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Chinese Gold Standard?

A Chinese Gold Standard?

International critics said that the United States, by ending the dollar link to gold, was turning its back on its responsibilities as the guarantor of the international monetary system. Over the decades, the situation has gotten worse. The United States is $17.6 trillion in debt owed to the public, and large trade deficits are the norm. Yet there is no scope for revisiting the international monetary system, despite great dissatisfaction by countries like China and the Persian Gulf states, which hold large foreign currency reserves. Americans themselves question the security of the dollar when their country faces such large trade and budget deficits.

China’s nearly $4 trillion in reserves — accumulated through its mercantilist trade policies — give it plenty of ammunition to claim leadership in the creation of a new monetary order. The Chinese, however, are most unlikely to bid for monetary hegemony in the near future. For the past 25 years they have pursued a policy of aggressive export growth to drive their economy. China successively devalued its currency, from 1.50 renminbi to the dollar in 1980, to 8.72 in 1994. (Today the renminbi trades at 6.20 to the dollar, which the United States still considers artificially low.)

Could China someday peg its currency to gold, as Britain did in 1821? China has the reserves to do this, and it could have the political will, if the dollar proved to be unreliable as a store of value in the future.

Having expanded its manufacturing base and captured international markets, China may well find a world hooked on its products. It could eventually — in, say, 20 years — peg the renminbi to gold, considering it preferable to the dollar as a store of value, because of its permanence and longevity. With a balanced budget and a gold-backed currency, China’s economy could be even more formidable than it is today. Such a move would truly mark its return as the “Middle Kingdom.”

Kwasi Kwarteng, a Conservative member of Parliament, is the author of “War and Gold: A Five-Hundred-Year History of Empires, Adventures and Debt.”

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Here we go again

From deep in the DP archives:

'The Question of Gold Money. Is There Enough?'

This should be required reading

The Chinese People Are Now Allowed To Own/Buy Gold/Silver,,

In small or large amounts, after many years of Communism fore bidding Gold/Silver ownership.
China is now the largest producer/buyer of Gold in the world, they are also allowed to set up individual physical Gold bank accounts.


The Briics countries are already forming new types of trade settlement systems, which are not dependent on U.S. dollars.
I personally think the long history of Gold/Silver money will eventually prevail over the current world's bankrupt system.




All of the gold in the world equals close to $7 trillion.

That is the big problem because the United States alone has a $17 trillion economy.

If every currency in the world was backed by gold, the global economy would be severely limited to just under $7 trillion.

We would all be fighting for a limited amount of pie.

The world economy would be restricted from growth by the limited availability of gold backed money.

There's only so much gold to go around in a $7 trillion world economy.

A gold backed currency is a thing of the past because human production is unlimited.

Gold is limited, and that is its biggest problem.

Nobody uses gold anymore to purchase products.

When is the last time you used gold to buy a pizza, pay for your car insurance, pay your "rent," or purchase gasoline?


Gold is not digitally unlimited.

People are.

Never be afraid to ask simple questions.

Your comment misses the whole

Your comment misses the whole point of backing paper money with a tangible product like gold. How much silver is there out there? How much copper is there? How much Titanium is there? How much oil? Not every one is going to want their share of gold, some may want to turn in their gold backed dollars for a piece of steak from a farmer. That farmer will then use those dollars to help buy a new tractor for his farm, and so on. The only thing that the gold would do is peg the value of the dollar to keep it from becoming worthless. Where have you been in the last 40 years since we detached the dollar from gold? The concept of the world economy now being many time bigger than it was back then is a joke. The world is bigger in terms of people, but it is not that much bigger in terms of resources. Backing money with something like gold would give us all a reality check by making sure everyone is honest. China is looking at that reality, while most of us in the US still have no clue what we are really doing to the rest of the world, and therefore eventually ourselves.

It is better to look dumb and not be, than to look smart and not be.

It works with dollars

Why would gold be different?

There was approximately $1.29 trillion in circulation as of July 2, 2014, of which $1.24 trillion was in Federal Reserve notes.

And nobody is talking about carrying around gold to pay for everything.

Being scarce is one of the

Being scarce is one of the attributes of money; being divisible into nearly unlimited, fungible portions is also an attribute. My question is, should an economy be bi-metallic; should silver also be money? That is a question that bothers me so.