Or something pretty close to it.
In his latest article, Martin argues for a One World Currency. He shows how gold has for centuries been the de facto one world currency. And he points out the problems of a fixed gold price in a gold standard, as well as the benefits of a floating gold price. Everything he describes seems to dance nicely around the Freegold concept. Here are the first few pages followed by a link at the bottom...
The Coming One World Currency
How do we do it?
by: Martin A. Armstrong
former Chairman of Princeton Economics International, Ltd.
and Foundation for the Study of Cycles
May 1st, 2009
There is no doubt we will see a new One World Currency. This is the next step in the evolution process of Okinomikos (Economics) as Xenophon (431-352BC ca) first coined the word as the title to his book that today probably would have been given the illustrious title - How to manage your estate including your wife and slaves - for Dummies! (meaning = how to regulate the household).
Until 1971, the world for the most part, relied upon gold as money. It was the neutral store of wealth that was recognized around the world. There were times when the gold standard was suspended, such as during the American Civil War. And there were times when some countries adopted a silver standard because they had too little gold to create a viable money supply domestically such as in China and Mexico during the last quarter-century in the 1800s. There was a suspension of the gold standard during periods of war, but we must exclude these interregnum periods for now.
The Monetary Crisis Cycle of 37.33 years has come on target - 2008 as calculated from 1971 turning point when the gold standard died. Go back another 37 years and we come to 1934 when Franklin D. Roosevelt confiscated gold and created a Two-Tier Gold Standard whereas gold was illegal domestically, but served as the ultimate store of wealth to settle the balance of payments among nations. Go back yet another 37 years and we come to the crisis of 1986 where J.P. Morgan had to gather a consortium of banks to lend the US Treasury a $100 million in gold because it was bankrupt. If we go back yet another 37 years, we come to 1860 with the break of the Union and the abandonment of the gold standard thereafter for the Civil War. We can keep going back in time and find amazing correlations to the various currency crisis periods that seem to appear like clockwork. Perhaps it just takes 37 years before man routinely screws up everything one way or another. The answer to the regularity is a bit deep than that and is interlinked with a host of other regular events including weather. That is for another day.
There is a rising discontent politically behind closed doors where some of the noise is filtering out through the cracks. Both China and Russia are raising the question about the dollar and its global reserve currency status. China has even suggested that it wants a "guarantee" that its $1 trillion reserve will not be just devalued by spendthrift domestic stimulus packages. Those who seem to have great difficulty in believing there are even cycles, fail to understand that there are a limited number of options, and the one thing that remains unchanging, is human nature. Just as China has asked for a "guarantee" now, so did Britain in 1971 that fueled the closing of the gold window by Nixon. History does repeat!
The One World Currency Cometh
There will be no avoiding a One World Currency - after all is said and done, that is what the gold standard was. There will be the biblical soothsayers who will be carrying their signs that the end is here and repent. But for the most part, we always had a One World Currency meaning gold. The real issue that seems to get the juices flowing is the idea that the Anti-Christ will control all commerce and thus will prevent the buying or selling of anything with a One World Currency and accepting the number of his name 666 stamped on your forehead or right hand. Perhaps the Anti-Christ was really Karl Marx, and his posterity are organized governments who follow Adam Smith's Invisible Hand insofar as their self-interest dictates more and more power is needed to control the population. Look well at the shenanigans of government, for there lies the true threat to the liberty of the people.
For now, the real problem we have is that the floating exchange rate system is causing economic distress that may break the back of the average person. On the one hand the United States wants to be the world leader. On the other, it wants freedom to expand Marxism to create a social state. Either we abandon the world leader shit and worry about our own, or we abandon our own and tell the people you must suffer because the politicians want to play king of the mountain. We cannot have our cake and eat it too under such a current system.
At the same time, there is about $5 trillion outstanding in the world dollar reserves outside the United States. Those people holding the dollars believe that they have a right to be heard in economic policies that will affect the value of those reserves. We cannot say; "Here support the dollar, but shut up about our domestic policies." If we double our money supply squandering that on infrastructure payments that do nothing to stimulate either the domestic or international economy, then there is going to be concern about the lack of a voice in those policies. Remember what the slogan was that symbolized the American Revolution? "No taxation without representation."
The complaint of the founders of the United States was that England was raising taxes, but Americans had no seats in Parliament. There was no voice to even object to the spendthrift policies of King George III. We are doing the same thing right now to those who hold $5 trillion worth of dollar reserves. If you want to see a real economic crisis, what if they said here, take them back now! It will be time to turn out the lights.
How do we retain sovereignty?
The real question then is this. How do we retain sovereignty for domestic policy yet at the same time respect the views of those outside the United States? The idea of creating a new enhanced SDR (Special Drawing Right) at the IMF (International Monetary Fund), will not work. The IMF lacks integrity and is long known behind closed doors for being an economic prostitute that can be bought. Those put in charge would be subject to favorite appointments, and this would yield sovereignty to an agency that is just not trust-worthy.
So how do we create a new world monetary system that is still viable, retains individualism among nations, and reduces the threat of global war be it either physical or economic? The answer is to create a new Global Central Bank kind of like the EU where the head rotates among nations, rather than appointments from private Investment Banks groomed for the job. We need not a single currency used in each national locally, but a Two-Tier Currency system where international payments only are filtered.
A Two-Tier Currency System
A Two-Tier Currency System would allow us to retain the individual sovereignty that embraces the "culture" of each nation and simultaneously create accountability among nations. The whole problem with Bretton Woods back in 1944 setting up the U.S. dollar as the reserve currency, was that it was inflexible and polluted the global economy causing it to suffer by exportation of domestic economic policy from the United States.
Bretton Woods was not well planned. It "fixed" the dollar to $35 of gold, but it did not account for domestic policy interfering with international stability. If politicians stood up and ran for office promising new spending programs, they did not consider the impact upon the supply of dollars relative to gold. Had gold been allowed to float, then perhaps the domestic policies would not have been exported to the global economy that led to (1) the establishment of a two-tier gold standard in 1968 when gold began to trade on the London Metals Exchange establishing a "free market price" for gold that rose to $42 at one point, and the "official" standard between nations of $35; (2) the entire collapse of the gold standard by 1971.
Europeans began to see massive increases in dollars, but no corresponding increase in gold reserves. The Europeans began to "put" dollars to the US Treasury demanding gold at $35. This effort was led by the Swiss and French. Yet finally, in 1971 even Britain joined and asked for a "guarantee" that the United States would secure the value of the dollar with gold. That sparked the closing of the gold window where gold was exchanged for dollars, and thus the end of the gold standard officially took place.
Bretton Woods was a total failure. Why? Because it did not recognize that no matter what the nation, politicians always spend more than they have. There was no practical way for the world to force economic responsibility upon American politics. American politicians would never yield sovereignty to the world, for how else could they run for office if they could not promise gifts for the people?
It Must Be Practical
We cannot design a system that sounds nice, but has no possible hope of long-term survivability. It must be Practical or we will end up with another bandaid. Bretton Woods failed because it left the politicians in charge of the money supply with no sense of responsibility whatsoever for its relationship to the gold supply. If gold had floated freely, perhaps we could still have a monetary system that survived. But gold is so rare, there is less than 1 ounce (troy) per person in the entire world. Its real value would probably be in excess of $10,000 per ounce. But we have to be practical and also realize that the supply of gold does not increase automatically with economic growth nor with population growth. Fixing gold would amount to an official form of deflation by decree, for the value of goods and all services would decline against gold when its supply does not increase in proportion to economic growth or population growth. Instead of there being 1 ounce per person, the day would come when there was 1/2 ounce per person. That is institutionalized deflation.
The creation of money is largely today in the hands of the private sector. This takes place through leverage in debt creating a spiral of velocity whereby the same $100 is multiplied in a cascade of loans. If you really look close at the books of some institutions, you will see net revenues of a few hundred million dollars but the "risk" factor from leverage may be hundreds of billions of dollars.
To be practical, government will not surrender their sovereignty to some one world government. Those notions of grand conspiracy theories are not remotely even possible unless there was a major world war and all government no longer existed. That extreme circumstance set aside along with visions of the Illuminati or whatever else we may call them, neither the people nor the politicians would surrender all their individuality and customs to some sort of central control.
Yet at the same time, we must respect that there has always been one reserve currency since ancient times. Even during the Dark Ages of Western Europe, still it was the currency of the Byzantine Empire that circulated and was the only minted gold coin that circulated among the various regions of the world. While the formal name was the gold "solidus" much as we formally have a "dollar," the slang name became known as the "Byzant" as we call the dollar a "greenback" or a "buck" and a wide variety of other names here and there...
Click here for the full 23 page PDF and you can pick up where I left off on Martin's page 4 (page 5 of the pdf).