FED's printing money machine at a free cost couldn't be a standard for so long, that is just common sense. Europe is trying to give a warning to any country that is not able to back their currency with a measurable pattern. The only way they could do that is by forcing the Euro to follow a standard based on reserves. First they have to clean the Euro out of its massive debt, then they can ask others to prove their reserves in order to give the world a fair value of their currency. If they are able to achieve that, get ready for a massive devaluation of the dollar. https://www.linkedin.com/pulse/europe-finalizing-preparations-gold-standard-money-metals-ujwhe/
The austerity streak continues for the idiots at the EU. More low growth for Europe and sub-10 PE. The Gold Standard has been dead since Breton Woods and isn't coming back. I guess the EU can continue suing US tech companies for their income instead of actually innovating. What a great plan.
Bitcoiners will, of course, demonize these news. But the evidence is clear, even for publications specialized in cryptocurrencies. https://grafa.com/news/cryptocurrencies-europe-sees-increase-in-gold-reserves-to--123b-306731
I thought to take a peek at how Zimbabwe's new gold backed currency is faring.... Zimbabwe’s gold-backed currency loses half its value: Why and what’s next? Six months in, the gold-backed ZiG touted as a solution to the currency crisis is struggling to win confidence. A supermarket cashier dispenses a new 10 ZiG note from a till as change in Harare, Zimbabwe [Jekesai Njikizana/AFP] By Al Jazeera Staff 24 Oct 2024 Less than six months after Zimbabwe launched yet another new currency, it was forced to devalue it, signalling new challenges for the Southern African country’s efforts to stand up a local currency and reduce dependency on the United States dollar. In April, Zimbabwe’s central bank launched the ZiG, or Zimbabwe Gold, which was hyped as a stabiliser amid the country’s long-running currency and economic crisis. But in late September, authorities slashed the value of the new gold-backed currency by more than 40 percent. The ZiG is only one of several attempts Zimbabwean authorities have made to introduce a new currency since 2009 when surging hyperinflation caused a spectacular crash of the Zimbabwe dollar, or the Zimdollar. The effects of the inflation crisis are still glaring with Zimbabwe battling high inflation worsened by a severe drought in the region. Here’s what to know about the latest in Zimbabwe’s currency crisis and why the government’s efforts to establish a trusted local currency are flailing: What happened? On September 27, the Reserve Bank of Zimbabwe (RBZ) slashed the value of the ZiG by 43 percent, taking it from 13.56 ZiG to the US dollar at its launch to 24.4 ZiG to the dollar. The currency has further weakened to 27 ZiG this week. The bank was forced to make the move after widening gaps emerged between the official and unofficial exchange rates of the ZiG as the currency was going for about twice the approved rate on the black market. Despite the devaluation, there are still huge gaps between official and parallel rates: By October 23, the ZiG was pegged at 40 to 50 to the dollar on the black market, according to the price monitoring website Zim Price Check. Local businesses and retailers forced to trade with the ZiG at the official rate had reportedly warned authorities that they would close their stores if the rate differences are not tackled, according to reporting by the BBC. In an interview with the Zimbabwe Broadcasting Corporation this month, RBZ Governor John Mushayavanhu said the move “was not a devaluation but a manifestation of what was already happening on the market”, referring to the depreciation of the ZiG in the months since its launch. He also said it was not expected to happen again although he said inflation would rise slightly by the end of the year. “I’d say that the impact … has been felt, but there should be stabilisation going forward. In fact, we should see prices starting to fall,” he added. Zimbabwe Reserve Bank Governor John Mushayavanhu at the launch of the ZiG currency in Harare [File: Jekesai Njikizana/AFP] Why and when was the ZiG introduced? The RBZ launched the ZiG on April 5 to replace the Zimdollar and tackle skyrocketing inflation. The now-scrapped Zimdollar had become one of the world’s worst performing currencies after it lost nearly all its value because of depreciation. By the time of its death, the currency was exchanged for about 30,000 to 40,000 Zimdollars to 1 US dollar. Many small businesses had already stopped accepting the local currency with most people opting instead for the US dollar, which has been legal tender since hyperinflation hit the country from 2007 to 2009. Mismanagement, corruption and sanctions by the US and the International Monetary Fund (IMF) had caused Zimbabwe’s economy to flail under longtime former President Robert Mugabe. The RBZ then resorted to printing money to ease the situation, flooding the economy with currency that had no real worth. The hyperinflation that followed saw people lose all their savings and pensions as prices of food and other necessities skyrocketed with a loaf of bread costing 500 million Zimdollars. The general inflation rate was about 79 billion percent. At one point, the RBZ issued a 100 trillion Zimdollar banknote. In 2009 at the height of the crisis, the government was forced to temporarily scrap the local currency and allow the US dollar, which was already on the black market, to be used legally. In 2019, the local currency was introduced but three-digit inflation has persisted. A digital gold-backed currency was also introduced in May 2023 to a lukewarm reception by businesses. Zimbabwean authorities have struggled to wean the population off the US greenback as it has become the most reliable currency for people to secure their savings. By April, about 85 percent of the country’s transactions were conducted in US dollars, Mushayavanhu told reporters in Harare during the ZiG launch. Is the ZiG better than the Zimdollar? The effects of the new currency are mixed for now, and some said it is too soon to assess the ZiG’s performance. The currency is anchored on a mix of foreign currencies, gold, diamonds and other precious stones in Zimbabwe’s reserves. Mushayavanhu said in April that Zimbabwe had 1.1 tonnes of gold worth US$175m as well as foreign currency reserves of US$100m. Zimbabwe boasts vast gold deposits with the precious metal accounting for almost 25 percent of all exports in January, according to official data. However, the country’s 16 million people continue to experience hardships in an economy long battered by high inflation, and many rely on aid. The ZiG comes in eight denominations, including coins, with the highest being the 200 ZiG note. The notes feature a drawing of gold blocks being minted and Zimbabwe’s Balancing Rocks, which were also on the Zimdollar notes. Many Zimbabweans, though, do not appear to trust it. “The ZiG has been getting weaker, so it does not make business sense to transact with it,” Maynard Maketo, a street hawker selling candy and phone recharge cards, told the Reuters news agency in September. “I do not have faith in the ZiG. We have been here before with the Zimdollar.” However, OK Limited bank reported a drop in foreign currency sales in July in favour of the ZiG although the bank did not give the real value of the drop. Zimbabwean media also noted that the use of US dollars for transactions has dropped from 85 percent to about 70 percent. Officials said they expect more people to gradually accept the currency. But some don’t have faith in a currency that has come under pressure in less than six months and lost nearly half its value despite government intervention. Authorities arrested black market foreign exchange dealers in April, accusing them of distorting exchange rates. As the ZiG continues to slide rapidly on the unofficial market, some people – scared of a repeat of 2009 – are increasingly exchanging the currency for the US dollar, pressuring the local currency even more. Some businesses do not accept the ZiG. Some experts blamed the government’s decision to retain a multicurrency system for the currency’s depreciation although authorities said the plan is to use only the ZiG by 2026, moving up from a previous 2030 deadline. Others said rushing to make the system a monocurrency one could cause confusion and further hardships as they advised authorities to take their time and stabilise the local currency first. A boy with a donkey cart arrives to receive food aid in the Mangwe district in southwestern Zimbabwe [Tsvangirayi Mukwazhi/AP] What next for the ZiG? The ZiG’s fate is unclear as even some parts of the government appear to have lost confidence in it. Although government agencies were ordered to pay pensions and salaries in both ZiG and the US dollar, the Grain Marketing Board in September paid wheat farmers entirely in US dollars for this year’s crop. Civil servants will also get pay raises and annual bonuses in US dollars this year, authorities said. Some experts said the devaluation was not necessarily a poor move but the government’s task now is to use the currency frequently enough that businesses and individuals start to have confidence in it – for example, by charging more taxes in ZiG. “I don’t think we are seeing the death of the currency, but we have our work cut out for us,” Lawrence Nyazema, president of the Bankers Association of Zimbabwe told Reuters. “We have to do more work in terms of convincing the citizens that the money is stable. We needed to reset, and now that we have reset, we need to stick to our promises.”
What I am about to write, is in no way a criticism of you . You in fact believe what nearly everyone does, and that is that The Fed makes the decision to print money. The Fed does print money, but they have no say over how much or when to print it. They are a federal institution that must obey Congress. Congress is the only part of our government that can cause the printing of new money. They do this indirectly when they decide both the level of spending and the level of taxation. The Fed has zero control over this! When the Congress orders the Treasury to spend in excess of Taxation, the Treasury will spend whatever the Congress says to spend. The Treasury writes checks whether or not sufficient revenues have been acquired to cover those checks. The Fed then, in effect, "prints", whenever it covers Treasury overdrafts. But the overdrafts and their amounts are created by Congress, not the Fed. The Fed prints money the way your computer prints, always at your direction. It's the same with Congress and the Fed. The Fed, in this respect, is to Congress as your home printer is to you. The power to "coin", i.e. "print", money is given exclusively to the Legislative Branch of government by the U.S. Constitution. The Fed has no say when it comes to deciding how much new money to print and when, but, and this is an all-important "but", the Fed does have a major hand in deciding what form various amounts of sovereign money in the private sector shall take.* The Fed, working with Treasury, decides , how much of private sector money shall appear as legal tender and how much shall appear in the form of Treasury Securities (which are not part of the official "money Supply"). A little reflection here will reveal just how very important this particular Fed role is! It is wrong to speak of the Fed printing money, because "printing" is a trivial , obligatory role that the Fed must play. It has no choice. Instead, we should speak of "Congress's printing money machine..." and never say "The FED's printing money machine...". If we were to get the roles of Congress and the Fed correct, it would go a long ways to helping we Americans understand where new money originates from. It's NOT the Fed. All New Money Comes from Deficits. There is no new money without deficits. Once we realize that, we immediately understand that deficits can either be good or bad depending on their amounts and circumstances. Nevertheless, deficits are essential because without deficits we would have no government issued money in the private sector at all! All of the money we in the private sector use for spending, savings and investments comes from deficits! As an aside, European Monetary Union has a problem we in the U.S. do not have. The European Monetary Union is incomplete. There is no Eurobond, there are only individual EU monetary member states' bonds --- somewhat equivalent to individual State bonds in the U.S. George Soros said, a few years ago in a speech he gave in Frankfort, that Germany should either drop its objection to the "EuroBond" or leave the European Monetary Union. I agree. _______________ *The Fed's job partly consists, and at times perhaps largely so, of deciding on and adjusting the private sector's ratio of the two forms U.S. money can take, legal tender or Treasury Securities. Shall the Fed increase bank reserves by buying Treasury Securities, or shall the Fed decrease Bank reserves by selling Treasury Securities, or shall the Fed sit tight?
Gold Dec future dropped to 2619 today. AI predicts GC to hit 2710 by next Monday. So far AI had 100% correct prediction since I have been using it.
Europe can't go back to the gold standard. There can be some who do not understand either money or the gold standard who might foolishly advocate such a ridiculous thing, but were they to try, they would soon discover the folly of their advocacy. There are reasons the U.S. could not maintain the Gold standard agreed to at Bretton Woods. Those same reasons are with us today. Incidently, Keynes knew in 1944 that the gold standard could not be long maintained, said so, and explained why. He was proved right of course. The U.S. has its own Gold standard advocates. For example, Ron and Rand Paul. I'm sure they mean well, but their advocacy represents, because of their political influence, a dangerous ignorance.