The President of the World Bank, Robert Zoellick, called for a new post Bretton-Woods currency system involving gold, in November 2010. Zoellick said that gold was worthy of consideration as a reference point for modern currencies and as an indicator to help set foreign exchange rates.
At the end of January, the Cheviot Sound Money Conference held an excellent conference in London which examined the practical application of gold and silver as money within a modern context.
The context to these proposals is crucial as without an understanding of the modern financial and monetary system one cannot possibly comprehend the continuing importance of gold and silver.
We live in an era of surging trillion dollar deficits and surging national debts in the US and internationally.
The US recorded its biggest monthly deficit in history two days ago with a $223 billion deficit for February alone, the 29th straight month of deficits – a modern record. The US budget deficit in 2010 was over $1.45 trillion and is forecast to be of a similar magnitude in 2011. At the close of business on Feb. 28, the total federal debt stood at $14.195 trillion ($14,194,764,339,462.64).
We live in an era of massive creation of government bonds.
Foreign central banks hold $5 trillion in US Treasury bonds and agency debt alone. Chinese foreign exchange reserves alone are soon to reach the $3 trillion level.
We live in an era of of thousands of trillions of dollars, euros, pounds etc. of derivatives.
The enormous OTC sector of derivatives alone is worth nearly $600 trillion on paper, roughly 10 times world economic output.
We live in an era seeing the creation of and speculation with trillions of dollars (euro, pound etc.) of electronic currency.
According to the Bank for International Settlements, as of April 2010, average daily turnover in global foreign exchange markets was estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007 – soon after the financial crisis began. Some firms specialising in foreign exchange have put the average daily turnover in excess of US$4 trillion.
We are experiencing a scale of global currency debasement, the likes of which the world has never seen before.
We live in an era where thousands of millions of people live on less than a dollar or two a day in the "developing world". While millions of people in the "developed world" are now debt slaves – both individually and as citizens of increasingly bankrupt nation states.
Reformation or replacement of our debt-based fiat paper and electronic financial and monetary system is one of the most important debates of our times.
The modern monetary system of paper and electronic money is inherently unstable and unsustainable and there is a strong case for considering using gold and silver as money once again.
At the Cheviot conference, Money Week’s Dominic Frisby gave an excellent talk in which he outlined why gold is the currency of the free.
Frisby eloquently outlined how the modern system of finance, banking and credit (or debt) impoverishes and enslaves. It has "made wars that should never have happened possible; its brought about a relentless needless commercial expansion and malinvestment that has raped the earth."
He points out how the world is cursed by monetary illiteracy and it is amazing how few people understand the modern monetary system, and how it is to blame for the huge inequalities in wealth we see in the world today.
"Money must be sound and true, at the moment it is neither and society is corrupted as a consequence."
Dominic Frisby’s lecture can be watched here:
There were a number of other excellent talks all of which are worth viewing. The highlights include Chris Powell, the Secretary/Treasurer of GATA (Gold Anti-Trust Action Committee), lecture ‘Gold price suppression purposes and proofs’:
There is then an excellent panel discussion and question and answer session on gold at the end which involved Max Keiser, James Turk, David Morgan, Ben Davies, Richard Cragg, Sandeep Jaitly. It is surprisingly entertaining and very informative:
GoldNomics – Cash or Gold Bullion?
Our educational video, ‘Goldnomics – Cash or Gold Bullion?’ complements the excellent interviews from the conference. It clearly shows how gold has retained value throughout history.
‘GoldNomics’ can be viewed by clicking on the image above or on our YouTube channel:
The US dollar has been the strongest fiat currency in the world in the last 100 years and indeed it became the reserve currency of the world during the period (due to victories in the two World Wars and the accumulation of the largest gold reserves in the world).
Despite that the dollar has lost 97% of its value in 97 years. The massive loss of purchasing power of the preeminent currency of our age, the US dollar, clearly shows gold’s importance as a currency, as money and as a store of value.
Individuals, families and societies can never be free as long as money is based on debt and compounded interest and as long as the money we use day to day is constantly depreciating and being debased.