2ndlook

The Gold Standard Fraud – New “Old’ Gold Standard Born Again

Posted in Current Affairs, European History, Gold Reserves, History, India, Pax Americana by Anuraag Sanghi on October 4, 2008

Instead of gold standard disperse gold holdings among citizens. This will dilute the ability of nations to wage war!.

Good OLDEN Days

Good ‘OLDEN’ Days

Good Ole’ Gold Standard

In the last few decades between the Nixon Chop and the Bush Whack, the Western academic world, has floated another ‘hot air’ balloon. It is the revival of the ‘pure,’ Gold Standard. The story goes that in the ‘olden’ days of 19th century, in the golden age of Western civilization, there once reigned the Gold Standard.

As Senator Ron Paul says,

This post-Bretton Woods system was much more fragile than the system that existed between 1945 and 1971.Though the dollar/oil arrangement was helpful, it was not nearly as stable as the pseudo gold standard under Bretton Woods.It certainly was less stable than the gold standard of the late 19th century.

The Oil-Dollar Tango

The Oil-Dollar Tango

The simplistic logic of this theory is that the world should ‘go back’ to the Gold Standard - or as some put it, improve the ‘corrupted Gold Standard’ of the 19th century, and then everything will be fine. All currencies of the World, should be indexed to Gold – and then everything should be fine.

Currency can be redeemed against gold – and gold reserves equivalent to currency should be kept as reserves. This will kill inflation, stop war, make politicians honest, make tax payers honest, citizens hard-working and business efficient.

In short a magic bullet.

The last time, we saw this, it was called the Bretton Woods. The US and the Anglo-Saxon Bloc came together and said we will administer the new world currency system. The world agreed – once again. And we know what happened.

A Bad Idea – Whose End Has Come Too Late

Gold is the root of war. That is gold in the hands of kings, generals and rulers.

Alexander

Alexander’s campaign started with the gold reserves that his father had built from the mining operations at Mount Pangeus. The Macedonians were the first in the Hellenistic world to keep standing army – a luxury and a big expense, in Greece, at that time. (His first sexual experience was with a slave girl from these mines, Leptine from the slave camps of Mount Pangaion also written as Mount Pangaeus).

In 357 BC, Alexander’s father conquered Amphipolis in Thrace, an Athenian colony – and that gave him possession of the Mount Pangaeus gold mines. Gold from theses mines financed Phillip’s wars. (356 BC – captured Potidea in Chalcidice, Pydna on the Thermaic Gulf; 355 BC Crenides, a Thracian town (later re-named Philippi). 354 BC – Methone, advanced into Thessaly. 348 BC – Completed the annexation of Chalcidice, including Olynthus). His politics and financial muscle got him (346 BC) a seat in the Delphic council, a prestigious position in Greece.

Alexander set off on his campaign with this hoard of gold – and King Phillip’s standing army. The Persian conquest further added to his gold hoard. And India took away some of that loot. A bit of that gold loot was spent by a nervous Alexander for buying peace with Indian rulers at the borders of his empire.

Roman Empire

The Roman empire was similarly funded by gold mining and loot. Julius Caesar’s European conquests were funded by Gallic loot. The Punic Wars with Carthage were fought over Spanish Gold. Roman conquest and love affair with Egypt was motivated by grain and Nubian gold. One of the first actions that Romans took in Wales, Britain was to build an gold ore refining system. Gold mined in Britain went to Roman coffers.

Charlemagne of France – The First Christian Emperor

The movement towards gold standard will ensure that the US government will again become a huge gold owner - giving it enormous financial muscle. Last time, they had much muscle, we had WWII.  |  Cartoon by Bill Sanders. Publication date - NA.

The movement towards gold standard will ensure that the US government will again become a huge gold owner – giving it enormous financial muscle. Last time, they had much muscle, we had WWII. | Cartoon by Bill Sanders. Publication date – NA.

Carolus Magnus, Karel de Grote, Karl der Grosse, Carlomagno, Charles the Great – or more commonly known as Charlemagne (ruled between 768-814) waged war for 30 years, spread over more than 50 battles. Charlemagne’s conquests were funded by the Saxony mines, the Haartz mountains, etc. His victory over Avars, (modern Hungary) gave him treasures which needed 15 carts, pulled by grey steppe oxen for transport.

America And The Great Depression

Roosevelt gave a New Deal to the Americans. He took away all their gold. WWII followed soon thereafter.

The British loot from Canada, Australia, South Africa – and India, gave the world, numerous wars and brought humanity “under the heel by means that will not bear scrutiny.” It is these very same Gold reserves which gave birth to the Bretton Woods – and we know what happened after that!

Gajalakshmi at the Varaha caves

Gajalakshmi at the Varaha caves

What Should We Do With Gold

Just sell it to people. From all the countries of the world.

The world financial organization should limit control of global gold output by any mining organization to 10% or a single mine – which ever is lower. Gold holding should be widely dispersed, as widely as possible, amongst individuals – like the Indian gold possession model. No national government, in the new financial architecture should not be allowed to have more than 250 tons of gold – to progressively reduce to 50 tons.

What this will do is disperse gold holdings among the citizens of the world – and dilute the ability of nations to wage war! National Governments (like the US), have used gold looted from their own citizens (and others) to deprive other Peoples of the world of gold – and wage war.

Lakshmi – And Her Two Vahaans

Lakshmi the Indian Goddess of wealth rides on two animals. The airawata - a white elephant, is one. She blesses the deserving, by the day, riding on the airawata. The deserving and the whole world knows that the deserving have been blessed – by Lakshmi, when she comes riding on the airawata.

Gajalakshmi at Bantei Srei Temple - Cambodia

Gajalakshmi at Bantei Srei Temple – Cambodia

But the other way, in which Lakshmi dispenses her favors, is by night – when she comes flying on a owl. No one, including the recipients of her bounty, comes to know when she arrives – or more importantly, when she flies away. Spain and Britain are two excellent examples, when Lakshmi came at night and flew away. The Spaniards and the English are still wondering, what happened.

Gajalakshmi

Gajalakshmi

The new financial blue print must ensure that Lakshmi comes riding on the airawata – and we have a sustainable currency system!


23 Responses

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  1. dsylexic said, on October 4, 2008 at 3:13 pm

    not to nitpick, but it is Representative Ron Paul and not Senator.

    secondly,your faith in a global bureaucracy to control the output of gold and have it dispersed can only be termed as unduly optimistic.global bureaucracies are a dangerous tool.absolute power corrupts,like you have shown multiple times.vesting the authority to perform such an audacious redistribution of gold will cause more war and strife and leave room for never seen before corruption.

    who will control these bureaucrats?where will there loyalties lie? the UN is a puppet of the western nations -are you relying on such a body to enforce this?.we might ask god to do this for us!

  2. dsylexic said, on October 4, 2008 at 3:35 pm

    it is not clear why you have identified gold to be root cause of all wars. it is like saying that guns and weapons are the cause of killing.if that were indeed the case,we would have had a peaceful period in the fiat money era.considering it has been a display of supreme arrogance by the powerful nations of the west,it can only be concluded that the root of war is power and not gold.
    gold tries to put the power back into the hands of the people.it is the representatives of the people(the govt) that seeks to assert its power time and again and for that the govt wilfully abandons a stable money regime. the wars and attacks over centuries have not been due of gold,but rather because the govt summarily abolishes gold money in favor of paper/debasement to pursue financing for conquests,plunders and wars.

  3. Galeo Rhinus said, on October 4, 2008 at 5:00 pm

    Anuraag!

    I have to agree with dyslexic on this one… your ideas are downright scary.

    However, both of you have skirted around the real solution.

    First to clarify what Ron Paul has been saying – beyond this single quote that you mention. (I voted for him in the Primaries… I switched from being a libertarian to a republican so I could vote for him… then switched back).

    Ron Paul advocates the elimination of the monopoly of the Federal Reserve to create currency. This would allow for people to print their own currency that would find its value in the market. The idea is that even if the government printed its own currency – its value will be determined by the market. This is different than the pseudo-gold standard post 1945.

    In fact – Ron Paul has quoted Gandhi a few times encouraging people to express civil disobedience – but be ready to face the legal consequences.

    This led to the arrest of a person a few months ago – who minted his own “Liberty Dollars.” While minting them is not a crime under American law – he went to a convenience and used it. This made it a felony – leading to his arrest.

    It is important to understand this from an Indian point of view as well.

    Indian rulers did not force a monopoly of a royal coinage.

    Shivaji for example did not “forbid the passing of any manner of coins.” During his regime there were 32 different kinds of gold coins in usage. Gambhars, Mohors, Putlis, Padshah Hons, Satlamis, Ibrahimis, Shivarai, Hons, Kaveripak, Sangarai Hons, Devarai Hons, Ramachandra Rai Hons, Gooty Hons, Tadpatri Hons… and more.” [The Maratha Supremacy, Bharati Vidya Bhavan, History and Culture of the Indian People, vol. iii, 1991, p. 547-548] While the Shivarai was the most widely circulated coin and had Shivaji’s sanction (the mints paid a license fee to Shivaji), the other coins were not banned.

    Would this not be the implicit and effective “gold standard?”

  4. Anuraag Sanghi said, on October 5, 2008 at 11:31 am

    On the Rep.Ron Paul versus, Sen. Ron Paul – I stand corrected.

    ‘faith in a global bureaucracy’ – Where have I said anything about any global bureaucracy. What this will mean, in terms of effective implementation, is to extend the Indian IPO model for gold sales to be electronically managed with ‘registered’ markets participants. This is also not a permanent state of affairs. Till gold ownership is ‘normalized’ from the current ‘skew’ of ownership with the Anglo-Saxon Bloc, this ‘intervention’ may be essential. There is no need for any global bureaucracy.

    ‘audacious redistribution of gold’ – I have made no mention of redistribution of gold. I am only saying that future gold output should be equitably available for purchase to all people of all countries – and not just 5% of Anglo-Saxon humanity.

    ‘the UN is a puppet of the western nations’ – I agree. I seriously think, that India should walk out of the UN, or at least dilute Indian commitments and involvement. The veto system must go!

    ‘are you relying on such a body to enforce this’ – I have as yet not proposed any body as yet! You will see a concept of the administering body soon.

    ‘root of war is power and not gold’ – Gold, that is in the hands of these ‘corrupt’ governments! Power that flows out of the ability to control gold flow! By the hoards of gold! Gold that the Anglo Saxon Bloc has acquired by genocide of the Red Indians and the aborigines and the Africans.

    ‘gold tries to put the power back into the hands of the people’ – Gold can be a powerful asset that Governments can use force, to gain control of! Like Roosevelt ‘nationalized’ gold in 1930s in the US and Morarjee Desai did that in India in the 1960s’. The idea of delegitimising gold in the hands of Governements is take away that power from Governments to wage war – against its own citizens and other nations.

    On Ron Paul’s views - I dont know Ron Paul well enough or hold no brief for Ron Paul – and he is not the subject of this post.

    ‘pseudo-gold standard’ – Has been sold like God and the American Constitution. No one knows who he is, where he is, what he is, but everyone swears by Him. Similarly, the American Constitution has failed on every promise that it made – and now people blame the implementation and not the document.

    Similarly, Bretton Woods was also sold as a Gold Standard. The ‘gold standard’ is a term used by the West to sell lemons to all of us – which we then suck for the next 50-100 years. After its due failure, we are again sold another lemon – as the all-new, fresh, re-packed, real, actual Gold standard. And as I see, some people have bought this lemon, too.

    ‘Indian rulers did not force a monopoly of a royal coinage’ – This makes sense. What I am suggesting is also similar. Let there be many currencies. Electronic, global currency trading systems will determine value. Currencies exchanges will determine cross currency prices – based on actual demand, supply, purchasing power, output, imports, exports, outstanding debt, etc.

    People will have the option and access to gold – apart from currencies.

    The outline of a new type of index currency denominator is also what you will see in another few days /weeks. Then possibly, you will see more clearly what this blog outlines.

  5. Galeo Rhinus said, on October 5, 2008 at 3:21 pm

    …what you are implicitly suggesting is that this “new” organization will do all these things… it’s like a WTO for currency… its like managed trade is passed of as unrestricted trade… you are under the belief that this “new” organization will achieve your vision…

    …you must be naive to think that this “global” organization will actually ever relinquish the power of the fiat…

    Indic polity was the exact opposite of the concept of any centralized power… be it “benevolent” or “fascist”…

    …will your recommendations fly as a tactical ploy? it depends on what India’s strategy is going forward… without the existence of this strategy – supporting another “global” regime would be more disastrous than the current dollar regime…

  6. Dsylexic said, on October 5, 2008 at 5:26 pm

    ‘audacious redistribution of gold’ – I have made no mention of redistribution of gold. I am only saying that future gold output should be equitably available for purchase to all people of all countries – and not just 5% of Anglo-Saxon humanity.

    i am confused,is gold not available freely for purchase? india buys the most gold on earth -almost 20% of world output.nobody is preventing us from buying it (except for our own politicians from time to time).we spend more on gold than oil imports -our priorities seem to be correct. the world already depends on india and the middle east (and china as well) to keep the gold market healthy.
    ownership of gold mines has nothing to do with stable money.gold mines dont bestow any great power to the owner of the mine.the mines return on investment is pretty much what precious metal producer can get in the world market.gold’s intrinsic value comes from the fact that it is used for jewelry and industrial purposes. owning the gold mine does not make the miner rich ,per se. in fact if the miner mines a lot of gold,its value automatically goes down by inflation.

  7. Anuraag Sanghi said, on October 6, 2008 at 9:33 am

    ‘is gold not available freely for purchase?’

    No!

    Gold has not been freely available for 90 out of 100 years in the last century – in India. You are projecting current situation backwards – and assuming that it was also so! It wasn’t!! US citizens were not allowed to buy gold for 50 years in the last century. So, why assume that recent history will not repeat itself.

    ‘ownership of gold mines has nothing to do with stable money’

    Ownership of gold mines is what has given the Anglo Saxon Bloc the power to wage illegitimate wars, colonize many countries, impoverish the world – and indulge in the kind of loot, on a scale that is even now not fully understood by most!

    What I am saying is that the concentration of ownership of gold and gold mines (amongst countries, companies and colonies) be diluted from now on! We cannot reverse history – but we can definitely ensure that history does not repeat itself.

  8. Dsylexic said, on October 6, 2008 at 11:16 am

    OK,I understand the rationale behind not allowing history to repeat.I’ll wait till you propose how to dilute the ownership of this gold as well as deligitimize it in the hands of governments.
    I would find it bizzare however if you are going to trust inter-government bodies to do so.No government downsizes,unless there is a bloody coup.You cant ask the fox to guard the henhouse

  9. Dsylexic said, on October 6, 2008 at 2:38 pm

    Here is something you have completely missed out: India can adopt a gold standard on its own,unilaterally. Indian govt doesnt need the co-operation of other nations for it to succeed. If this is done,the fiscal disciple will be automatic,the Indian rupee will be very strong and stable and intra-country trade will flourish.Other countries will view our money as stable and trash other currencies since the rupee will then not be subject to inflation.India will be able to trade confidently with other nations since hedging for currency fluctuations will no longer depend on whimsical FII ‘flight to safety’.Infact the rupee will be the ‘flight to safety’.
    The biggest hitch to this to get the govt of India to give up its monetary stranglehold over its citizens.That,ofcourse,will need a revolution of thought and action.

  10. Anuraag Sanghi said, on October 6, 2008 at 3:12 pm

    Let me repeat – the gold standard currency system is a fraud. Period. There is no future – and the past of the ‘gold standard’ is clear.

    People don’t need gold currency. They need the freedom to own, trade, buy, sell gold – without restrictions. Period. Those who desire the stability and value of gold should be able to buy gold.

    A currency system is separate and complex arrangement – which, is finally a legality. Currency can liquify capital, allow debt flows, and many othe things which with gold becomes difficult and restrictive.

    There is a complex interplay between gold and currency – and that must again be allowed freely and without restrictions. If countries (like the USA and Zimbabwe) want to mess up their currency, I (should) have the option to move to gold – or any other currency!

    Those who wish to use the flexibility and benefits of globally acceptable currencies, should be allowed to do so. Period.

    Tying up one with the other, is a fraud – that ‘mercenary’ economists and politicians want to sell to us. Just what is the need for any tie up between currency and gold.

    Why cant I just buy gold – raw, solid, pure, bars of gold!

  11. Dsylexic said, on October 6, 2008 at 3:45 pm

    the term gold standard is often used metaphorically to denote stable money.for centuries gold has served this purpose. it doesnt need to be gold.it could be anything which cant be inflated willynilly.
    allowing so called free float will ,by reductio ad absurdum,entail a barter system.back to the stone age UNLESS currencies are divorced from governments.

  12. Galeo Rhinus said, on October 6, 2008 at 10:31 pm

    Dsylexic and Anuraag…

    …the last two posts seem to show some convergence.

    Dyslexic’s point is that India should show initiate a revolution of thought and action…

    …what should the revolution be?

    That can’t be creating a “gold standard” because it becomes a government monopoly.

    India’s revolution should be simply the elimination of the government monopoly. Let people print or mint their own money… this will prevent the government from creating the “gold standard” that anuraag rightly dreads…

    …the problem is that anuraag doesn’t seem to dread a lot of other things that he should be dreading…

    …we should all be dreading too much power in the hands of a few – whether it is for the “good” or not…

  13. Anuraag Sanghi said, on October 7, 2008 at 8:29 am

    Ignore the hectoring tone … but …

    India can adopt a gold standard on its own,unilaterally.

    You should look up the history of Gresham’s law on this. You might have heard about how ‘bad money drives out good.’ So, this option is really NO option.

    Indian govt doesn’t need the co-operation of other nations

    This seems to be symptomatic of an Indian attitude of not wanting to engage with other nations – or assuming that people cannot /will not listen to reason. This either assumes a superior attitude that only ‘we’ are reasonable, moral, ethical or a chronic fear of other human-beings. Why not be reasonable and assume that people may have a different perspective – and someone needs to initiate the ‘alignment’ process.

    No government downsizes

    From 1991, the Indian Government has significantly, steadily, without compulsion, downsized itself. The RTI Act, the delicensing of industrial sectors, are all examples of this. Many (especially, the West) faults Indian Government on the pace – but that is something of a matter of judgment. Hence, your statement is in the Jeffersonian ‘eternal vigilance’ route – which is valid in the Western contexts, where freedoms have been won after much bloodshed.

    govt of India (will not) give up its monetary stranglehold over its citizens

    You can as an Indian invest, trade, in any currency for the last 4-5 years. So, this statement is factually untrue. The genesis of the ‘stranglehold’ was Western in its origin – and since, 1980, (7 years after Bombay High) there has been a decline in state intervention. Post 1991, there was, of course, much faster pace of de-regulation. So, the Western biases are not such a good idea.

    are (you) going to trust inter-government bodies

    Are you suggesting that some NGOs to run currencies. Or you suggesting that we move to Indian /Hayek’s competitive currencies scenario from tomorrow? There has to be graded, nuanced change over, from the current cess-pool of ‘gold standards’ to free gold sales and multiple currencies regime.

    allowing (so called free float) will ,by reductio ad absurdum

    The dollar indexed float was a disaster – because of fraud. But, free float with forex trading and free gold sales will allow enough options for people to mix-n-match the best. I don’t see the problem.

    elimination of the government monopoly

    If people can buy gold freely, can move from one currency to another, where is the monopoly, or the ‘concentration of power.’

  14. Dsylexic said, on October 7, 2008 at 8:56 am

    The concentration of power – lies in the fact that taxes have to be paid and benefits like pensions received in the currency of the govt.Thats where Gresham’s law comes into play .If the govt has a bad currency,it will,perforce drive out the good currencies.

    We can trade in any currency -sure -but can we hold dollars in Bank of Baroda?.Can I have a Ringitt account?.There is no capital account convertibilty.There is only partial convertibility on capital account.There is no true freedom.NRIs and people with connections abroad can make use of the RBI guidelines on investing abroad.I would want the freedom to do it in India.

    @India govt downsizing. You are overlooking the fact that the govt resorts to a lot of Off balance sheet activities like the Oil bonds etc.This is huge.It didnt matter when oil was cheap,but in the last 6 years,its got monstrous.I just did some quick calculations from data from indiabudget.nic.in,the expenditure in 1996 was around 183000 crores. in 2006 it was 563000 crores approx.So I dont see any downsizing.Govt spends more and more.If we removed the income tax collected last year from the budget ,we would still only have to go back to 2003 revenues to equal it.So income tax can not be further slashed,it can be eliminated without further ado.

    You misunderstand when I say that India doesnt need the co-operation of other nations.What I imply is that following a stable money regime and following fiscal disciple is something we can do on our own.I’ll ignore the other insinuations.

    @Graded and nuanced moves.You are kidding yourself.Changes in finance happen in turmoil and much upheaval to current establishments of the day.Today is as good a chance to take advantage.The federal reserve happened one fine day.so did the end of bretton woods 1.there was no announcement and gradualism.Things happen in a revolutionary and frighteningly rapid manner when paradigm shifts have to be effected.

    I agree with Paraag about people’s currencies.It can be done very rapidly.I already do so indirectly by using Accor coupons for buying groceries .Its a valid currency :-) in my favorite kirana store.

  15. […] reserves. Hence, only they could underpin their currency with gold- which the world accepted. It is separate story that they defrauded the world – and the system unravelled within a short 20 […]

  16. […] equation hazy. What if Warren Buffet becomes the new US Treasury Chief? There is the real risk of another fraud like the gold standard happening all over […]

  17. […] equation hazy. What if Warren Buffet becomes the new US Treasury Chief? There is the real risk of another fraud like the gold standard happening all over […]

  18. Harshad Malkan said, on March 24, 2009 at 11:56 pm

    The currencies or banknotes that are backed by the Gold standard or Gold standard money denominated from 100 to 500 Billion are the old German Reichsmarks, Yugoslav dinars, Turkish liras,Vietnam Dongs,Greece Drachmas,Iraq Dinars, Brazilian cruzeiros,Mexico Pesos, Croatian dinars, Polish złoty, Argentine peso leys, Angola Kwanzas reajastodos, Zairean zaires and Bolivian Bolivianos.These monies between 100 to 500 Billion denomination currencies are acceptable ,redeeemable for cash in any currency or Gold by all Banks and traders as trade for credit ,goods, services and deposits worldwide indefinetely or no time limit for its redemption.

  19. […] this another step in the European offensive to take advantage of the current US financial crisis – to gain alliances or neutrality from anti-US countries. The crisis at home in Europe is bad […]

  20. […] ’system’ received wide publicity in Europe (thanks to Marco Polo). 600 years later, Roosevelt did the same with the Americans – and collected 8000 tons of […]

  21. Gold King said, on October 10, 2009 at 2:27 pm

    History History repeats repeats itself itself again,again,again…ad nauseam.
    Be a King.
    Trade your paper dollars, euros, pesos, yen, for Gold.
    When we opened the Tomb of King Tut, we didn’t find any papyrus dollar bills…
    nuff said

  22. mpanj said, on March 1, 2011 at 12:50 pm

    Is it possible, US is trying to trigger a Shia-Sunni conflict. Too many benefits: Arms sales, redirect terror, revive US and global economy, possible counter to Chinese designs, keep the islamic youth bulge occupied with their own vietnam….leading to a much needed catharsis across the Islamic world.


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