Sunday, May 30, 2010

One World Currency

I have been revisiting the theory of "one world currency". As we watched Iceland and their banking/currency system completely melt down last year, and now watch Greece, Portugal, Spain and Italy governmental debt completely drag the Euro down almost 20% against the has to consider the fundamentals that are causing these significant gyrations.

There is considerable chatter that the Euro's ills will soon spread to the dollar. This to me represents serious economic vulnerability of the west against the east since the stronger economies/currencies (debt-wise) of Asia, India and even "Middle East" factions are increasingly in a position to attack the economies of heavily indebted nations like the USA and many of the European Union. Future wars will be fought more with "cyber terrorism" and quiet economic attacks than bombs and missiles. I find myself agreeing with those that say the damage done to the USA on 9/11 by Bin Laden and company was more about undermining the USA economy than taking physical American lives...and it would seem they succeeded tremendously on that front when you look at the last decade of economic results in America and Western civilization.

As a market oriented person, it has always been apparent to me that nations who trade together don't go to war against each other. Economic and money ties are at the core of our global society. Many families worldwide marry into other families based more on economic parity and power than for "love". As globalization spreads in its irreversible dynamics, global corporations and their financial powers control more of the political and social agendas of the world.

In the midst of this significant reality of globalization, you have "States" continuing their striving to maintain the values of their individual currencies and "Central Banks" primarily chartered to preserve value and integrity of their various paper currencies. When currencies were first issued in the world they were based on solid reserves of commodities...basically gold. Hence, only a little more than 130 years ago there was a "gold rush" in America since at that time everyone was aware that Gold was worth much more than worthless paper. The underpinning reasons for the "Conquistador" era in Latin America was the thirst of Spain, England and other then empires for the gold that still proliferates in regions of Colombia, Panama and other Central/South American regions.

As I now observe many shrewd financial people in my circles investing and profiting with gold the past number of seems quite evident that change is coming. The global economy can no longer sustain the gyrations and false valuations of sovereign currencies which are constantly waylaid by their government's continued spending and printing of more and more worthless currency to match their consumerist palate. Governments as large as the USA are fighting a winless battle as its Federal Reserve continues manipulating the numbers and interest rates in order to control that which is uncontrollable. There will come a day when all this manipulation will force everything to a head where international powers and money will require a day of accounting. At that time of accounting, I believe you will see everyone starting to fall under a one world currency and adjustment of valuations in all currencies. This is the only way at some point global trade will be able to maintain itself. Eventually you have to take the currency/money power out of the hands of short term, short sighted politicians who produce nothing and spend everything...and hand those reins over to a global system of valuation for exchange. Just think of the wealth that can be saved just by getting rid of all these false systems/currencies...and various mintings of worthless currencies that consume billions each year that would better go towards paying of national debts or feeding the hungry. Better yet, get rid of all these various banking bureaucrats who continue to play games and manipulate currencies falsely...protecting their banking "buddies".

Now, I know these ideas bring great fear and anxiety to those with apocalyptic belief systems. Many Christians believe that Biblical prophesy predicts that just before the end of the world as we know it, there will be one world leader who will forge a one world currency and cause everyone in the world to have a "mark" to identify them. It is assumed that those who "accept" the mark will be unbelievers and miss out on the new world to come. Many religious sects have formed around these mysterious Biblical prophesies and I'm sure "one world currency" will be rejected by millions purely on this religious belief. Yet, I would point out that the current economic system is very contrary to original Judeo Christian ethics when it comes to debt and uses of "mammon" (money). How can a one world currency based on globally agreed upon valuation of representative currency be more "evil" than the systems and use of money we currently have?

Much of the Bible is based on Mosaic law about economics and use of money. It is actually one of the most prolific subjects in the Bible after "love". The Talmud is full of detailed instruction on money, debt, etc.. People are often critical of Jews and their historical proclivity towards accumulation of wealth even as a small minority race/nation. Yet, one can't argue with results...and I think much of their economic success over the millenniums have been about their base of fundamental economic principles that the rest of the world could use more of.

When I was young, I read in impacting book called "Productive Christians in the Age of Guilt Manipulators" by David Chilton which was basically a theological response to Christian "socialist" thinking of the 1960s-70s...the practice of "economic equality". I currently have this book in downloaded, digital form if any of you might be interested in it.

Some amazingly poignant quotes on money systems are as follows (remember, this was copyrighted 30 years go...)

(Pg 41-42 digital, 34-35 print version)
Historically and biblically, gold and silver in particular have served as money. The important thing to remember is that money is a commodity in itself. Gold and silver emerged as media of exchange precisely because they have always been the most marketable goods– in other words, they can easily be exchanged, again and again, for other commodities. Money is not a measurement of value (there can be no measure of value) or of wealth. Money does not “represent” wealth. Money is a commodity, a good, a form of wealth.

Dishonest governments have always hated this fact, because it prevents them from controlling money and society. “Hard money” is a strict limitation on a government’s ability to grow beyond biblical (moral) boundaries. For this reason, governments have sought to have a monopoly as the sole suppliers and regulators of currency. This enables government to go into the counterfeiting business, whereby it can debase the currency (by mixing the honest gold or silver weight with dross) and create as much “money” as it needs. This has happened again and again in history. It is forbidden by the law (as in the passage cited above; see also Proverbs 11: 1; 20:10, 23) and the prophets (Isaiah 1:22; Amos 8:5-6; Micah 6:10-12). This is an absolute biblical prohibition against inflation, which is a dishonest increase in the supply of money. Counterfeiting is condemned by Scripture, no matter whether it is done by individuals or governments. Inflating the currency is theft, for it reduces the wealth of everyone who does not have access to the “new money.” Prices rise in response to the addition of new currency, and those who are last in getting the newly-created money inevitably lose.

(Pg 162...print version, 198 digital)
"The factional reserve banking system can work against any group, depending on which group succeeds in gaining access to the newly created money first. For example, if the Federal government runs, a massive deficit — if! ! ! (a little humor)- and the Federal Reserve Board steps in and buys a portion of the government’s bonds by creating fiat money, the government will spend the newly created money in subsidizing its patrons. If this should be welfare recipients or Social Security pensioners, then these groups can benefit temporarily (at least until inflation destroys the value of the currency, not to mention the social order). Those
hard-pressed middle-class people who are on tight budgets may not choose (or be able) to indebt themselves. Thus, they see their savings go down the inflationary drain, while the poor, who have no savings, maintain their living standards by means of their ready access to “indexed” welfare payments. They get the fiat money first, spend it before it depreciates, and leave the middle class businessmen and families holding the bag-the “bag” being a savings account, or pension program, or annuity, or cash-value life insurance savings full of worthless paper money.

Under fractional reserve banking, which is universal today, it pays to be the favored group which gets access to the fiat money first, before its purchasing power deteriorates. We can expect class war eventually, such as Germany experienced in the years of mass inflation, 1921-23. Everyone wants to be the favored person in the race against price inflation, which is in turn caused by monetary inflation. Thus, by looking at the short run, and voting for a debt-based monetary system, today’s middle-class voter is sealing the doom of the social order which has permitted the economic benefits to flow to the middle class — a social order based on voluntary exchange, contract, social peace, and honest money. Ignorance of economics, when coupled with envy, and motivated by a false sense of guilt, can produce a devastating social crisis."

Now, while I hold many of my money and political views on reasons other than religious helped me immensely 30 years ago when I read this book to form some of my foundational philosophies on money and political systems from a morality position.

Finally, I point you to this recent article by Jim Sinclair, a precious metals and commodities specialist who predicts a world currency sometime this next decade. The results according to Mr Sinclair will be:

1. Gold will progressively lock price-wise in the inverse to the SDR or similar item.

2. An exchange will soon begin to trade a virtual SDR or similar item just as they trade a virtual dollar as the USDX or virtual gold as a paper gold.

3. The USDX will become redundant.

4. The ability to pay off the debt of previous reserve currencies with market de-valued paper is facilitated.

5. Currencies as a whole will decline.

6. That decline will be the SDR versus the gold price.

7. The method of attacking a currency is inherent in attacking its debt.

The answer is simple even though the problem is complex.

Reduce all your currency positions into strength. Buy gold in all its forms other than US or Euro based in weakness.

Gold will trade at $1650 and above. The US dollar continues its march in phases towards worth-less and worthlessness.

Based on these seems to me we could do far worse than to establish a new world currency system that take individual governments and politicians out of the system of economic controls. In my opinion, this will help us stabilize our world economically and totally end around the aspect of economic "wars" and false manipulations of currencies to support disastrous money policies by little people in high places.

1 comment:

John said...

One interesting fact that I read today - if all the US debt were to be liquidated based on the amount of gold publicly known to be held at Fort Knox, then gold would need to be priced at $36,000 an ounce.

That gives us an idea of where things stand and the tax and spenders should wouldn't want you to know that fact!