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Re: RED ALERT:- Tomorrows FT Headline..."World Bank President Robert Zoellick Wants Gold Standard "
There are three points to take from Fred raising this important aspect, "inevitability".
First, anyone with a long term viewpoint of the historical function of Gold has always believed that we must return to a Gold standard.
Second, as things stand, imposing a new monetary order will only exchange one unstable situation for another. The underlying problem is the transfer of prosperity from the majority of all society into the top few percent. By far the majority of the populations of the developed economies of the planet are poorer now than at the time of Bretton Woods. And, yes, while acknowledgeing I do annoy some from time to time;
it is my ongoing belief that we must address the simple fact that there needs to be a mechanism to transfer that prosperity back again. Not after another war, nor, for that matter, after several more decades of decline or stagnation; but as soon as possible. Exchanging paper money for Gold does not address that need.
Correct me if I am wrong, but there was one group left untouched when the US confiscated Gold in 1933; trusts, or if you like, charitable institutions.
One of my early research projects I undertook when contemplating a permanent move to the US was to discover that all the wealthiest families used such charitable institutions to hold their wealth. http://en.wikipedia.org/wiki/Trust_law
As I understand it, in the US the main requirement is that the income of the trust must be spent in the year it is generated. http://en.wikipedia.org/wiki/United_States_trust_law
http://en.wikipedia.org/wiki/Alfred_...amentary_Trust
And this makes for a VERY interesting read, (down the web page a little). http://www.fundinguniverse.com/compa...y-History.html
You will all need to do some very detailed research, but it may well be that the answer is to place all your Gold into a defined trust fund.
Originally posted by FRED
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Central banks have not had to use their gold reserve parachutes, but the circumstances we face today are precisely what they are there for: to permit the simultaneous reflation of all currencies in the event that another 1930s style global deflation recurs.
To us, the question of a global reflation of currencies and deflation of debt against gold is a matter of when and how not if. The cost will be born unequally, with debtors like the US gaining more benefit and creditors like Japan and China less. In a world where trillions in currencies swim the global currency markets sea daily, the re-institution of an international gold standard with some formula of fixed exchange rates, even if temporary, will be wildly disruptive and costly to the global economy, and more to some nations than others. This is why we don’t see this happening until global economic conditions resulting from debt deflation grow much more dire; the economic and political costs of the ongoing debt deflation must outweigh the costs of implementing a new international gold standard.
More daunting, as the costs and benefits of that solution are unequal, who will provide the necessary leadership? Imposing a new world monetary order in 1944 was a simple matter in the wake of WWII when only one nation, the US, stood economically and militarily strong enough to drive all nations to consensus. In a multi-polar world, how will consensus be gained, especially if economic hardship is once again motivating populations to demand expedient solutions, and autocratic government makes a comeback, never mind that one major party at the table, China, is autocratic now?
To us, the question of a global reflation of currencies and deflation of debt against gold is a matter of when and how not if. The cost will be born unequally, with debtors like the US gaining more benefit and creditors like Japan and China less. In a world where trillions in currencies swim the global currency markets sea daily, the re-institution of an international gold standard with some formula of fixed exchange rates, even if temporary, will be wildly disruptive and costly to the global economy, and more to some nations than others. This is why we don’t see this happening until global economic conditions resulting from debt deflation grow much more dire; the economic and political costs of the ongoing debt deflation must outweigh the costs of implementing a new international gold standard.
More daunting, as the costs and benefits of that solution are unequal, who will provide the necessary leadership? Imposing a new world monetary order in 1944 was a simple matter in the wake of WWII when only one nation, the US, stood economically and militarily strong enough to drive all nations to consensus. In a multi-polar world, how will consensus be gained, especially if economic hardship is once again motivating populations to demand expedient solutions, and autocratic government makes a comeback, never mind that one major party at the table, China, is autocratic now?
Second, as things stand, imposing a new monetary order will only exchange one unstable situation for another. The underlying problem is the transfer of prosperity from the majority of all society into the top few percent. By far the majority of the populations of the developed economies of the planet are poorer now than at the time of Bretton Woods. And, yes, while acknowledgeing I do annoy some from time to time;
it is my ongoing belief that we must address the simple fact that there needs to be a mechanism to transfer that prosperity back again. Not after another war, nor, for that matter, after several more decades of decline or stagnation; but as soon as possible. Exchanging paper money for Gold does not address that need.
The range of future popular opinion of private gold holders under those drastic circumstances ranges from villain or hero and everything in between. If gold owners are vilified, you can count on a less than friendly government policies on gold taxation and possession. The 1933 confiscation was strictly old school; the modern approach is more likely to take the form of a 90% capital gains tax on private gold sales with high penalties to encourage sales to the government at a fixed price and slow a popular rush to the metal, and of course create an enormous black market in the bargain. If that sounds paranoid, you haven’t been watching the news lately.
One of my early research projects I undertook when contemplating a permanent move to the US was to discover that all the wealthiest families used such charitable institutions to hold their wealth. http://en.wikipedia.org/wiki/Trust_law
As I understand it, in the US the main requirement is that the income of the trust must be spent in the year it is generated. http://en.wikipedia.org/wiki/United_States_trust_law
http://en.wikipedia.org/wiki/Alfred_...amentary_Trust
And this makes for a VERY interesting read, (down the web page a little). http://www.fundinguniverse.com/compa...y-History.html
You will all need to do some very detailed research, but it may well be that the answer is to place all your Gold into a defined trust fund.
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