Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“Be wary of strong drink. It can make you shoot at tax collectors - and miss.”     Robert A. Heinlein,    Time Enough For Love

March 30, 2009

Russia Considering Return to Gold Standard

by Stephen Gordon

Here’s some irony for you. Perhaps Obama, Reid and Pelosi might consider following Russia’s lead:

Arkady Dvorkevich, the Kremlin’s chief economic adviser, said Russia would favour the inclusion of gold bullion in the basket-weighting of a new world currency based on Special Drawing Rights issued by the International Monetary Fund.[...]

[...]Mr Dvorkevich said it was “logical” that the new currency should include the rouble and the yuan, adding that “we could also think about more effective use of gold in this system”.

The Gold Standard was the anchor of world finance in the 19th Century but began breaking down during the First World War as governments engaged in unprecedented spending. It collapsed in the 1930s when the British Empire, the US, and France all abandoned their parities.

It was revived as part of fixed dollar system until US inflation caused by the Vietnam War and “Great Society” social spending forced President Richard Nixon to close the gold window in 1971.

The world’s fiat paper currencies have lacked any external anchor ever since. It is widely argued that the financial excesses and extreme debt leverage of the last quarter century would have been impossible – or less likely – under the discipline of gold.

Of course, this would make bailouts and excessive federal spending less palatable politically, so it ain’t gonna happen here until it’s forced on our governmental leadership.

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2 Comments

  1. This sounds like regulation that would work. You let the money system govern itself.

    Comment by Eliot Pearson — March 30, 2009 @ 7:40 pm
  2. [...] Stephen Gordon placed an observative post today on The Liberty Papers »Blog Archive » Russia Considering Return to …Here’s a quick excerptArkady Dvorkevich, the Kremlin’s chief economic adviser, said Russia would favour the inclusion of gold bullion in the basket-weighting of a new world currency based on Special Drawing Rights issued by the International Monetary Fund.[. … [...]

    Pingback by Topics about Gold » The Liberty Papers »Blog Archive » Russia Considering Return to … — March 31, 2009 @ 1:12 am

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