QUESTION:
Martin,
On September 18th you wrote “That is until it is time for a new monetary system after all of these jokers are done trying to grab power.” What do you think the new monetary system will be based on. Many people claim that Russia and China will force the balance of international trade by a partially gold backed trade note. Some are claiming that Russia and China have more than 10 times the gold that they state they have. Some people also claim that the U.S. may devalue its currency in the U.S. but have a higher value for foreign holders outside the U.S. Your thoughts would be appreciated.
Thank You
JA
ANSWER: I can tell you I am in discussion behind the curtain on both sides of the Atlantic and have always had direct contacts in Asia and Russia. These stories make interesting discussion but they are total nonsense. In the real world of finance, any discussion of gold is laughed at as a backing. You cannot control the supply if it is gold for it is subject to new discoveries that will create inflation and the lack of new supplies with increases in population result in deflationary periods. That was William Jennings Bryan and his famous speech you shall not crucify mankind upon a cross of gold. The whole argument is a gold standard inhibited growth and created massive deflation – the 26 year Long Depression of the late 19th century. Gold does not provide for a stable monetary system and that is why Bretton Woods collapsed. Gold should remain as a private investment/hedge. Money cannot be fixed in value while everything else floats.
Any discussion behind the curtain is to move the monetary system toward electronic money. That is where they are headed on every continent. They see that as 100% accountable for tax purposes. Any new currency will be a unit of account internationally with each currency converted into that, not the system of the Euro. That is failing. Can you imagine every country with the right to print currency. Talk about open chaos.
The new currency will be electronic. This will be the RESERVE CURRENCY and that will not be used in each country to buy things. This will be up there with the SWIFT CODE system. You can buy gold if you like. The idea that money will be FIXED and backed by gold to make it tangible is a pipe-dream. Been there done that – such systems fail because there is a business cycle. Gold was money during the 19th century. The value of gold still rose and fell with discoveries. It did NOT provide anything tangible and stable.. Just look at the Inflation Index for that period.
Buy gold for personal reasons and as a hedge against government. If you want money to be tangible and of some constant value, then you will never see a raise, your house must remain the same price, and no investment becomes possible other than money.
