Operation Meltdown, Part II: Hoarding for War, Vaulting for Victory
Today's Financial News - Posted September 8, 2008
“Governments and their central bank agencies set the price — and thus value — of what we now use to buy and sell, invest and spend. And since this control over money rests with politicians and bureaucrats, it’s worth noting how the surge in nationalized gold reserves coincided precisely with the surge in nationalist politics, war-mongering and state controls…” — Adrian Ash
by Adrian Ash
It seems an odd quirk of history that Washington’s post-War obsession with its nationalized gold reserves — an obsession which Ian Fleming neatly tapped into with Goldfinger in 1959 — came so long after what historians call the “classical” Gold Standard ended.
Indeed, central bank gold reserves worldwide rose almost five-fold over the 50 years following the start of WWI in 1914 — the date traditionally given as the death of the international Gold Standard.
That system, running roughly between Bismarck’s defeat of France in 1871 and the bloody stand-off at Ypres a half-century later, saw nations settle their balance-of-trade debts with each other in bullion. Gold really was money, and only gold (and, progressively less, silver) would do in payment. And just like domestic cash transfers, the vast bulk of cross-border payments were made by private individuals using privately-held gold and fully-backed gold certificates.
But as governments worldwide set about nationalizing welfare, health provision, pensions, insurance and the “commanding heights” of industry, so their nationalized gold reserves were also growing apace. The Gold Standard collapsed not only into the mud of Verdun, but also into state-owned and state-controlled gold vaults.
Put another way — as Texas Congressman Ron Paul did before the U.S. House of Representatives in Feb. 2006 — “Though money developed naturally in the marketplace, as governments grew in power they assumed monopoly control over money.” Read more…
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