The world has shown EU that a trillion dollar bailout is no more than a flop movie with a lifespan of just one week at the box office. The value of the euro is back to where it was before the announcement of the trillion-dollar bailout. Solutions to highly complex problems are indeed very simple. A return to the gold standard is the simplest solution to all the financial crises across the world.
Most of us might be dazed by the meteoric rise of the price of gold. This is an ominous indicator of an impending financial disaster just like a dead canary in a coalmine. We might not need a gloom and doom article reminding us that we would be in the gutter again but some hope about how we can get out of it.
Gold was the standard for all world currencies until Aug 1971. The price of a troy ounce (approximately 31 grams) of gold was fixed at US $35. All other countries pegged their currencies to the US dollar or gold. Any money printed without having a gold backing was considered fake money and only crooks and some despots in Africa and Latin America resorted to printing money without possessing gold. Such a brainless act DID and DOES destroy the currency and the economy. The latest example is the 100 trillion Zimbabwean dollar note that turned worthless. Zimbabweans got their lesson and silently buried their currency and let other global currencies become legal tender in their country. US dollar and now the Euro are following Zimbabwe’s example into financial oblivion.
Gold is now worth about 1200-1250 USD a troy ounce which means the total amount of paper money in the world increased 35 times in the past 35 years and is about to increase a whole lot more with trillions of dollars and euros in bailouts coming in the recent months. The chief culprit is USA. They depegged the dollar from gold violating the Bretton woods agreement, the global standard currency for millennia. All other countries followed suit, as they could not play by the rules when the lead player was flouting all the rules.
Just as it worked for the counterfeit crooks, this measure helped the Americans pay others pieces of paper with the faces of dead American presidents to fund their entire extravaganza. This lead to the de-industrialization of almost all developed countries as China emerged as the factory of the world and India became the back office of the world.
India also got its fox’s share of industrialization as our infrastructure severely limited other sectors from taking a huge leap forward. On the other side what China and India really got for all the hard work is not real money but stacks of paper with the faces of former US presidents.
Sooner or later USA would come back to the gold standard. It is the only way they can get back the jobs they lost to foreign shores. Lowering interest rates to 314 year lows is not helping UK and soon, USA would also be forced to end this game of printing more and more fake notes.
The good news for all my compatriots is that Indians have always believed in gold. Indians have it in our psyche to convert savings into gold as we associate it with (Goddess of) wealth. Dinakarananda wishes you all a very happy Akshaya trithiya and golden days ahead.