - 08:50 | 707776 Freewheelin Franklin
Freewheelin Franklin's picture

The 14th is a Sunday. We're talking business days. 18 business days.

Sun, 11/07/2010 - 21:39 | 707326 title examiner
title examiner's picture

Turning to a Gold Standard now to lock all this crisis debt?  Yes, let's just lock it all in place now, so we can never get it paid off--or worked out.

The Gold standard would be just perfect for those who own Gold mines.

Sun, 11/07/2010 - 21:51 | 707346 Snidley Whipsnae
Snidley Whipsnae's picture

Governments would nationalize or heavily tax all commodity mining operations.

IRS guy would be following every old prospector and his donkey around the wilderness, watching for a little color in the pan. lol

Sun, 11/07/2010 - 22:39 | 707431 dogbreath
dogbreath's picture

snidley

I take your point with good humor BUT.  I am in the bussiness and have the legs.  I routinely kill junior geo's and techs who dare follow me.  I would say that many in the bussiness would welome the oportunity to be shadowed just for the laughs.  Time to go prospecting in the Brooks Range Ak.

Mon, 11/08/2010 - 11:13 | 708009 -Michelle-
-Michelle-'s picture

Wait a minute.  You routinely kill people who follow you around?  Or was that not to be taken literally?

Mon, 11/08/2010 - 22:14 | 710328 dogbreath
dogbreath's picture

LOL.   meat a four.  They are generally toast,  dead legs with major cramps and to bed early without supper.

Tue, 11/09/2010 - 10:53 | 711603 -Michelle-
-Michelle-'s picture

Whew.  Okay then!

Mon, 11/08/2010 - 01:34 | 707645 Oracle of Kypseli
Oracle of Kypseli's picture

Taxation of miners will drive the gold price even higher.

Sun, 11/07/2010 - 22:04 | 707360 boricuadigm-shift
boricuadigm-shift's picture

Remember, is not about locking the gold standard to any price.  It is letting it float freely.  To be fair, we could start the standard at $100k/oz.  That wouldn't be that bad!

Sun, 11/07/2010 - 22:10 | 707378 DoChenRollingBearing
DoChenRollingBearing's picture

$100,000 / oz.  I'm good with that.  Great idea.  C'mon Fed, make my day!

Sun, 11/07/2010 - 23:47 | 707551 RockyRacoon
RockyRacoon's picture

Look out there, DCRB.  Those golden woodies can be dangerous.

Sun, 11/07/2010 - 23:57 | 707565 espirit
espirit's picture

 

$100,000 USD might only be worth 10 or so IMF SDR's, in comparison to an oz of gold.

Don't forget unlimited BennieBux equals hyperinflation.

Sun, 11/07/2010 - 21:48 | 707338 Charley
Charley's picture

Can someone tell me who moves to a gold standard when the world's best customer only deals in dollars?

Anyone?

Anyone?

Bueller?

Also, if it not too much to ask, what fills the hole left by the sudden elimination of 1/4 of the world market demand?

I am not sure people are thinking this through. They want a durable store of dead value, but they are not thinking about the actual living circuit of production and consumption...

Sun, 11/07/2010 - 21:52 | 707347 Internet Tough Guy
Internet Tough Guy's picture

What are you going to do if the saudis settle for oil in euros, stop importing oil? That will teach them who is boss...

Sun, 11/07/2010 - 21:57 | 707358 Charley
Charley's picture

Ask Saddam what Washington is going to do...

Use a Ouija board...

Sun, 11/07/2010 - 22:21 | 707400 zaknick
zaknick's picture

Arab response to your drivel:

 

Fool, we will burn the oil rather allow its theft. Try protecting the far flung pipelines and vulnerable infrastructure required for its shipment to an ever more energy hungry world.

 

Besides, the Saudis have an intimate relationship with central bankster mafia.

Sun, 11/07/2010 - 22:44 | 707437 Canucklehead
Canucklehead's picture

Who is going to pay for the social programs in the Middle East if you burn your own oil?  It's said that the Saudis need close to $70 per barrel to support the domestic pork barrel.

... I know that you don't see any of that largess, but what about your parents?

Sun, 11/07/2010 - 23:07 | 707482 zaknick
zaknick's picture

Actually sir, the production cost for a barrel of oil is considerably less than the market price. It is another market which is manipulated by the same people who literally own the fake fed.

In respect to some Arab social program I've never heard of, I would like to remind you that the man said the Saudis would be invaded which means that there is already death and destruction on the streets so who's talking about some social program?

Lastly, I'm not Arabic!

 

lol

 

May I suggest Geritol?

Mon, 11/08/2010 - 01:08 | 707628 l1xx3r
l1xx3r's picture

FOFOA had a good gold/oil manipulation set up article. Shows how both are manipulated using each other. Both down in price.

Sun, 11/07/2010 - 23:09 | 707487 Charley
Charley's picture

Hey,

Don't get angry with me. But, he did try to price Iraqi oil in euros before we suddenly became so outraged about his use of the chemical weapons that we sold him...

I'm just sayin...

 

Mon, 11/08/2010 - 14:02 | 708680 BigJim
BigJim's picture

Yes, that's true. And I believe Iran takes euros now (http://en.wikipedia.org/wiki/Iranian_oil_bourse) which might partly explain TPTB's expressions of impatience to bomb them.

Mon, 11/08/2010 - 14:04 | 708690 BigJim
BigJim's picture

The Saudis would need to get security guarantees from Russia and China for this to be feasible. Uncle Sam would NOT be pleased if they started taking currencies other than the US $

Sun, 11/07/2010 - 21:55 | 707355 Snidley Whipsnae
Snidley Whipsnae's picture

Gold/silver are already acting as stores of value.

Is the dollar?

It is not impossible to have a store of value and a transaction currency circulating in the same economy.

As long as the store of value (gold) is left floating against the transaction currency whats the problem?

Too much printing of the transaction currency would drive up the store of value (gold).

It is happening as we sit here typing.

Sun, 11/07/2010 - 22:00 | 707364 Charley
Charley's picture

The dollar is a worthless piece of fictional money ... it cannot be a store anything, much less value

But, in the circuit of production and consumption, the money function is only token anyway. I agree with those who oppose QE and the like; but it is just not going to happen. Banks like being able to create money at will...

Sun, 11/07/2010 - 22:05 | 707368 Snidley Whipsnae
Snidley Whipsnae's picture

" Banks like being able to create money at will..."

...and hasn't that worked out well. lol

Gold floats beside the Euro and is 'offically' revalued every quarter. So, in Euroland gold is a store of value and the Euro currency is a transaction currency. Is this difficult to understand?

Sun, 11/07/2010 - 22:14 | 707385 Charley
Charley's picture

When the euro-zone can run unlimited trade and public deficits to consume everything Germany, Japan and China can throw on the world market, the euro will replace the dollar.

Until then, Europe is basically doing what they did in 1971: NOTHING. Please, I am not agreeing with these assholes in Washington, I just can read the tea leaves, and those booty-punks in Europe will dance to whatever tune Washington puts on the turntable...

Sun, 11/07/2010 - 22:16 | 707391 Charley
Charley's picture

They have spent the last 70 years on their knees, and now is not the time for them to learn a new profession

Sun, 11/07/2010 - 22:24 | 707405 Snidley Whipsnae
Snidley Whipsnae's picture

Well, I certainly cannot have a logical discussion with someone that can read tea leaves and incorporates the outcome into a macro economic forecast.

I respect your right to your opinion and wish you well with your investments.

 

Sun, 11/07/2010 - 22:30 | 707415 Charley
Charley's picture

Look at history, man. The US defaulted on its obligations under Bretton Woods -- outright default. Who in Europe and Asia sent boats to collect their gold? Can't you see that macro is not all about equations? There also conflicts which cannot be quantified.

Please, do not fall for the elegant math of neoclassical economics -- it didn't prediuct any of the last three years...

Mon, 11/08/2010 - 00:28 | 707588 Walter_Sobchak
Walter_Sobchak's picture

No one can predict with 100% accuracy the actions of the elite.  This does  not change the fact that GOLD BITCHEZ!

Mon, 11/08/2010 - 00:36 | 707595 Walter_Sobchak
Walter_Sobchak's picture

There ARE other countries in the world besides the US, and I'm not so sure they'd be in favor of your so called "dollarization" when our central bank has proven its willingness to debase said paper.  No I think what the entire REST OF THE WORLD desires is a stable unit of account.  But maybe you're right, 70% of the worlds weapons can convince them otherwise...

Mon, 11/08/2010 - 14:48 | 708907 chopper read
chopper read's picture

Charley, your point is fair, in my opinion, as we are defaulting on China as we speak (monetization) and they have not sent over any slave ships to pick up the only 'asset' backing the $USD (our slave labor). 

Sun, 11/07/2010 - 22:43 | 707438 dogbreath
dogbreath's picture

the global oigarchy will be whatever they need to be to consolidate more power and wealth in their hands. gold commie dollar capitalist does not matter

Mon, 11/08/2010 - 08:55 | 707780 Freewheelin Franklin
Freewheelin Franklin's picture

... it cannot be a store anything,

 

Sure it can. it can be a "store of debt".

Sun, 11/07/2010 - 22:06 | 707370 unum mountaineer
unum mountaineer's picture

best customer...largh

 

Sun, 11/07/2010 - 22:20 | 707399 Charley
Charley's picture

The CHinese would still be picking potatoes in reeducation camps if it weren't for debt driven American demand -- and they know it. You won't see them upsetting this dollar thingy.

Sun, 11/07/2010 - 22:27 | 707411 tmosley
tmosley's picture

Right, I mean, trading useful goods for pieces of paper improves their standard of living so much.  Right?  Right?

God knows they couldn't just use those things they produced themselves.  Instead, they stir crumbled up treasuries into their potato stew, turning it into delicious porterhouse steak.

Sun, 11/07/2010 - 22:34 | 707423 Charley
Charley's picture

Yes, it makes about as much sense as selling bank assets to the Fed for dancing electrons puched in a computer.

Unless those assets were worthless as well. Not to mention all that shoddy manufactured crap exiting Chinese factories which would pile up worthlessly on the piers of Shanghai if WalMart wasn't there.

What is the value of a pier full of unsold Chinese made crap?

Sun, 11/07/2010 - 22:52 | 707452 tmosley
tmosley's picture

As much as the Chinese are willing to pay for it.

Why do you think only white people can consume?  If you produce and save, you can consume, so long as the policies of your nation aren't keeping you artificially poor by shipping the goods you produce abroad in exchange for little pieces of paper that Westerners are printing like there is no tomorrow.  The Chinese would not be particularly hurt by a total secession of trade with the US, because the US doesn't produce anything that they need or want.

Also, look at your monitor.  Is it a shoddy piece of crap?  It was made in China (I can say that with 90+% accuracy).  Look at your computer.  Same thing.  Look at your TV, you DVD player.  Look at the silverware in your drawers.  Look at your pots and pans.  Are they all shoddy crap?  Chances are, it was all made in China.

You really should cut down on the collectivism.  China isn't one big hivemind.  It is a nation with well over a billion individual, and millions of different companies.  Some are well run, others do shoddy work.  The ones that do shoddy work don't last very long.  Those that do good work do.  As time goes on, the market forces them to get better.  We have seen this, to the extent that they have gone from making cheap fall apart toys to making high-end, well built electronics.  The US went through the same process, as did every other country that ever industrialized.

Sun, 11/07/2010 - 23:02 | 707472 Charley
Charley's picture

I did not intend to provoke a feeling of jingoism aimed at the Chinese -- the crap is made there because American manufacturers offshored it to China. China doesn't own a single WalMart store in the US, but WalMart has 700 factories in China...

Mon, 11/08/2010 - 09:00 | 707785 Freewheelin Franklin
Freewheelin Franklin's picture

No, but WalMart owns stores in China. In China, they sell "high-end" products, not the shit they sell here.

Mon, 11/08/2010 - 09:30 | 707823 financeguru500
financeguru500's picture

What does it matter if China doesn't own a single walmart? Or if Nike was originally an American Company. Same goes with other companies such as Budweiser (who is now owned by inbev).

American Companies have ZERO allegiance to America. This was proven in the 1980's when these said companies shipped out jobs to the lowest bidder.

As soon as taxes rise for said companies here in the U.S. they won't even be located here anymore but will ship their headquarters to the most convenient place possible.

Sun, 11/07/2010 - 22:44 | 707439 unum mountaineer
unum mountaineer's picture

don't misinterpret the actions of the chinese..they will sell you the rope which you hang yourself with..patience is of the utmost priority

Sun, 11/07/2010 - 22:14 | 707384 Thee Barbarous Relic
Thee Barbarous Relic's picture

Why does it matter if demand changes due to less less money because of less credit extended to people who cannot repay the loans anyway?I think most ZH readers would like an honest unit of account. If we need a state at least they can provide honest weights and measures and not some arbitrary value changed as quick as you can say 600 thousand million.Is the US really the worls best customer or just the one with the biggest guns?

Sun, 11/07/2010 - 22:24 | 707406 Charley
Charley's picture

Listen, I see what QE is doing and will do -- the euro is toast and probably the yen and yuan as well. The dollar is headed in a cess pool of depreciation. But, these guys will go down the drain with the dollar -- kicking and squawking the entire way -- because they have no alternative.

Even if they went to gold standard, the US control about 80 percent of the existing stock!!!!!!!!!!!!!!!!!!!!!!!!!!!

(And, 70 percent of global military power)

Sun, 11/07/2010 - 22:31 | 707419 Snidley Whipsnae
Snidley Whipsnae's picture

"Even if they went to gold standard, the US control about 80 percent of the existing stock!!!!!!!!!!!!!!!!!!!!!!!!!!!"

I suppose you have a credible link for that one?

Sun, 11/07/2010 - 22:38 | 707430 Charley
Charley's picture

Yes -- Hold on I will find it ... Jim Rickards interview

Sun, 11/07/2010 - 22:48 | 707446 Charley
Charley's picture

Here: http://tinyurl.com/35foyqb

I don't vouch for his figures, but if they are correct, the world will never return to the gold standard...

Sun, 11/07/2010 - 23:17 | 707499 CrockettAlmanac.com
CrockettAlmanac.com's picture

World gold holdings (2008) (Source: World Gold Council[18]) Holding Percentage Jewelry 52% Central banks 18% Investment (bars, coins) 16% Industrial 12% Unaccounted 2%

http://en.wikipedia.org/wiki/Gold_reserve

Looks like Indian brides are holding the gold.

Sun, 11/07/2010 - 23:44 | 707545 msjimmied
msjimmied's picture

No shit...check out the South Indian brides...

http://www.indiamarks.com/guide/Gold-Mines-of-Kerala-Just-Kidding/17646/

That's kind of old school, but they never sell the stuff, it just gets passed down. Now they are heavy into diamonds..here is an ad with my niece as the potential bride...OK, I know, but she's a doll.

http://www.youtube.com/watch?v=_SjIs8nqXDs

 

 

Mon, 11/08/2010 - 01:49 | 707656 Oracle of Kypseli
Oracle of Kypseli's picture

BTW: Diamonds are no longer considered precious stones (in investment parlance)

Round trip buy/sell as high as 45%. It is not divisible and its quality and properties vary widely. Not an investment unless inherited, stolen or found.  

Mon, 11/08/2010 - 03:10 | 707682 Treason Season
Treason Season's picture

Gives a whole new meaning to the term "Gold Digger"!

Mon, 11/08/2010 - 08:48 | 707775 MsCreant
MsCreant's picture

Many beautiful women in those pictures. Your niece is stunning. 

Sun, 11/07/2010 - 22:43 | 707434 unum mountaineer
unum mountaineer's picture

meh, never mind..xie xie ni charley..night crew..in the morning.

Sun, 11/07/2010 - 23:26 | 707516 nmewn
nmewn's picture

unum mountaineer,

"meh, never mind..xie xie ni charley..night crew..in the morning."

Pick it up a couple notches or don't bother.

Sun, 11/07/2010 - 22:46 | 707436 boricuadigm-shift
boricuadigm-shift's picture

Charley,

 Its called a paradigm-shift.  When you are devaluing the reserve currency at a fast(er) rate than anyone else, countries and business will opt to transact in a more stable currency.  Preferred currency of all times...  You thought right!  It has happened and it will happen again. Time is the only uncertain.

Sun, 11/07/2010 - 22:56 | 707462 Charley
Charley's picture

I agree that there will be a paradigm shift, but it is likely to go in the direction of a global dollarization movement rather than the gold standard. It hurts me to say that, but I just do not see any alternative. Without QE, European austerity woud push the global economy right into the grave.

But, just because I see it this way doesn't mean I like it or agree... My preferences are quite defferent.

Sun, 11/07/2010 - 23:32 | 707520 boricuadigm-shift
boricuadigm-shift's picture

The global "dollarization" (or fiatization) you mentioned will fail again, if that fiat currency is not backed by some sort of asset (oil, PM, commodities).  Remember, the problem lies in the control of the money supply.  This backing of fiat currencies by a physical asset would bring the indispensable check and balances needed for the market and authorities. 

Mon, 11/08/2010 - 06:48 | 707720 Troy Ounce
Troy Ounce's picture

What will your reaction be if yoy have unlimited power to create money and suddenly someone says you cannot do this anymore becasue of a gold / pm standard?

You will tell them to fuck off.

This is what you can expect from all the guys with shiny shoes in big buildings staring at 19" screens.

My take: the deeper the crisis, the better the chance of a gold standard.

 

Mon, 11/08/2010 - 10:29 | 707914 ibjamming
ibjamming's picture

Isn't the dollar based on oil already?  Isn't that the beauty of it?  The value of a dollar is based on a consumable.  You pull it "for free" out of the ground and you "create" dollars.  It expands the economy and then more are made.

Mon, 11/08/2010 - 08:06 | 707756 snowball777
snowball777's picture

If the people who sell the black stuff that makes everything go say they want gold and only gold because Allah commands it, you'll either go broke trying to kill them or pay fucking gold, capiche?

Sun, 11/07/2010 - 21:57 | 707352 Gordon Freeman
Gordon Freeman's picture

WTF just happened to the dollar??  Some really fat finger just manifested...

Sun, 11/07/2010 - 22:07 | 707372 LongSoupLine
LongSoupLine's picture

Nixon just rolled in his grave.

Sun, 11/07/2010 - 22:23 | 707403 The PolyCapitalist
The PolyCapitalist's picture

indeed! (hilarious)

Sun, 11/07/2010 - 22:09 | 707374 FreedomGuy
FreedomGuy's picture

I would like to have been there in '71. I am sure if we could look back there were people who warned what would happen with a fiat currency. Just like there were people who warned what would happen with Social Security back in 1939...just like our founders warned what would happen if we let the power of government grow, even if was pitched as being good for us.

The very best thing about a gold standard is that no one can get defrauded in the exchange. Payment is in the currency.

Sun, 11/07/2010 - 22:16 | 707392 Snidley Whipsnae
Snidley Whipsnae's picture

Money under a gold standard becomes more scarce.

Capital can still be misallocated but it is a bit more difficult to misallocate $60 Trillion.

Sun, 11/07/2010 - 22:30 | 707417 tmosley
tmosley's picture

Money doesn't become scarce, the units just get smaller.  This means your savings buys more.  This is a good thing, contrary to what the witch doctors tell you.

Sun, 11/07/2010 - 22:40 | 707433 Snidley Whipsnae
Snidley Whipsnae's picture

Fewer claims on underlying assets, to me, is scarce money....call it hard money if you prefer.

Hypothetical question: Do you believe that the enormous booms of DotCom and housing could have happened under a gold standard?

...and, yes I am well aware of the boom bust cycles under previous gold standards. But, I am talking bubble SIZE here, as well as the enormous leverage that was allowed under a strictly fiat regime.

Too many dollar claims on assets that were way over priced. Hell, now there are so many claims that no one knows who owns what and any glich will bring down the cards. 

 

Sun, 11/07/2010 - 23:07 | 707484 tmosley
tmosley's picture

I see what you mean.  I thought you were referring to scarcity the way the Keynesians do, saying that gold standards don't offer "flexibility", which is asinine.  They only want "flexibility" in money so they can steal real capital from all holders of dollars through debasement.

Booms driven by new technologies could easily occur, but they would be highly unlikely to get out of control, as (presumably) we would have interest rates set by the market, which would have put a hard cap on speculation.  

Sun, 11/07/2010 - 22:13 | 707383 MsCreant
MsCreant's picture

Okay, I can't get one gold price site to work right. Is it just me?

Sun, 11/07/2010 - 22:31 | 707418 AVP
AVP's picture

No...Kitco is down... This site is working...

http://www.goldprice.org/spot-gold.html

Gold down $8...

Sun, 11/07/2010 - 22:31 | 707420 tmosley
tmosley's picture

goldprice.org has the best uptime, in my experience.

Sun, 11/07/2010 - 22:50 | 707448 gookempucky
gookempucky's picture

MC no problem on my end-KC-

We r currently trading over the big rock known as Aussieland.

Aussie 1 penny over par v the sawbuck

Loonie still at par

Euro down 100 pips at 13935

Au down 5 sawbucks at 1389

Siber down .21

Sushi buck hangin round 81 give or take a few pips

This site has decent content and commentary

http://www.24hgold.com/english/home.aspx

Sun, 11/07/2010 - 23:16 | 707496 MsCreant
MsCreant's picture

Thanks to everyone. I had Kitco [flat line], Goldprice [repeating the same words and no price], and fastmarkets [stuck on an old price] each doing odd things. My tin hat got, well, snug for a second.

Sun, 11/07/2010 - 23:15 | 707492 saulysw
saulysw's picture

I quite like the live charts at Bullionvault, as long as you don't mind Java running on your machine. They were up just now when Kitco was flat. You can switch to spot silver, change date ranges, and also (important for me) switch currencies (to AUD). The "realtime" option shows trade by trade changes, but that mode only runs for a few minutes (before you have to enable it again).

Sun, 11/07/2010 - 22:15 | 707386 The PolyCapitalist
The PolyCapitalist's picture

'Tis the monetary season of giving, and all is getting off to an early start. Zoellick just gift wrapped gold $1400+.

http://www.polycapitalist.com/2010/11/world-bank-president-zoellick-gift...


Sun, 11/07/2010 - 22:14 | 707388 gookempucky
gookempucky's picture

Op-Ed in the Financial Times says that since the system of floating currencies established by the 1971 Bretton Woods II system, has broken down, it is time to look to a new international system of commerce, one which "should also consider employing gold as an international reference point

Big problem/scam as I see it (well maybe I dont)--the worlds banks gold reserve's have never been AUDITED--is it live or is it memorex ???

Sun, 11/07/2010 - 22:17 | 707394 Revolution_star...
Revolution_starts_now's picture

I think we miss the point. It's not what we value, it's how we value it and with "it" being the dollar and the fed "valuing" is the problem.

Sun, 11/07/2010 - 22:21 | 707402 Sean7k
Sean7k's picture

I think the reference to building developing counry infrastructure and training labor to be more problematic. Are they going to ask developed countries to subsidize worker training so we can off shore more jobs? Sounds like it to me. Rat bastards.

 

Sun, 11/07/2010 - 22:26 | 707408 thegr8whorebabylon
thegr8whorebabylon's picture

Who benefits from free trade?  If these fuckers want a partially gold backed SDR, or any form of pm standard, I'm out.  Globalism (in any form, carbon tax or private war), is coporatism and we are it's fodder...

God help us.

Sun, 11/07/2010 - 22:32 | 707422 Samual Adams
Samual Adams's picture

Globalism, corporatism, oligarchy, world government, are all the antithesis of freedom, the pursuit of happiness, we the people, or anything remotely awesome.

Mon, 11/08/2010 - 00:44 | 707602 Walter_Sobchak
Walter_Sobchak's picture

Yes and just try to stop them.  We've been living in the new world order for well over 40 years.  Freedom isn't coming back, Amerika has been socialist since 1933.  Nukes are weapons of collectivism, not individuality.

Mon, 11/08/2010 - 10:32 | 707924 ibjamming
ibjamming's picture

We've ALWAYS been fodder to someone.  The tribal chief, the lord, the king, the pope, the government...

Sun, 11/07/2010 - 22:27 | 707410 RedPacket
RedPacket's picture

The problem is ensuring a smooth transition from the old-system to the 'new' system, whatever that might be. Moreover someone needs to decide (or a rough consensus formed) as to who should sit at the table to decide the new rules, on what terms etc. Certainly Zoellick's FT oped is 'timely' given the start of this week's G20 meeting in Seoul. 

However, even when faced with a 'clear and present' risk of USD purchasing power-erosion/collapse, I very much doubt that policy makers will unilaterally and proactively ensure a smooth transition to GS2. Why? 

1) Although China is a now a top gold-producer, it ain't got shit compared to Europe or the US. Therefore the motivation to move to GS2 is not an equalizer or even a game changer from a SCO perspective. Those who have the gold - rule and China, Russia and middle-East ain't got shit. GS2 is just a repeat of furthering traditional US-European interests or fuel the conspiracy theorists/NWO-types.

2) It has to hurt a lot more before the sheeple provide ass-cover to the politicians.

So its more likely that any transition would be rough (for everyone) and non-linear. Especially if, within any given society, there exist non-alternative means of exchange (above basic barter) to be used as a 'plan b' alternative should chaos emerge. Certainly ZH-readers will be ok is they hold gold, however how does that scale. It doesn't.

Hence I would call on those programming-types to develop and encourage community-currencies, with exchanges, that exploit the current trend in social networking and self-issued credit. Gold could anchor such a GS3 standard that might complement existing 'legal-tender' fiat systems by providing insurance should they fail.

'Legal tender' is what the Government accepts but it doesn't not mean that it must be the only 'currency' businesses or you should accept.

All the technology exists today to do this, but the trust does not. So, if you believe that there is value and strength in diversity... go forth and multiply.

 

 

Mon, 11/08/2010 - 08:58 | 707782 tip e. canoe
tip e. canoe's picture

the software already exists amigo:

http://drupal.org/project/mutual_credit

the key to the success of these endeavors is to clearly understand and communicate the functions of money and be able to separate out the medium of exchange & store of value elements.  

also what will be challenging is to tweak an appropriate algorithm for credit extended/accumulated, either through a time mechanism to devalue the credits or credit limits, etc.   it will be interesting to see what works and what doesn't. 

currency decentralization is where it's at though methinx.   why should da boyz have all the fun right?

 

Sun, 11/07/2010 - 22:29 | 707412 Eureka Springs
Eureka Springs's picture


Robert Zoellick! seriously! PNAC, Bush Baker bot, World bank, Goldmanite, ENRON advising, Robert Zoelick?

 

What's next? Extra Extra, read all about it - Gollum backs gold too!

Sun, 11/07/2010 - 23:21 | 707509 CrockettAlmanac.com
CrockettAlmanac.com's picture

Gollum just wants his gold back. And maybe a fish.

Sun, 11/07/2010 - 23:43 | 707544 Narcolepzzzzzz
Narcolepzzzzzz's picture

You've missed off his Trilateral Commission and CFR membership.

Sun, 11/07/2010 - 22:30 | 707414 tired1
tired1's picture

So what would be the consequences of a gold standard global economy if there were entities that had unimaginable stores of Au?

Sun, 11/07/2010 - 22:34 | 707424 tmosley
tmosley's picture

They would either have to stop spending recklessly, or they would lose thier gold.

Sounds good to me.

Sun, 11/07/2010 - 23:38 | 707530 tired1
tired1's picture

I worded poorly. Yesterday, I think, someone posted transcripts from the House of Lords to the efect that a great deal of gold was being offered to the British government. I didn't follow it too closely. My point is: there's a known amount of gold in exixtance. If the Au standard was adopted and there was an entity with a enormous hidden reserve (i.e. the Catholic Church or the Rothchilds or whoever, what would the results be.

It just seems that Au standard, even under above board conditions just exposes economies to manipulation. Perhaps a basket of Au, Ag. Ni, Cu,  etc. might be a more prudent store of value.

Mon, 11/08/2010 - 00:37 | 707597 desgust
desgust's picture

How about Yamashita gold?

Never heard about it?

Mon, 11/08/2010 - 00:59 | 707619 tired1
tired1's picture

Many years ago I read something like 'MacArthur's Gold'. It dealt with a huge stash of Asian plunder.

Mon, 11/08/2010 - 08:08 | 707757 snowball777
snowball777's picture

http://www.geoffmetcalf.com/bixman_20010615.html

Let the Bixster melt those pesky neurons into oblivion...

Sun, 11/07/2010 - 23:25 | 707514 CrockettAlmanac.com
CrockettAlmanac.com's picture

All the gold in the world could fit in a 20 meter cube which is quite easily imaginable.

Sun, 11/07/2010 - 23:41 | 707537 tired1
tired1's picture

Yes, perhaps. But by whom?

Sun, 11/07/2010 - 22:30 | 707416 spongeBOB
spongeBOB's picture

Check back around 2 AM...That's when Ben has his alarm clock set, just before the Europe opens.

Sun, 11/07/2010 - 22:36 | 707427 surfsup
surfsup's picture

Big money dumping Euro buying dollars tonight...  167 pip daily range established on EURUSD in just a couple hours of Asia...  What cooks?  If mark to myth blows up -- perhaps in some super nova court "discovery" moment -- it can pull every dollar of QE2 out of existence like a CERN experiment gone very bad...   Always love the main stream hype at inflection points.  More retail carnage for sure.  

Sun, 11/07/2010 - 22:44 | 707440 sbenard
sbenard's picture

Go for the gold! It's about time!

Sun, 11/07/2010 - 22:51 | 707451 Clinteastwood
Clinteastwood's picture

Zoellick's piece is confused and confusing.  There is absolutely NO political will to solve the world's financial crises.  Absolutely ain't gonna happen.  Sooner or later the Black Swan will appear and a series of cascading failures will ensue.  There is absolutely no world leader stepping up to produce a different result.  The banksters have no idea what will work.

Mon, 11/08/2010 - 00:20 | 707581 RockyRacoon
RockyRacoon's picture

Make my day....   I'm inclined to agree.  They are too entrenched and ossified to make any real attempt at "repairs" to the current regime.   There will be cascading currency defaults before they come to their senses.   As someone put it, they are grabbing the silver on the Titanic.   Trade for the next week, save the current political dogma, support the existing military madness -- damn the torpedoes so to speak.

From Mauldin's latest issue:

Quantitative easing promises to have little effect except to provoke commodity hoarding, a decline in bond yields to levels that reflect nothing but risk premiums for maturity risk, and an expansion in stock valuations to levels that have rarely been sustained for long (the current Shiller P/E of 22 for the S&P 500 has typically been followed by 5- to 10-year total returns below 5% annually). The Fed is not helping the economy, it is encouraging a bubble in risky assets, and an increasingly unstable one at that. The Fed has now placed itself in the position where small changes in its announced policy could have disastrous effects on a whole range of financial markets. This is not sound economic thinking but misguided tinkering with the stability of the economy.

The emphasis is mine.  Commodity hoarding is the same as buying gold in my book.

Sun, 11/07/2010 - 22:52 | 707455 Canucklehead
Canucklehead's picture

Zoellick is simply sending up trial balloons. He needs to be more inclusive if he expects any movement forward on this initiative.  First there was the G7 conversation, then the G20 conversation.

Once the powers that be have the G69 conversation, Zoellick's proposition may well move forward.

Sun, 11/07/2010 - 23:07 | 707481 notadouche
notadouche's picture

Exactly what would happen to the price of gold if this were to pass?  Manipulated downward by govts?

Sun, 11/07/2010 - 23:11 | 707490 tmosley
tmosley's picture

There would be an initial explosion as the price of gold would have to be reset to reflect that ACTUAL amounts of gold in the vaults.

If you can't exchange your dollars for the treasuries gold, you can be assured that it is a scam, just like Bretton Woods.

And yes, after the initial explosion, if gold isn't allowed to float, then you would have a situation where the governments want to print money in secret without affecting the exchange rate with gold, so yes, it likely would be manipulated down.

Sun, 11/07/2010 - 23:18 | 707505 saulysw
saulysw's picture

I think everyone is lying about how much gold they have. It might be in the vault, but is it leased out to anyone, or even, multiple people? This is similar to Arabs and oil reserves. Who knows.

Sun, 11/07/2010 - 23:23 | 707513 web bot
web bot's picture

... which is why when the USD defaults... we're looking at hyperbolic movements in gold and silver.

Mon, 11/08/2010 - 00:21 | 707584 AUD
AUD's picture

According to the RBA, only a small fraction of their gold reserves are currently on loan.

That's down from 100% only a few years ago.

They possibly know something we don't.

Mon, 11/08/2010 - 00:50 | 707610 Walter_Sobchak
Walter_Sobchak's picture

Or they're full of shit

Sun, 11/07/2010 - 23:55 | 707562 Aristarchan
Aristarchan's picture

Don't forget that almost every investment bank and hedge fund in the world speculates on the price of gold...trying to drive it one way or the other.

Sun, 11/07/2010 - 23:07 | 707485 lolmaster
lolmaster's picture

ahem, and shall it be a paper gold LBMA standard or a real gold standard? well played Mr. Zoellick

Mon, 11/08/2010 - 01:38 | 707648 Miles Kendig
Miles Kendig's picture

As long as a closed combine sets the standards & books does it matter?

Sun, 11/07/2010 - 23:36 | 707524 Aristarchan
Aristarchan's picture

Gold has long passed its ability to be standard behind money. Think of it this way, a fiat currency is based on the value (and currency machinations) of the country in which it is based. Gold, now, is based on who owns the most, and the global speculators who drive the price. If you own the bulk of the gold, and your country's un-mined gold resources are large, you might consider it...otherwise, you loose control of the value of your currency. I am sorry, but gold has no intrinsic value...it is only worth what people are willing to pay for it, like paintings, stamps and other things. Right now, people are paying large for it, because it is going up, and it is considered a hedge against currencies...but that, as always will change...then where the hell are you?

Mon, 11/08/2010 - 00:27 | 707587 RockyRacoon
RockyRacoon's picture

What does have any intrinsic value other than a can of beanie-weenies?

No sophisticated economy can evolve without a money with certain characteristics, all of which are inherent in gold.  That, by definition, means that gold has intrinsic value.

QED

Mon, 11/08/2010 - 08:58 | 707783 MsCreant
MsCreant's picture

Direct and to the point.

+1391

Sun, 11/07/2010 - 23:39 | 707532 boricuadigm-shift
boricuadigm-shift's picture

Anyone following Bill Still @ The Secret of OZ lately?

Excellent short write up!  I'll bet my few gold ounces on this:

http://www.secretofoz.com/index.php?option=com_content&view=article&id=1...

Sun, 11/07/2010 - 23:42 | 707540 tony bonn
tony bonn's picture

there was no more a call for a gold standard from zoellick than there was truth in hitler speech...

the only successful exchange and trade system was the gold standard under real bills. anything without real bills is a fraud. once the banksters stepped into the picture everything was polluted hopelessly.

Mon, 11/08/2010 - 00:38 | 707598 RockyRacoon
RockyRacoon's picture

...the Real Bills Doctrine, not “the” gold standard, was the intellectual and operational basis for the disastrous Fed policy of 1929-1933.

http://econjwatch.org/articles/gold-standards-and-the-real-bills-doctrin...

Mon, 11/08/2010 - 09:37 | 707833 trav7777
trav7777's picture

rubbish...RBD had been functioning for centuries.  Fractional lending is what did the banks in. 

Mon, 11/08/2010 - 16:21 | 709307 RockyRacoon
RockyRacoon's picture

READ it, Trav.  There is agreement in the sense that the RBD was violated!

Sun, 11/07/2010 - 23:46 | 707549 Cleanclog
Cleanclog's picture

Lots of Op-Ed action by "big boys" of late.  Bernanke on Friday in WaPo, Board guy in WSJ, now Zoellick in FT.  I'm waiting for them to post to ZH next!

Mon, 11/08/2010 - 00:04 | 707569 honestann
honestann's picture

We will NEVER see a call for a real "gold standard" from ANYONE in the banking or financial system - period.  Why?  Because every single one of them would have no job the instant a real gold standard was established.

People seem to forget that a real gold standard, with no fractional reserve fraud permitted, puts EVERY money manipulator and regulator out of business - instantly.

On a real gold standard, people only exchange real, physical goods for other real physical goods (gold being one of those goods).  No more need for fractional-reserve fraudsters at any level.  In fact, no more need for banks, since anyone can hold or loan their gold directly from the owner.

Sure, a small banking and financial system would remain, but not much.  Some would warehouse gold, silver, platinum, palladium, gemstones and other valuables (savings).  And some might even loan out the real, physical gold their clients had on deposit (but only as explicitly authorized by each client).

But 99% of the entire banking system would vanish, which it should and must if the world is to return to anything remotely resembling a world of honesty, ethics, justice, production, individualism and simply, "the good life".

If the world ever manages to return to a gold standard, people must demand only physical gold coins and bars.  All forms of "gold backed paper" is inherently pure fraud, as has been proven over and over and over again.  To carry around gold coins is no burden, but prevents the predator class from stealing the wealth everyone else produces.

And again - NO fractional reserve practices can be allowed, otherwise a supposed "gold standard" is no better than a "fiat paper standard".

In gold we trust.

In fiat, fake, fraud, fiction, fantasy we despise.

Mon, 11/08/2010 - 00:50 | 707609 technovelist
technovelist's picture

I'm with you all the way... except that it will not be feasible for people to carry around enough coins to make major purchases, nor are even small gold coins small enough to easily be used for small purchases. Thus, we will need warehouse services that will store gold and issue exchangeable receipts (whether paper or metal) for it in small quantities (e.g., milligrams and multiples thereof). These might look a lot like "coins" but would again be receipts for gold rather than gold itself.

Of course, "fractional reserve" means "fraud", so that is unacceptable. But the warehousing service is a valuable one.

Mon, 11/08/2010 - 01:37 | 707646 honestann
honestann's picture

I think you need to compute how much gold is required for people to make "major purchases".  If we return to a "gold standard", one ounce of gold would likely equate to about $25,000.  But just for sake of argument, let's consider your statement with $1400 gold (current price).

To outright buy a $200,000 home, you need to bring about 9 pounds of gold to the transaction.  That's less than the weight of a bowling ball, which some people carry to the lanes every weekend.  Thus, you can even buy a million dollar home with gold you can carry in two bowling bags (albeit with some effort required).  Even today you can buy a brand new car with only 10~20 one-ounce gold coins, which you can carry around quite easily in one jacket pocket.

On the other end of the scale, if we consider a pure "gold only standard" (no silver, nickel, copper coins), we would indeed need to make some very lightweight gold coins.  The best ones I have seen for this purpose are acrylic coin-like discs the size of dime, nickel and quarter with the small discs of gold visible in the center.  Something like this would surely develop quickly, as many other forms are possible too.  The acrylic discs I saw can be opened, so the tiny gold discs inside can easily be tested for fraud.

But today, in the days of computer cash registers, there is nothing wrong with palladium, silver, nickel, copper and zinc coins.  They could either have permanent or yearly-adjusted standard fixed values (relative to gold).

Personally I prefer a pure gold standard for 2 primary reasons.  First, it is simpler for everyone, and nobody ever need worry that their non-gold coins lose value relative to gold.  Second, the other metals have more commercial and industrial applications than gold (because they exist in much larger quantities, and are much more affordable), so a pure gold standard will never cause supply issues in those other markets.

Mon, 11/08/2010 - 01:50 | 707653 technovelist
technovelist's picture

Yes, it's true that few transactions that individuals undertake are too large to use physical gold, so far as weight is concerned. However, I for one would be concerned about the possibility of robbery if I were to carry around pounds of gold.

As an alternative, storing your gold with a trusted warehouse ("bank") and transferring it via an order to pay ("draft") rather than physically has significant security advantages.

And as for the tiny coins you mention, a purchasing power of $10k/oz in current money would be about $320/gram. A one-gram coin is pretty small, but would be too large for day-to-day most purchases. And how would one make change? Using different metals or commodities for smaller amounts reduces the advantage of using money in the first place. With a fixed exchange rate between those different "moneys", you get arbitrage problems that drive some of them out of circulation. These issues are what doomed "bimetallism" in the 19th century US. Therefore, you need floating exchange rates, which are another needless complication.

Mon, 11/08/2010 - 04:53 | 707702 RedPacket
RedPacket's picture

Why not issue your own digital tokens backed by your total gold holdings, used for regularly clearing purposes to settle final debts.

Some concepts are outline here

http://www.digitalcoin.info/

Mon, 11/08/2010 - 04:53 | 707703 RedPacket
RedPacket's picture

Why not issue your own digital tokens backed by your total gold holdings, used for regularly clearing purposes to settle final debts.

Some concepts are outline here

http://www.digitalcoin.info/

Do NOT follow this link or you will be banned from the site!