Tuesday, October 28, 2008

Reinstate the Gold Standard

Keynes came in after the 1903s Depression to argue with the simple market economists in the Treasury that letting the market find its bottom would not help because many people were hungry and had no money to create the demand needed by the market. This is, in essence, the General Theory or GT.

Keynes also reinstated the gold standard and created the IMF to help maintain the gold standard by providing the necessary liquidity to stabilise currencies.

The failure of the US financial system - what it looks like to be the world financial system as practiced by the West and imitated by the East - is the destruction of the gold standard in 1973 when Nixon removed the US dollar from it - which led Greenspan to abuse it with its unbridled expansion in the name of free market and global innovation.

But the free marketeers had failed to define market rules under which everyone should operate. Banks are left to innovate to their hearts' content. The referees were sleeping.

The solution to the global financial system is to go back to the gold standard, regulate money supply, control inflation - so that the real economy and people who really work can proceed to go about with their ordinary lives - working and consuming and waiting to die.


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Today the value of the Gold held is the US is worth $210,585,164,529.42 at today's prices.