The True Gold Standard (Second Edition)
Is Wikileaks founder Julian Assange channeling Don Draper in the TV series Mad Men—the brilliant but ethically challenged publicist with retro lifestyle issues? Assange got the Daily Telegraph breathlessly to report an old June 2009 "confidential" cable from the U.S. London Embassy to the U.S. Treasury, State Department, Beijing and Moscow embassies, headed "LONDON-BASED EXPERTS AGREE THE U.S. DOLLAR WILL MAINTAIN ITS RESERVE STATUS."
The significance was hardly that Treasury Secretary Timothy Geithner deemed HSBC and Deutsche Bank economists' stumble-along-further prognosis a policy endorsement. At most it was that U.S. monetary authorities hadn't previously spelled out to U.S. diplomats that "recent proposals to make the SDR a global reserve currency lacked viability"—which had long been obvious to HSBC's Currency Outlook and James Grant's Interest Rate Observer (and LBMC LLC's Market Watch).
Since the dollar standard isn’t sustainable and the SDR isn't viable, the next successful U.S. president will undertake the remaining practical alternative: restoring the gold standard without reserve currencies. The chart below compares the U.S. dollar against gold, the yen and Euro/DM since monetary 'experts' famously predicted in the '60s that gold would fall from $35 to $6 an ounce if it were demonetized. Instead, the gold price multiplied forty-fold while the dollar slid against other currencies.
Oct 20, 2014
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Key Monetary Writings
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Why the Gold Standard?