Russians Back a New Gold Standard

Discussion in 'Politics, Religion, Social Issues' started by fivepoint, Mar 31, 2009.

  1. fivepoint macrumors 65816

    fivepoint

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    #1
    If anyone has any opinions/thoughts on this, or can find/post more information regarding this topic, please post... very intriguing to say the least. While I personally promote a return to the gold standard (not exactly what they're proposing here), losing the dollar standard would no doubt be crushing to the American economy and many others (Chinese for example, who hold TRILLIONS of dollars in American Debt)

    A very interesting topic to follow for sure. I wonder how far these talks of abandoning the dollar for a new 'global currency' will go?

    And what are the ramifications as far as sovereignty is concerned?



    http://www.telegraph.co.uk/finance/...-Gold-Standard-to-solve-financial-crisis.html

     
  2. Ugg macrumors 68000

    Ugg

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    #2
    What they are backing is not a "New Gold Standard" much beloved of Ayn Rand fanatics and American Exceptionalists, rather a Basket currency made up of many different things.

    Anyone who would back a basket currency that includes the virtually non-convertible yuan and the basket case of a rouble, deserves what's coming to them.

    What's next? An oil based currency, how about cane toads?

    It would take a major overhaul of the international banking system for any change to take place and that ain't gonna happen anytime soon. Neither China nor Russia have the necessary clout to make it happen.
     
  3. fivepoint thread starter macrumors 65816

    fivepoint

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    #3

    The title of the article is: "Russia backs return to Gold Standard to solve financial crisis"

    Did I in any way indicate that this is the same gold standard Americans used to back the dollar back in the day? If so, I apologize... as it was not intended. (no need to be so harsh)

    The main point of the thread is to discuss the potential replacement of the Dollar as our global standard and to perhaps discuss ramifications of eliminating the dollar as such. I'm particularly interested in hearing anyone's opinions inside the sphere of sovereignty.
     
  4. AlexH macrumors 68000

    AlexH

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  5. Eraserhead macrumors G4

    Eraserhead

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    #5
    What do you mean by that? Its one of the top 10 currencies according to xe.com.

    While the yuan is not as exchangeable as the euro and dollar (and probably pound and yen) its not exactly a joke and I can easily get it in Oxford.

    It would be strange to include the rouble that's true.
     
  6. Chundles macrumors G4

    Chundles

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    #6
    Use gold as a standard currency?

    *checks that he still lives in Australia*

    Yup.

    OK, bring it on.
     
  7. BoyBach macrumors 68040

    BoyBach

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    #7

    I'll be joining you on the Gold Coast. It is made out of gold isn't it?
     
  8. Desertrat macrumors newbie

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    #8
    fivepoint, I've noticed that ad hominems are quite common here. Easier than thinking or trying to understand what's said.

    The excesses of the US in increasing its money supply has many countries worried. The ongoing decline in value of the US $ is temporarily on hold due to the fact that other countries are also in difficulty, but that is unlikely to continue as long as our own problems.

    China, SFAIK, is the largest holder of US debt, including some $700 Billion (+/-) of Treasury paper as well as commercial paper, if I understand all I've been reading. Anyhow, last I read, the total of US paper was somewhere around $1.2 trillion. They apparently hold another $0.8 trillion in other currencies. Creditors, not debtors like the US. Needless to say, they aren't happy with the current state of affairs, and have sold a lot of their long-term US paper. Short-term Treasuries are relatively safe for now.

    For now, many transactions require the purchase of dollars via the sale of indigenous funds. With any decline in the dollar, any funds already held in that form would lose purchasing power, and there's no sign that the present US monetary policies will change away from this risk.

    So, a "basket". Some stable currencies of major players, plus some gold. The effect on the US dollar, of course, would be an accelerated decline.

    I can see where China would favor this. They're well on their way to becoming the world's financial stud horse. And, with their own proposed needs they're less and less likely to park surplus funds in US paper. We're running out of customers for Treasuries, based on the need for an increased yield just to make sales at the recent auction. We're not as bad off as England, but we're working on it.

    Russia has clout because they control the wintertime room temperatures in much of Europe. The natural gas thing, with Germany being rather vulnerable as was reported in the news. "Work with us or get cold, next winter." When it comes to realpolitik, Putin makes Kissinger look like a piker.

    'Rat
     
  9. iJohnHenry macrumors P6

    iJohnHenry

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    #9
    I also believe I read that the Chinese will not be acquiring any more U.S. paper, in the foreseeable future.

    This is war people, make no mistake.
     
  10. Cromulent macrumors 603

    Cromulent

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    #10
    I'm interested to hear why you think Britain is doing worse than the states at the moment (serious question, not a trap :))? I haven't been following the financial crisis as closely as I should regarding the US and indeed back here, so I'm a little in the dark about the larger picture.
     
  11. pilotError macrumors 68020

    pilotError

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    #11
    I'm pretty sure anything that gets proposed without US backing is a lame duck.

    I'm sure the Middle East would also love to see a different standard.
     
  12. fivepoint thread starter macrumors 65816

    fivepoint

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    #12
    As always, Rat... a pleasure. Thanks for bringing additional information and participating in the conversation. You're so right on everything here, especially with the reference to us working on making it worse. With the trillion we printed last week, it's almost like we're in a competition with Britain to see who can screw it up faster!




    Certainly can't blame them for not buying. I wouldn't. ;)


    http://www.youtube.com/watch?v=8juD7UKXaTI
    http://www.guardian.co.uk/business/2009/mar/18/uk-recession-imf
    http://www.metro.co.uk/news/article.html?in_article_id=122794&in_page_id=34
     
  13. Desertrat macrumors newbie

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    #13
    England? It was reported that there was an auction of "gilts" and there were hardly any bids. I think that's what precipitated the Hannan blast at Brown--among other things.

    Check the timesonline.com for articles by Ambrose Evans-Pritchard. He comes across as pretty sharp on economic issues.

    Folks who write for the Agora investment services have commented that the U.S. is running some six months to a year behind England for economic woes. We had a thread here last year (IIRC) about the Pound reaching $2, but per Kitco.com, trading closed today at $1.43. That's indicative of one helluva problem...

    'Rat
     
  14. Eraserhead macrumors G4

    Eraserhead

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    #14
    While banking is a large part of the UK economy and that has made the currency drop a lot the rest of the economy seems to be fairly healthy from where I'm sitting.
     
  15. Cromulent macrumors 603

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    #15
    That was my thinking and the reason I asked.
     
  16. Eraserhead macrumors G4

    Eraserhead

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    #16
    Thats not true, they sold most of them but just not quite all of them (£1.63bn out of £1.75bn were sold) - source.

    And they also failed to sell all of them fairly recently back in 2002.
     
  17. OllyW Moderator

    OllyW

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    #17
    You are obviously not sitting close to the UK manufacturing industry. :(
     
  18. Cromulent macrumors 603

    Cromulent

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    #18
    Thanks for the update here. I just feel that people are painting a far more pessimistic picture than is required. I have setup a business fairly recently and everything I have seen has encouraged me to be positive. Sure, the easy money has gone but there is money to be made none the less. I really don't feel much different to the way I felt pre-recession financially. The only real difference is I have stopped buying stuff from the states as the exchange rate is just not worth it. I buy stuff from UK companies now.
     
  19. Eraserhead macrumors G4

    Eraserhead

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    #19
    No, I'm not. I'm looking at retail and IT.
     
  20. Desertrat macrumors newbie

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    #20
    My recollection about the sale of gilts was that the yield had to be increased above expectations in order to get the bids. I don't know if they raised the interest rate or discounted off of face value. But, it adds to the money supply which is an inflationary push.

    We had the same sort of problem with our last sale of Treasuries. Trouble is, when the interest rates are as low as now, the paper must be discounted off of face value to get buyers.

    I haven't hunted for the unemployment rate in England. This morning's "Daily Pfennig" stated that the overall European unemployment rate has increased from 8.1% to 8.5%. Most European countries are suffering from contracting economies, just as in the US. The only real growth countries are China, India, and commodity-exporting countries such as Australia and Brazil.

    Back to the topic: A "Pfennig" comment was that the "basket of currencies" won't happen. Just PR and media talk. However, many countries are reducing their exposure to the dollar, doing more selling than buying.

    Cromulent, you can find folks who are a lot more pessimistic than I am. What's scary is that I find many of their "If A, then B" arguments hard to refute. :) Kunstler.com is one; he voted for Obama, FWIW. Google for Doug Casey; he's mostly into mining, but has some interesting commentary. Something that's worrisome to me is the overall energy picture; with all this focus on monetary affairs, little of substance is being done in that arena.

    'Rat
     
  21. Ugg macrumors 68000

    Ugg

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    #21

    In the end though, US securities are one of the few games in town. The Rouble is worthless, are there any Yuan based securities? The Euro isn't really up to speed yet and neither Brazil nor India have the financial clout yet. I've no doubt that the dollar has reached its zenith,b but in order for it to start falling, another currency has to take its place. So far there's nothing on the horizon.

    China has to become much more transparent for the Yuan to be taken seriously.

    When it comes to US energy policy, I think we've already seen some major efforts being made in terms of conservation and alternative energy and higher CAFE standards. It's too bad the stimulus package didn't tie the funds to sustainability but we can't have everything.
     
  22. Eraserhead macrumors G4

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    #22
    Probably not, as the Chinese have large amounts of cash on hand, so I'd be surprised if they had any significant debt.

    Why? Its obvious China is successful, seeking out and dealing with corruption and fairly stable and there are many countries which are similarly transparent to China, for example Japan.

    It doesn't mention that in the Bloomsberg article above, do you have a source?
     
  23. Desertrat macrumors newbie

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    #23
    Source? Probably find commentary in a Pritchard-Evans column in the timesonline. Also, archives of TheDailyReckoning.com and WhiskeyandGunpowder.com.

    China's sitting pretty. Some three years back, they announced an increase in their gold holdings from 400 tonnes, aiming toward 2,400 tonnes. They've been buying and have been mining in Tibet. they've also found significant copper in Tibet. Built a railroad to Lhasa, and a luxury hotel ther with $1,500/night rooms. They hold about two trillion dollars in foreign paper assets, whereas the US is headed toward some $14 trillion in debt. Haven't heard much, lately, about oil-drilling efforts in the Spratly Islands. While this worldwide depression has hurt them, they're still expected to have a GDP growth of around 4.5% to 5% this year.

    It was sixty years ago that I first heard the Chinese referred to as "The Jews of the Orient", a compliment toward their business acumen. Now that they've escaped Mao's economic/monetary idiotics, they're on their way, big time. which, of course is what entrepreneurial capitalism does when the government encourages it.

    'Rat
     
  24. kastenbrust macrumors 68030

    kastenbrust

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    #24
    Lets all go back to the 70's yay just because Russia says so! or maybe not, Gold Standards are history.... history Russia, yes we know you were more powerful 30 years ago, now get over it.
     

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