Russia backs return to Gold Standard to solve financial crisis

March 31, 2009 by · Leave a Comment
Filed under: Global News 

Personally I think all this talk about going back to the Gold Standard really points to the underlying problem that we have seen over and over throughout financial history.   Having an honest management of the currency with a policy that does debase it over time which harms the savers in your country which kill incentive to save and invest over time.   We tend to ignore the savers and focus on the people in trouble without any thought of balance when addressing these issues.  

The current crisis in the U.S. is a perfect example when the popular notion of bailing everyone out is being carried out without real discussion being put into what that means and if there is a better method of handling the crisis.  If you have followed my writing on here, you would know that I would of let all the banks go under that were reckless and used the money to back up obligations they had (the honest and correct ones) and then went on a robust programs to get funding to private businesses to jump start the job creation process focusing on our infrastructure and energy needs, you can almost never have enough of either.

News (Telegraph UK):

 

 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”.

The Gold Standard was the anchor of world finance in the 19th Century but began breaking down during the First World War as governments engaged in unprecedented spending. It collapsed in the 1930s when the British Empire, the US, and France all abandoned their parities.

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