Monday, March 30, 2009

G20: Russia wants a gold standard (of sorts)

According to the UKs Telegraph, Russia is telling the G20 that they want gold backing for a future world currency:

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.

Chinese and Russian leaders both plan to open debate on an SDR-based reserve currency as an alternative to the US dollar at the G20 summit in London this week, although the world may not yet be ready for such a radical proposal.

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". (by Ambrose Evans Pritchard)

So there are two issues here:

1) a gold standard (or some derivation)
2) a world currency

Both of these would have massive impacts on life in America. I support the concept of a gold standard, painful though it would be initially. But I strongly oppose the creation of a world currency... something that would make Americans beholden to these guys:

No thanks.

Tim White

1 comment:

Anonymous said...

There simply is not enough gold in the world to support today's economic activity.

Also, if there was enough, who would maintain it at a fixed price. If you can maintain it at a fixed price, the price would fluctuate just as it does today. When the economy looks bad, people would want to buy gold and take delivery.

The gold standard may sound good, but it could not work.