___ __ __ ____ ------------------------------- ____ __ __ ___

|___/\\//\\//\___/

\___/\\//\\//\___|

\--------------------------------/

January 3, 2001 | revised February 7, 2001 The truth IS out there.

N+N: Home Page
Contents!
What's New?
L. R.'s Links

Spirit Of 76 Home

Fellow Travelers
Paul Scott: Artist
Simmering Frogs
Jomama's Blog



Where NEX NEWS visitors are. Locations of visitors to this page

A NEXIALIST N+E+W+S Feature: The BIG One III: Merchantilist Menace

from L. Reichard White


Do you like the "A-ha!" experience?

- "This is the biggest financial challenge facing the world in the last half-century." -Bill Clinton to CFR, 14 Sep 1998

A NOTE FROM L. Reichard White:

For me, this was the most valuable week I've spent on ANY project ever. Hope you find the results as interesting and useful as I did.

If you haven't read any of the other "The BIG One" features, this one starts with a "BACKGROUND:" and a short "REVIEW:" to catch you up.

If you have followed "The BIG one" series of NEXIALIST N+E+W+S Features before, we are now at the "Eventually it will come back to the United States" phase. This set of clips will put you "in context" so you can have some understanding of the world-wide implications and connections of what's going on - - - and it IS still going on as you'll see. Perhaps it will help you to anticipate some of what may happen next.

Of course, as seminal Austrian economist Ludwig von Mises put it, "...to acting man the future is hidden." -Ludwig von Mises, Human Action A Treatise on Economics, Third Revised Edition (Chicago, Illinois: Contemporary Books, Inc. 1966), pg. 105. Or more clearly in the words of baseball great (and philosopher?) Yogi Berra, "Prediction is very difficult, especially of the future."

This N+N is pretty long, but it covers a lot of territory. Most of the clips, especially the longer ones, have the most important parts bolded, so theoretically you could skim thru by reading only the short clips and the bolded text.

*// Mr. [Albert] Friedberg [famed Austrian economist, currency specialist and head of Canada's Friedberg Mercantile Group] points to the monetary policy of the Federal Reserve as the fundamental cause of the currency debacle. He notes that since the early 1990s, the Fed has backed a credit expansion policy that it has exported abroad. He also predicts that "the crisis will widen. It will travel from Asia to Russia, Greece, Brazil. Eventually it will come back to the United States." -TORONTO GLOBE AND MAIL (January 10, 1998) [NEXIALIST N+E+W+S reprise]
"It's certainly the worst international monetary crisis since the founding of the system, the Bretton Woods [paper money] system in 1944. ... And I know that the authorities in Washington are most concerned about this spread, and properly so -- because it seems to be happening." -Roger Altman, EVERCORE PARTNERS CHAIRMAN, former Deputy Secretary of Treasury, CNBC, 14 Aug 1998, ~7:37:21 AM EDT

TIME FRAME:

"Eventually it will come back to the United States." -Albert Friedberg, January 10, 1998 [from above]
- 3COM (COMS) announces a 15 cent short-fall in quarterly dividends as a result of the Brazilian situation. Some experts suggest that the Brazilian situation is spreading to the rest of Latin America, and then will come to the U.S., and that 3Com's quarterly dividend is one of the first U.S. casualties. But, if so, this effect has traveled much faster than expected. -CNBC, 3 Mar 1999, ~8:34:58 AM EST

BACKGROUND:

"I'm not one of those who subscribes to the issue that the whole question of trade relates to jobs; I think that's a mistaken view. Where there is a problem is somewhere else and that is in the broader notion of trade, namely our current account deficit." -Federal Reserve Chairman Alan Greenspan, semi-annual Humphrey-Hawkins testimony to the Senate Banking Committee, 25 Feb 1998
"We've had a very substantial current account deficit for a very protracted period of time which effectively has moved us from a very large net creditor [nation] to a very large net debtor. And we have a significant amount of net interest payments that we pay on that debt which are added to our trade imbalance and creates still larger current account balances and still larger net debt." -Alan Greenspan, Humphrey-Hawkins to the Senate Banking Committee, 25 Feb 1998
In other words, dollar trade imbalances, measured by current account deficits, converted the U.S into "a very large net debtor." But Mr. Greenspan is modest: Through the process he has described just above, the U.S. has become by far the biggest debtor in the history of the world. And by proxy, those living in the u.S. or holding U.S. dollars are, for good or ill, the beneficiaries of this process.
+
As Greenspan says, "We're seeing a major increase of dollar holdings by non-Americans, which is obviously the other side of the trade deficit." That is, while non-Americans have shipped us lots of goods, trade deficits also mean that in return, we've shipped them lots of dollars. -L. Reichard White, BIG-FLOAT: The American Damocles
As of early 1999, currency in circulation -- that is, U.S. coins and paper currency in the hands of the public -- totaled about $500 billion. ... The Federal Reserve estimates that the majority of the cash in circulation today is outside the United States. -Federal Reserve Bank of New York, How Currency Gets Into Circulation, December 25, 2000
"The amount of U.S. currency going into domestic circulation each year has not varied much over the past two decades, while the amount of currency going abroad has risen strongly, particularly in the 1990's; -Christopher L. Bach, U.S. International Transactions, Revised Estimates for 1974-'96, From the July 1997 SURVEY OF CURRENT BUSINESS
Foreigners accept these dollars fully expecting they can trade them back to "us" for goods and services -- "stuff" -- that they want at some later date. In other words, these "foreigners" have given us "stuff" we want today in trade for dollars -- essentially I.O.U.s -- they can trade back to us for stuff they want later. My wife dubbed this situation "Big Float." -L. Reichard White, BIG-FLOAT: The American Damocles, Repeat link.

BIG FLOAT THRU THE LOOKING GLASS:

No Central Bank can accumulate a growing stock of U.S. Dollar reserves if its country does not export more than it imports. What we have is, in effect, a neo-mercantilism based on conservation of U.S. Dollars. ... -Hugo Salinas Price (cite below)
Mercantilism: an economic theory that states that the world only contained a fixed amount of wealth and that to increase a countries wealth, one country had to take some wealth from another either through having a higher import/export ratio or in actual conquest of new lands and resources.
... Thus, the world over, national economies have been oriented to exports - always in exchange for Dollars - as the mainstay for the respective national currencies and banking systems. As soon as exports of any one country seem to fade ... The currency is deemed "overvalued". A devaluation is at hand. The Central Bank can cast away all its accumulated Dollars in defense of its currency, but in vain. ... The Central Bank will raise interest rates drastically, to stem the Dollar hemorrhage and retain or bring in Dollars. The devaluation will wreck savings, and the high interest rates will devastate the productive structure. The Central Bank will continue to invest its Dollar balances in U.S. Treasury Bills paying less than 6%. Thus even the most severely afflicted countries are financing the U.S. Government, at a cost to themselves. ... -Hugo Salinas Price (cite below)
+
... All countries in the world are in competition for U.S. Dollars, which they must obtain at all costs, for failure to obtain Dollars means devaluation, ruination of savings and financial havoc. ... The economic centre of gravity of all countries has been thrust outside their borders, placing them all in a condition of chronic instability. Since Dollars are the objective, the U.S. has to be the buyer, and the U.S. must run trade deficits to supply the world with export surpluses. ... Some analysts speculate that the U.S. trade deficit may reach $300 billion a year, and fear that whole areas of U.S. economic activity may be wiped out by the desperate export efforts of the rest of the world. Such is the prevailing condition in the world's economy. Clearly, it is unsound for the world to depend on exports to the U.S. for national stability. And it is profoundly unsound for the U.S. to place itself in the position of buyer of last resort to the world. -Hugo Salinas Price, The spectres of Bretton Woods, December 23, 1997 [Excellent!!]
RICHARDSON, Texas The way [Dallas Federal Reserve Bank president] Robert McTeer sees it, there's nothing wrong with the economy that couldn't be fixed with a little more consumer spending. "If we all join hands together and buy a new SUV, everything will be OK," said the president of the Federal Reserve Bank of Dallas [Speaking to the Richardson chamber of commerce]. ... McTeer closed by telling the business leaders of a simpler plan to boost the economy: "Go out and buy something," he told them. -David Koenig, Dallas Fed President: Spend More, Associated Press, Friday, Feb. 2, 2001; 7:19 p.m. EST

TURKEY -- A CURRENT EXAMPLE OF DOLLAR MERCHANTILISM AT WORK:

"As soon as exports of any one country seem to fade ... A devaluation is at hand. The Central Bank can cast away all its accumulated Dollars in defense of its currency, but in vain." -Hugo Salinas Price [reprise from above]

"The central bank governor said over the weekend he had $18.8 billion to use, [to defend the Turkish lira] down from $21.583 billion on November 24 and $24.433 billion before the crisis set in."
+
"In Ankara, an International Monetary Fund (IMF) team began talks on a loan, possibly $4-5 billion, to ease a dramatic liquidity squeeze now threatening to demolish Turkey's anti-inflation programme."
+
"If the two sides fail to agree ... or talks drag on, Turkey could be forced to abandon a crawling peg currency and devalue." -Hatice Aydogdu, Turkey in key IMF talks, market turmoil continues, Reuters, Dec. 4, 2000

At the current burn rate, the remaining Turkish reserves plus a $5 billion IMF loan will last about 86 days, beginning the first of December, 2000. -LRW

The Central Bank will raise interest rates drastically, to stem the Dollar hemorrhage and retain or bring in Dollars. The devaluation will wreck savings, and the high interest rates will devastate the productive structure. -Hugo Salinas Price [reprise from above]

"Average overnight interbank rates, a good measure of the general climate in money markets, reached 782.46 percent, down from 863.99 on Friday. But there was no clear indication the upward [interest rate] trend of the last two weeks had been broken." -Hatice Aydogdu, Turkey in key IMF talks, market turmoil continues, Reuters, Dec. 4, 2000

REVIEW (clips presented in real-time sequence):

*// Mr. [Albert] Friedberg ... predicts that "the crisis will widen. It will travel from Asia to Russia, Greece, Brazil. Eventually it will come back to the United States." -January 10, 1998 [reprise]

Asia then:

Currencies and stockmarkets plunged across EAST ASIA while banks, builders and manufacturers went bust in their hundreds. Worst hit were Thailand, Indonesia and South Korea, whose currencies all fell by more than 40% against the dollar -The Economist, Wed, 31 Dec., 1997
- The World Bank reports that [as a result of the Asian currency crisis] the number of poor in Asia (Malaysia, Thailand, Indonesia, and the Philippines) may double to 90 million over the next three years, and there is a desperate need to reduce the prices of basic supplies [food, etc.]. -News World International, 30 Sep 1998

Russia & Greece:

- Just one business day after Russian president, Boris Yeltsin, promised not to devalue the ruble, Russian banking officials moved the lower range for the ruble from 6.3 to the dollar to 9.5 to the dollar, effectively devaluing it about 50%. Over-night interest rates were raised to 250%. -CNBC, 17 Aug 1998, ~8:06:40 AM EDT
- Russia spillover has hit the Greek drachma, the Polish zloty, the Australian dollar, etc. -CNBC, 08 Sep 98, 11:37am EST

BRAZIL:

- Brazil is suffering capital flight of over $1 billion/day. [With a foreign exchange "war chest" of about $52 billion, Brazil can withstand this rate of withdrawal for less than two months. -LRW] -Ron Insanna, CNBC, 10 Sep 1998, ~2:15:03 PM EDT
- Fourth largest Brazillian state announced late yesterday that its debts to the central government this year will be unpayable, although the governor didn't yet announce an official debt moratorium. Brazil is a domino that must not fall because if it does, there goes Argentina and the rest of South America. -CNBC, 12 Jan 1999, ~9:08:54 AM EST
- As Gustav Franco, devaluation-fighting president of Brazil's central bank, resigns, the "real" is already down 8.6% as world financial markets quake. Brazilian monetary authorities have widened the trading band on the Brazilian "real," doubling it in fact, opening the door to devaluation, . -CNBC, 13 Jan 1999, ~ 7:57:58 AM EST
- The question is will this spread to the rest of Latin America, which amounts to 20% of trade with America. $2 billion has left Brazil since the beginning of January despite IMF loan guarantees of over $41 billion. -Nick Hastings, Sr. Foreign Exchange Correspondent, Dow Jones News Wire, CNBC, 13 Jan 1999, ~8:34:22 AM EST
- Even US Treasury and IMF were blindsided by Brazil's move. Sec. of Treasury Larry Summers had to cancel a trip. IMF agreements will have to be renegotiated. The Brazillian Governemnt will try to raise interest rates to defend it's currency [the "real"] for a few days or weeks, but it won't persist in this. 17% further devaluation is predicted within a few weeks, for a total of about a 25% devaluation. -Richard Medley, Medley Global Advisors, CNBC, 13 Jan 1999, ~2:14:23 PM EST
- Brazil announces it will not support the real, at least till Monday. This means the "real" is "free floating," subject to market forces. Brazilian authorities are traveling to Washington to ask for further support from U.S. and IMF. Observation is made that this situation resembles the Mexican devaluation in 1995/96 because it is "unexpected" and chaotic. -Kathleen Hays, CNBC, 15 Jan 1999, ~9:37:01 AM EST
- Brazil allows the "real" to float despite promises it would not do so as late as yesterday. Wednesday's attempt at controlled devaluation didn't work. When Mexico allowed the peso to float pesos kept leaving, and things got steadily worse for awhile. Where will this spread next? Argentina? Mexico? [Venezuela also mentioned elsewhere -LRW] Mexican peso has already been hit pretty hard. It was 975 last week, now over 1100/dollar. -Kathleen Hays et. al., CNBC, 15 Jan 1999, ~10:06:37 AM EST
- Bovespa sinks as "real" depreciates to 1.7 reals per dollar, despite passage of Brazilian pension reform last night [and an interest rate of 41% ]. -CNBC, 21 Jan 1999, ~11:01:22 AM EST
- Brazilian "real" falls to new low of 2.1 to the dollar. -Ron Insanna, CNBC, 29 Jan 1999, ~ 2:10:10 PM EST [The net result was about a 50% devaluation of the "real" vs. the dollar at this point. -LRW]

SOUTH AMERICA

- The "real" is down ~27%. Is this the end of the drop in the "real" and the end of capital flight? No one really knows. Argentina and Mexico have received promises of help from IMF. A big move in the [Argintine] peso hurt Mexico, will this happen in Brazil? A weaker "real" will help Brazilian exports, but this puts further competitive pressures on other Latin American countries, pressuring them to make competitive devaluations to protect their industries. -Nick Hastings, Sr. Foreign Excng. Corres., Dow Jones Newswire, CNBC, 15 Jan 1999, ~9:56:18 AM EST

This is a direct explanation of what causes "competitive devaluations," one of the forces that causes the "contagion" to spread. If your currency doesn't devalue relative to your devaluing trade partner, the prices of your products in the devaluing country's currency increase, making them more expensive there. By the inverse, products bought from the devaluing country drop. Argentinians could buy products imported from Brazil at about half of what they cost before but Brazilians had to pay double for products imported from Argentina. What effect do you think this would have on Argentine producers? In general this is very good for industries that export from the devaluing country but bad for competing enterprises in their non-devaluing trade partners. -LRW

- Argentina is under pressure from the Brazillian devaluation. -Kathleen Hays, CNBC, 22 Jan 1999, ~8:44:44 AM EST
- 3COM (COMS) announces a 15 cent short-fall in quarterly dividends as a result of the Brazilian situation. Some experts suggest that the Brazilian situation is spreading to the rest of Latin America, and then will come to the U.S., and that 3Com's quarterly dividend is one of the first U.S. casualties. But, if so, this effect has traveled much faster than expected. -CNBC, 3 Mar 1999, ~8:34:58 AM EST
In another blow to Colombia's president, Andres Pastrana, whose popularity has plunged because of recession and guerrilla violence, his government was forced to DEVALUE the peso by about 10%. -The Economist, Politics This Week June 26th - July 2nd 1999 Thu, 01 Jul 1999 14:07:39 MDT Go Economist web home

ECUADOR:

- Comprehensive reforms proposed by President Abdala Bucaram of Ecuador, designed to reduce inflation and the cost of government and to privatize services, meets with strong opposition. "He does not have the full support of the private sector, as one would think he would, nor of the labor groups." -Juanita Montalvo, Canadian Foundation for the Americas, NWI International Hour, 19 Dec 1996, 3:54:16 & 7:54 PM EST
- By a two vote margin, the Ecuadorian Parliament narrowly voted to remove President Abdala Bucaram from office for "mental incapacity." This was done to avoid a lengthy and complicated impeachment procedure. He barricaded himself in the palace, refusing to accept the vote. The vote followed a two day general strike, protesting his economic austerity program. -CNN HLN, 7 Feb 1997 ~1:10 PM EST
Can a currency go to effectively zero against another currency?" -Ron Insanna "Well, you've had, of course, in Latin America and many other parts of the world -- go back to the 1920s in Germany periods of hyper inflation. So failure to manage a currency can lead to a new currency eventually."-Kim Schoenholtz, Solomon Smith Barney, CNBC Inside Opinion, 22 Jan 1998, ~12:16:02 PM EST.
- Ecuador devalued it's currency today. -CNBC, 14 Sep 1998, ~4:54:32 PM EDT
- "What does 'Money Meltdown' mean." -Ron Insanna, [Referring to the book "Money Meltdown: Restoring Order to the Global Money System," by Judy Shelton] ~"It means money loses its store of value and its medium of exchange value. Peoples' confidence in local currencies evaporates. -Michael Rosenberg, Merrill Lynch, CNBC, 11 Aug 1998, ~2:56:55 PM EDT
- The authorities in Ecuador have ordered the deployment of more than 30,000 police and troops across the country, ahead of large anti-government protests planned for later tonight. ... Criticism of the President has intensified since he announced a plan earlier this week to replace the national currency with the American dollar. -Ecuador assembles riot police ahead of planned protests, ABC Bulletin: Sat, 15 Jan 2000 20:21 http://abc.net.au/local /news/newslink/weekly/newsnat-15jan2000-65.htm
QUITO (Reuters) - Hundreds of Indian protesters surrounded Ecuador's government palace Friday just hours after President Jamil Mahuad, grappling with economic disarray and facing calls he resign, refused to quit but left the building. ... A military official said Mahuad, who has been sharply criticised for his inability to revive the Andean country's economy, left the palace for his own security in an ambulance escorted by four security vehicles.
+
The United States strongly condemned what one official called a ``proto-coup'' in Ecuador. ``We remind all parties that an attempted overthrow of the constitutional government of Ecuador, under whatever pretext, will have disastrous consequences for all Ecuadoreans,'' a State Department official said. ``Any regime that emerges from such an unconstitutional process will face political and economic isolation, bringing even greater misery upon the Ecuadorean people,'' the official warned.
+
The Indian groups are also sharply opposed the Mahuad's plan to revive the country's economy by adopting the U.S. dollar as its currency. The Indians said it would further impoverish the country's poor. ... ``We're here to end the looting (by the government) and to support a just cause by our indigenous comrades,'' said Cobo
+
Mahuad, a Harvard-trained lawyer who took office in August 1998, has seen his popularity plunge after failing during his 17 months in office to pull Ecuador out of economic crisis. Inflation, poverty and unemployment have skyrocketed under Mahuad's command and the economy contracted 7.5 percent in 1999. The country is also immersed in tough negotiations to restructuring its [IMF] debt, on which it partly defaulted last year. -Reuters, Ecuadorean Protesters Surround Government Palace, Saturday 01/22/2000, 01:24 EST http://my.netscape.com/news /International/01_21_2000.roitz2010-story-bcinternationalecuadorprotests.html?cp=aim
- QUITO, Ecuador, April 4 (Reuters) - ... In a desperate attempt to stabilize South America's most rickety economy, [the Ecuadoran] Congress passed a law in early March to phase out the sucre, which lost two-thirds of its value last year amid a severe recession and now trades at 25,000 to the dollar. The rapid devaluation fueled inflation to an annual 80 percent, the highest rate in Latin America. -Miguel Vega, Ecuadoreans confused as dollars replace local currency, Reuters, Tuesday April 4, 2000, 3:12 pm Eastern Time http://biz.yahoo.com/rf/000404/0d.html
QUITO, Ecuador -- Carmen Landeta doesn't really understand how the government's plan to replace Ecuador's national currency with the dollar will work. But the 85-year-old retiree joined hundreds of others in lines this week to trade in Ecuadorean sucres for U.S. greenbacks. "I don't really understand why, but I do know I should do it," said Landeta, handing her savings of the past two years to a Central Bank teller in Quito. She pulled 2 million sucres from her purse -- two wads of bills, each about 2 inches thick -- and received four $20 bills in exchange. Two years ago, the sucres would have been worth $400.
+
... It [Ecuadoran Central Bank] calculates that all the Ecuadorean currency in circulation is worth only $450 million because of the severe devaluation of the last several years. The Central Bank has begun withdrawing Ecuador's largest note from circulation, the dark-orange 50,000-sucre bill, worth $2.
+
... By giving up printing its own currency, Ecuador is turning over monetary policy to the U.S. Federal Reserve. "We are going to throw those machines for printing bills into the Pacific," Foreign Minister Heinz Moeller said. The switch to dollars, he said, "is a straight jacket -- it means the most absolute fiscal discipline." -MONTE HAYES, A reluctant switch from sucres to dollars, The Associated Press, Bergen Record, Saturday, March 25, 2000 http://cgi.bergen.com/
Japan then:
Japanese growth is crucial for Asia and the world, but it was bad in 1997 and could be worse in 1998. The Japanese government needs to make massive and permanent tax cuts. Even so, things could take two or three years to turn around -- and a lack of recovery will slow Asian recovery and thus hurt US & Europe as well. -CNBC, 23 Jan 1998, ~2:53:12 PM EST
Japan to announce one more economic stimulus package. Japan won't suddenly become strong overnight. European banks are more exposed to Asia than are American banks. Europe might have problems if Asian contagion spreads to Eastern Europe. -Kim Schoenholtz, Solomon Smith Barney, CNBC Inside Opinion, 22 Jan 1998, ~12:18:16 PM EST
CORPORATE bankruptcies in Japan climbed 35.7 per cent in July from a year ago to 1,710, the highest number for any July in the postwar period, a leading credit research agency said yesterday. ...July was the eighth consecutive month in which corporate failures rose more than 20 per cent. ...Teikoku Databank gave warning that the number of corporate bankruptcies would continue to show a steep rise ..."It is obvious that this is only a drop in the bucket given that a series of emergency economic measures taken since the bursting of the bubble economy have ended in failure," the report said. -ROBERT WHYMANT, Japanese corporate failures rise 35%, August 15 1998 http://www.the-times.co.uk /news/pages/Times/frontpage.html?1633768
- A recent survey shows that 90% of Japanese families are worried about the safety of the deposits in their banks. This is an alarmingly large number." -Michael Rosenberg, Merrill Lynch, CNBC, 11 Aug 1998, ~2:56:55 PM EDT

JAPAN NOW:

FEARS are mounting that Japan could soon relapse into recession -- and suffer a new banking and financial crisis -- as the renewed economic downturn adds to a massive overhang of debt that has burdened the system for the past 10 years. ... What has provoked these fears is the growing belief that Japan's economic recovery has peaked out after a brief cycle, and that this time the government has few policy options -- at least those that it is willing to contemplate -- with which to counter a possible new recession. ... Mr Mizuno believes that the next financial system crisis in Japan -- the third since the collapse of the "bubble economy" 10 years ago -- will bring about the collapse of further insurance companies as well as banks. It will also entail another plunge in the Tokyo stock market, which likewise has suffered several severe collapses over the past 10 years. The market signalled distress last Friday when the Nikkei 225 Average tumbled 374.90 points or 2.5 per cent to 14,552.29 -Anthony Rowley in Tokyo, Coming months will be crucial as Tokyo's policy options are seen to be drying up, THE BUSINESS TIMES online edition, 18 Dec 2000 http://business-times.asia1.com.sg
Tokyo, Dec. 27 (Bloomberg) -- The yen plunged to a 16-month low against the dollar and an 11-month low versus the euro after Japan's government said industrial production declined last month, adding to concern the world's No. 2 economy is stalling. ... The yen declined after the government said Japanese industrial production dropped 0.8 percent last month from October. That compares with the 0.1 percent drop economists had forecast. The report follows figures yesterday showing a rise in the jobless rate to a nine-month high of 4.8 percent in November and a drop in household spending among salaried workers. -Miki Anzai and Mari Murayama, Yen Tumbles to 16-Month Low as Japan Industrial Output Slips, bloomberg.com, 12/26/2000 20:59

ASIA NOW:

- South Korean Won, after an approximately 40% devaluation against the US dollar in the 1997 Asian Contagion, is down another approximately 10% against the dollar in the last six weeks. -LRW, Dec. 28, 2000
- Taiwanese dollar down 8% in last three months. Taiwan stock market down 54% in last 45 months, partly because there is a lot of bad debt held by the banks there. -Greg Weldon, Weldon Money Monitor, CNBC, Dec. 28, 2000, ~3:32PM

ARGENTINA:

- Brazil is 45% of Latin American GDP. Argentina exports 35% of its goods to Brazil, and there is competition in the area. Mexico has responded [devalued] before. -CNBC, 13 Jan 1999, ~ 9:53:33 AM EST
MEXICO CITY--The International Monetary Fund has engineered another bailout, this one a $20-billion to $25-billion rescue of Argentina that analysts say is the only way to avoid a debt default next year that would reverberate throughout the hemisphere. . . .
+
A default on Argentina's debt could spill over into neighboring Brazil and Chile, [remember many of Argentina's problems "spilled over" from Brazil originally -LRW] wrecking investor confidence in free-market reforms and causing economic chaos, said UCLA professor Sebastian Edwards, who is a former top World Bank economist for Latin America.
+
If Argentina goes under, there is a possibility there could be contagion that could engulf the rest of Latin America," Edwards said. ... Merrill Lynch, however, has noted a moderate draining of U.S.-based mutual funds' investments from Latin America, partly because of fears over Argentina's situation.
+
The bailout represents only a short-term fix for Argentina's problems, which have been building for some time but were exacerbated by the currency devaluation in early 1999 by neighboring Brazil, which conducts one-third of its foreign trade with Argentina. The 40% devaluation of Brazil's currency, the real, suddenly made Argentina's products less competitive in Brazil and at home in competition with Brazilian imports. That lack of competitiveness has contributed to a two-year recession in Argentina and a widening foreign trade deficit. Unemployment has wavered between 15% and 18% for several years ...
+
Nancy Birdsall, senior fellow and Latin America specialist at the Carnegie Endowment for International Peace, said Argentina's problems closely resemble those of Brazil in 1998 and Mexico in 1995, when each received bailouts. -CHRIS KRAUL, Argentina to Get IMF Bailout of Up to $25 Billion, LA Times, Thursday, December 7, 2000 http://www.latimes.com/business/20001207 /t000117067.html

THE UNITED STATES OF AMERICA:

"The desire to hold dollars, claims on the United States, is very strong because this is a very sound economy, and in that sense, there is no near term problem no, in fact, any obvious economic difficulty that one can infer from the existence of this current account balance." . . . . "The reason we are able to do that [run a chronic current account deficit, that is, continually be a large net exporter of dollars] is a very significant demand for dollars in the world." -Federal Reserve Chair Alan Greenspan, to Senate Banking Committee, 25 February, 1998
"The problem that we run into unfortunately, is that as our net foreign debt rises, that the amount of interest we must pay and indeed dividends as well, continues to rise, and that process itself creates a type of situation that if at some point foreigners stop wanting to continue to accumulate dollars, it creates a major reverberation back on the American economy ...And the question is, what does that mean, where is the end of that rise, and the question we have addressed ourselves to in some considerable detail. We have not yet been able to answer it effectively." -Federal Reserve Chair Alan Greenspan, Testimony to House Ways and Means Committee, 20 January, 1999

THE STING:

We have about 50% of the world's wealth but only 6.3% of its population. In this situation, we cannot fail to be the object of envy and resentment. Our real test in the coming period is to devise a pattern of relationships which will permit us to maintain this position of disparity. We need not deceive ourselves that we can afford today the luxury of altruism and world benefaction--unreal objectives such as human rights, the raising of living standards, and democratization. -[*7 George Kennan quoted in Sheila D. Collins, "From the Bottom Up and the Outside In," CALC Report, 15, no. 3 (March 1990):9-10] -James W. Loewen, LIES MY TEACHER TOLD ME, (New York, NY: Touchstone 1996), p. 216
All countries in the world are in competition for U.S. Dollars, which they must obtain at all costs, for failure to obtain Dollars means devaluation, ruination of savings and financial havoc. -Hugo Salinas Price [reprise from above]
Taken together, the [dollar denominated] expatriate First World monies represent a sum almost equal to current Third World debt, says Case Sprenkle of the University of Illinois. "Insofar as the money remains abroad and is not used to purchase goods or services from the country that printed it, it serves as an interest-free loan from poor countries to the rich," Sprenkle adds. -B.J. Phillips, The dollar is at home abroad, Philadelphia Inquirer, Friday, March 4, 1994
The Federal Reserve orders new currency from the Bureau of Engraving and Printing, which produces the appropriate denominations and ships them to the Reserve Banks. Each note [whether $1, $5 or $100] costs about four cents to produce. -Federal Reserve Bank of New York, How Currency Gets Into Circulation, December 25, 2000 [repeat link]
Let us assume that the international authority [say, the Federal Reserve -LRW] increases the amount of its issuance by a definite sum [of credit money or paper/megabyte money -LRW], all of which goes to one country, Ruritania [let's say it goes to America -LRW]. The final result of this inflationary action will be a rise in prices of commodities and services all over the world. But while this process is going on, the conditions of the citizens of various countries are affected in a different way. The Ruritanians [no, Americans] are the first group blessed by the additional manna. They have more money in their pockets while the rest of the world's inhabitants have not yet got a share of the new money. They can bid higher prices, while the others cannot. Therefore the Ruritanians [no, Americans] withdraw more goods from the world market than they did before. The non-Ruritanians are forced to restrict their consumption because they cannot compete with the higher prices paid by the Ruritanians [Americans]. While the process of adjusting prices to the altered money relation is still in progress, the Ruritanians are in an advantageous position against the non-Ruritanians. When the process finally comes to an end, the Ruritanians have been enriched at the expense of the non-Ruritanians. -Ludwig von Mises, Human Action A Treatise on Economics, Third Revised Edition (Chicago, Illinois: Contemporary Books, Inc. 1966), pg. 477 [XVII. INDIRECT EXCHANGE 19. The Gold Standard ]
In essence, America has told the world that as long as the business of this country is functioning, your wealth, as represented in Marks, Yen, Pesos, etc. is backed with performing US debt. It's like saying, "as long as your neighbor, next door, does not lose his job, you will not lose all your money! Most people would be surprised at how clear this is, outside the USA sphere of influence. -FOA (Friend Of Another), 17 Sep 1998, from USAGOLD.COM

Karma:

What would happen if the Saudia Arabians said they didn't want to be paid [for oil] in dollars anymore, but wanted instead, to be paid, say in yen. There would be inflation that would make the 15 to 20 percent inflation in the early 80's look good. -Sen. Pete Domenici, R-NEW MEXICO, C-SPAN II, 18 May 1995 ~12:33:55 PM
The US$ is "over-owned." 77.7% of world central bank reserves are in US$'s. That's disproportionate to the US share of world trade. There'll now be some diversification, esp to the euro. Just as central banks sold gold, they'll now sell US$'s. A study revealed at central bank confab at Jackson Hole, by Prof Obstfeld & Rogoff, suggests the US$ could drop 24%-40% if foreigners move quickly to exchange $'s. Foreigners own a record 38% of US Treasury mkt ( 44% excluding Fed Reserve holdings ) , 20% of US corp bonds, 8% of US stks. A change of sentiment, now suddenly in the air, could start a $-brushfire. -Harry Schultz, The International Harry Schultz Letter, Jan. 19, 2001
NEW:"We believe there has been a strategic decision by the United States that its national interest in the Middle East is 100-percent based on [Israeli Prime Minister Ariel] Sharon." This was America's right, the message continued, but Saudi Arabia could not accept the decision. "Starting from today, you're from Uruguay, as they say. You [Americans] go your way, I [Saudi Arabia] go my way. From now on, we will protect our national interests, regardless of where America's interests lie in the region." Uneasy allies: U.S. and Saudi Arabia, Long before Sept. 11, the strains were beginning to show, By Robert G. Kaiser and David B. Ottaway, THE WASHINGTON POST, Feb. 10, 2002
The United States has in the past frozen the dollar balances of countries with whom relations have deteriorated and still does the same with some nations. With no end in sight to political uncertainties in the Middle East, it is inevitable that some countries will switch from dollars to other currencies to settle their cross-border trade. ... -TERUHIKO MANO, Euro attracts global audience as option to dollar-based trade, JAPANESE PERSPECTIVES, The Japan Times: November 20, 2000
Mr Jacques Santer, former president of the European Commission, has called on Gulf Arab oil exporters to price their crude in the euro rather than the US dollar as a means to stabilise the oil market. "It could be the instrument to consolidate oil markets" and would be less affected by US foreign policy, he told a Gulf-Euro conference in Dubai. -Santer calls for oil to be priced in euros,The Irish Times 10/08/2000
BAGHDAD, Oct 12 (AFP via energy24.com) - "Iraq may suspend crude exports if the United Nations refuses to reply favourably to its request to convert into euros its account at the French bank BNP," deputy governor Abdel al-Ilah Boutros told Al-Zawra. Iraqi Finance Minister Hekmat Ibrahim al-Azzawi announced last month a decision to ditch the dollar in foreign trade transactions. "The dollar is the currency of an enemy state, and must be abandoned for other currencies, including the euro," Azzawi said. The central bank announced Sunday it had begun to buy European currencies. -Iraq Threatens to Halt Oil Exports Over UN Money, Oil & Gas News: Top Story, Oct. 12, 2000
LONDON, Oct 12 (Reuters) - Baghdad, which accounts for five percent of internationally traded crude, is consulting the United Nations about the possiblility of making the switch from dollar payments ... "From November all letters of credit for the exports must be opened in euros and payment made in euros," the official said. A Western diplomat said he did not anticipate any objections to the setting up of a euro account for Iraq, whose revenues from an oil-for-food deal with the United Nations are deposited in a dollar U.N. escrow account in a French bank in New York. ... Iraq exports of 2.2 million barrels per day at current prices earn about $57 million a day. -Peg Mackey
Among producers, Iraq has said it would replace the dollar with other currencies for foreign trade transactions, including the euro. The Iraqi decision has yet to take effect on its oil exports and was adopted as an anti-US measure. -Santer calls for oil to be priced in euros, The Irish Times/ireland.com Repeat link.
BAGHDAD, Iraq, Dec.1 (UPI) -- Iraq Friday carried out its threat to halt oil exports after the United Nations rejected an Iraqi request to increase the price of its oil.

In this connection, it must be noted that Iraq is attempting to switch to the euro as its currency for settling oil exports, and that Venezuela [one of the three largest US suppliers -LRW] is reportedly planning to follow suit. Euroland has a lot to gain from this development because it will eliminate currency exchange risks. -TERUHIKO MANO, Euro attracts global audience as option to dollar-based trade, JAPANESE PERSPECTIVES, The Japan Times: November 20, 2000 [repeat link]

US TRADE AND CURRENT ACCOUNT DEFICITS:

Some analysts speculate that the U.S. trade deficit may reach $300 billion a year, and fear that whole areas of U.S. economic activity may be wiped out by the desperate export efforts of the rest of the world. -Hugo Salinas Price [reprise from above]

The U.S. trade deficit for the twelve months from Nov. 1999 thru Oct. 2000 was $355.65 billion. -LRW
The growth in the trade deficit over the past two decades has destroyed millions of high-wage, high skilled manufacturing jobs in the U.S., and pushed workers into other sectors where wages are lower, such as restaurants and health service industries. ... The U.S. has lost nearly 500,000 manufacturing jobs since March of 1998, due to the impact of the rising trade deficit. [2] -Robert Scott, The U.S. Trade Deficit: Are We Trading Away Our Future?, JULY 22, 1999
The United States Department of Commerce statistics show that the United States current account deficit has increased to a new record high of $338,918 million [$338.9 billion] in 1999. This indicates a $118 billion increase over the 1998 deficit and demonstrates a 200% increase since 1997. -U.S. Current Account Deficit Reached New High, Washington Monitor, Volume 4, Issue 11 00/03/17

A. Crockett [Managing director of the "Central Banker's Central Bank"]: In the short-term, U.S. current account deficit has been covered by even larger capital inflows putting upward pressure on the currency and those larger capital inflows have been driven by the perception of profit opportunities in the United States either through physical investment or through investment in financial assets. Over the longer term, however, we know that no country goes on indefinitely with a large current account deficit ... The United States economy is performing very well. But at some stage there is a potential factors that would cause it to change: (1) Increase in profit opportunities in the European economies which would then change the parameters the decisions made by investors, (2) another would be the change of investor expectations with regard to asset [stock] prices and (3) the slowing of the U.S. economy to a more moderate pace. All of these could be accomplished in a smooth manner with a smooth adjustment in exchange rates. All that we have said is that you cannot count on financial markets to make the adjustments smoothly. Some times abrupt changes can take place ... -PRESS BRIEFING - ANDREW CROCKETT, Managing Director of the Bank for International Settlements (BIS), June 2000

"The reason we are able to do that [run a chronic current account deficit, that is, continually be a large net exporter of dollars] is a very significant demand for dollars in the world." "... if at some point foreigners stop wanting to continue to accumulate dollars, it creates a major reverberation back on the American economy ..." -Alan Greenspan [reprise from above]

The tide has reversed against the dollar. Now that a U.S. economic slowdown has emerged as a new concern, the market has turned its attention to investors' moves to switch away from dollar-based assets. -YASUHIRO ONAKADO, Dollar no safe haven as U.S. economy ebbs, The Japan Times: Dec. 14, 2000
A survey of mutual fund mangers reveals that, while buying equities, they are pessimistic, expecting world-wide recession. Their favorite currency for next year? 75% euro, 13% dollar. This group of fund managers manage a total of more than $8 trillion. -CNBC, Dec. 12, 2000 ~11:38AM EST
-I saw a guy from Merrill Lynch on CNBC Europe a month ago. He said they do an internal poll of their money managers every month. Guess what the ML money mgrs fav currency was? If you said USD [USDollar] or Yen, go to the back of the class. -DaveC (12/12/2000; 12:40:43MT - usagold.com msg#: 43567)
Since it would be too much to ask the U.S. dollar -- the currency of a nation that has accumulated a gaping current account deficit -- to cover the financial transactions of the entire world, we must realize that the euro, despite all its problems, is on its way toward becoming a world currency. -TERUHIKO MANO, Euro attracts global audience as option to dollar-based trade, JAPANESE PERSPECTIVES, The Japan Times: November 20, 2000 [Repeat link.]
Remember most of the countries that have gotten into trouble in the last three or four years are countries that have been living on borrowed money and then suddenly people have said 'I'm not going to do anymore.'" -"Investment Biker" Jim Rogers, Rogers Holdings, 11 Dec 1998
On such judgments [the "discounted value of future expected returns"] of value rest much of our economic system. ...But history suggests that they also reflect waves of optimism and pessimism that can be touched off by seemingly small exogenous [external] events.
+
... the violence of the responses to what seemed to be relatively mild imbalances in Southeast Asia in 1997 and throughout the global economy in August and September of 1998 has illustrated yet again that the adjustments in asset markets can be discontinuous ...
+
History tells us that sharp reversals in confidence happen abruptly, most often with little advance notice. These reversals can be self-reinforcing processes that can compress sizable adjustments into a very short time period.
+
We can readily describe this process, but, to date, economists have been unable to anticipate sharp reversals in confidence. Collapsing confidence is generally described as a bursting bubble, an event incontrovertibly evident only in retrospect. -Federal Reserve Chairman Alan Greenspan, "New challenges for monetary policy," Jackson Hole, Wyoming August 27, 1999
"As I testified before this committee in the midst of the Mexican financial crisis in early 1995, major advances in technology have engendered a highly efficient and increasingly sophisticated international financial system. ...But that same efficient financial system, as I also pointed out in that earlier testimony, has the capability to rapidly transmit the consequences of errors of judgement in private investments and public policies to all corners of the world at historically unprecedented speeds." -Alan Greenspan to House Banking Committee, 16 September, 1998

TOO BIG TO SAVE:

- Although US, IMF, etc. have indicated support for Brazil, it's the world's ninth largest economy and will have to sink or swim on its own. -CNBC, 18 Sep 1998, ~4:05:01 PM EDT
- ~"While they haven't approved any loan, suppose in the next week or so, the IMF gave Brazil a $30 billion bail-out loan. Would that be sufficient? How would the markets react?"-Ron Insanna ~"Well, considering IMF gave $22 billion for Russia, a small economy, $30 billion is considered insufficient for Brazil, the world's ninth largest economy." -Sonia Dawson, -CNBC, 5 Oct 1998, ~3:40:50 PM EDT
- $2 billion has left Brazil since the beginning of January despite IMF loan guarantees of over $41 billion. -Nick Hastings, Sr. Foreign Exchange Correspondent, Dow Jones News Wire, CNBC, 13 Jan 1999, ~8:34:22 AM EST
- Brazilian "real" falls to new low of 2.1 to the dollar. -Ron Insanna, CNBC, 29 Jan 1999, ~ 2:10:10 PM EST [The net result was about a 50% devaluation of the "real" vs. the dollar. -LRW] [reprise]

If $41 billion in loan guarantees can't stop a 50% devaluation in the currency of the world's ninth largest economy, what would it take to bail-out the world's first largest economy? That is, what would it take to bail-out the U.S.A. - - - - AND where would the bail-out money come from? -LRW

GOLD:

We have repeatedly described all paper currencies as a "bunch of staggering drunks trying to hold each other up." -THE DINES LETTER, Annual Issue, 20 Jan 95, Page 9
"I'm one of the rare people who share a nostalgic view about the old gold standard as you know, but I must tell you I am in a very small minority amongst my colleagues on that issue." -Federal Reserve Chairman Alan Greenspan, to US House, July 22, 1998 pg. 45 & 46
... Though an indispensable requirement for the functioning of an extensive order of cooperation of free people, money has almost from its first appearance been so shamelessly abused by governments that it has become the prime source of distrubance of all self-ordering processes in the extended order of human cooperation. The history of government management of money has, except for a few short happy periods, been one of incessant fraud and deception. -F. A. Hayek, THE FATAL CONCEIT The Errors of Socialism, [Cap. emphasis added] (Chicago: The University of Chicago Press 1988), p. 103.
...one may call wasteful all expenditures incurred for increasing the quantity of money. ... It was this idea that led Adam Smith and Ricardo to the opinion that it was very beneficial to reduce the cost of producing money by resorting to the use of paper printed currency. However, things appear in a different light to the students of monetary history. If one looks at the catastrophic consequences of the great paper money inflations, one must admit that the expensiveness of gold production is the minor evil. -Ludwig von Mises, Human Action A Treatise on Economics, Third Revised Edition (Chicago, Illinois: Contemporary Books, Inc. 1966), pg. 422 [XVII. INDIRECT EXCHANGE 6. Cash-Induced and Goods-Induced Changes in Purchasing Power
We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K. -Edward A. J. George, Governor of the Bank of England and a director of the BIS, [Bank for International Settlements] to Nicholas J. Morrell, Chief Executive of Lonmin Plc. excerpted from paragraph 55. of a law suit filed by Reginald Howe in Massachusettes U.S District Court on Dec. 7, 2000. SEE this amazing law suit!
Remember, the "spot gold price" ISN'T the true price of physical gold - - - though you can still buy physical gold at this price. The spot gold price is a composite price including both physical gold and gold contracts, the paper component implying a much greater physical gold supply than actually exists. Buying physical gold (and taking possession) at this point in history is thus sort of like paying milk prices for a bottle of cream. Almost no one else has noticed yet. -Journeyman, Paper/gold composite spot, USAGOLD.COM (03/21/00; 06:32:00MDT - Msg ID:27201)
If the world is out of joint because of the Dollar reserve system instituted by Bretton Woods, then clearly, what the world requires is a system where national currencies do not depend on Dollar reserves. And that can only mean one thing: gold reserves, and their corollary, currencies convertible into gold. Either that, or we shall be treated to the spectacle of a crumbling world economy, and virulent nationalistic reactions. -Hugo Salinas Price, The spectres of Bretton Woods (Repeat link)
"Unfortunately monetary policy is not possible without forcasts. There are no mechanical rules we can follow in making these forcasts. I wish there were, but there just aren't. Even when we get a large number of forecasters and they all more or less agree, there's no guarantee they're correct. ... After all, we're all looking at the same data. I mean, this isn't a coin toss operation. We're right about 60% of the time." -Federal Reserve Chairman Alan Greenspan, C-SPAN , March 13, 1991 22:00 - 22:30 pm.
As the global economy increasingly becomes a reality with improved communications throughout the world, individuals in different countries will have less tolerance for the discretionary actions of fallible central bankers that undermine the value of money. Producers and consumers will want to deal directly with each other. A gold standard provides the common denominator for conducting business across national boundaries -- a sort of monetary Esperanto. National currencies function as dialects of the same root language, gold-backed money. -Judy Shelton, Money Meltdown (New York: The Free Press 1994), p. 259
"If you are on a gold standard or other mechanism in which the central banks do not have discretion, then the system works automatically. . . . " -Federal Reserve Chairman Alan Greenspan, to US House, July 22, 1998 pg. 45 & 46
A leading e-commerce expert has predicted that gold, the world's oldest method of monetary exchange after bartering, could soon appear online as digital gold. In his study on the current state of play in the e-commerce marketplace, Richard W. Rahn, an expert on the development of digital money systems, said that digital gold could be cheap to implement as a means of online exchange.
+
"Digital gold-backed bonds or other digital gold instruments could have significant advantages over the use of established currencies," he said. Rahn says that the e-gold group (http://www.e-gold.com ) is already preparing to offer a digital gold system on the Web. Known as GoldMoney, the system is due to start shortly," he said. ...
+
The advantage of digital gold, he went on to say, is that many people instinctively trust it. "It is tangible, free of government control and the idea that gold is intrinsically valuable is ingrained in folk history. Thus, a digital currency perceived to be adequately backed by gold would have an automatic advantage in competing for people's trust over many other currencies," he said. The second important advantage of gold as a digital currency, he went on to say, is the substantial demand that already exists for holding gold assets for purposes other than as a medium of exchange. ..."This certainly makes digital gold a candidate as an international digital medium of exchange," he said. .
+
Institutions that currently own or produce gold, he said, are logical developers and marketers of digital gold products. "There are no longer technological reasons why private companies cannot create international gold-backed monies to compete with government-issued monies," he said. -Steve Gold, Gold: The New E-Currency?, Newsbytes.com, Tuesday, December 5, 2000; 10:39 AM
If somehow you traveled back in time to 1930 and asked citizens about the "inflation" they experienced, you would get blank stares and "Huh?" as a response. Explaining that by "inflation" you meant that prices were constantly rising, or conversely, that the value of the money was decreasing every year wouldn't help. This simply didn't happen while the U.S. was on the gold standard. These citizens would be baffled by your questions. -L. Reichard White, Money, (Brownsville, Penna.: WhiteINK 1997), p. 21
// They [much of Europe and the Middle East] do not see any advantage in holding the currency bonds of one country, as a reserve asset of future payment, over holding physical gold as a reserve asset in full payment. The fact that the debt reserve asset pays interest is little more than a joke in these banking circles. Any paper currency, the dollar included, can fall in exchange value against your local currency far more than the interest received! ... -FOA (Friend Of Another), 17 Sep 1998, (fwd) from USAGOLD.COM [Repeat link]
- The dollar at its low was down 11 yen, at 120.3 yen per dollar from 132 yen per dollar yesterday. This is better than an 8% drop in the dollar, the bulk of this happening in about three minutes in the middle of the night. This is an "astounding drop" in the world's largest currency. -MSNBC etc., 7 October, 1998 -"This is the biggest one day dollar drop in 25 years." -Kathy Jones, Prudential Securities, 7 October, 1998
// Essentially and basically, the largest pro gold groups are those who want a world currency that is not subject to the performance of the American economy. At this moment and in this period of economic history, all currency reserves held by foreigners (non-Americans) is a debt of the US Government and by extenuation through tax collection, a debt based on the ability of the American economy to function profitability! -FOA (Friend Of Another), 17 Sep 1998, (fwd) from Repeat link.
"To reach the climax of ferocity, the Convention decreed, in May 1794, that the death penalty should be inflicted on any person convicted of 'having asked, before a bargain was concluded, in what money [paper "assignats" or gold and silver] payment was to be made.' The great finance minister, Cambon, soon saw that the worst enemies of his [inflationary] policy were gold and silver. Therefore it was that, under his lead, the Convention closed the Exchange and finally, on November 13, 1793, under terrifying penalties, suppressed all commerce in the precious metals." -Andrew Dickson White
+
Then, after chronicling the complete moral and economic demolition of France as a result of attempting to replace gold and silver with paper money "assignats":
+
"Thus was the history of France logically developed in obedience to natural laws; such has, to a greater or less degree, always been the result of irredeemable paper, created according to the whim or interest of legislative assemblies rather than based upon standards of value permanent in their nature and agreed upon throughout the entire world. Such, we may fairly expect, will always be the result of them until the fiat of the Almighty shall evolve laws in the universe radically different from those which at present obtain". *86 -Andrew Dickson White, Fiat Money Inflation In France, (Irvington-on-Hudson, New York: The Foundation for Economic Education, INC. 1959), p. 106-->109
"In summary, then, although information technology by its very nature has lowered risk, it has also engendered a far more complex international financial system that will doubtless bedevil central bankers and other financial regulators for decades to come. I am sure that nostalgia for the relative automaticity of the gold standard will rise among those of us engaged to replace it." -Federal Reserve Chairman Alan Greenspan, to American Enterprise Institute, April 14, 2000

N+N: Home Page mailto: L. Reichard


* * - Permission to re-post granted. Re-posting encouraged! - * *

NOTICE: In compliance with Title 17 U.S.C. section 107, this material is distributed free without profit or payment for non-profit research and educational purposes only. -CLICK for further information.



TOTAL N+N page hits
Since Feb 13, 2004