>In our modern, post-gold world, T-bills are the new gold, which is why
they're yielding 0.06% now.
So lang as the Chinese and other foreign creditors accept them in such a function it may seem so. But this is not the end of the story.
Lenin once made a proposal about the use of gold after the revolution:
--- When we are victorious on a world scale I think we shall use gold for the purpose of building public lavatories in the streets of some of the largest cities of the world. This would be the most “just” and most educational way of utilising gold for the benefit of these generations which have not forgotten how, for the sake of gold, ten million men were killed and thirty million maimed in the “great war for freedom”, the war of 1914-18, the war that was waged to decide the great question of which peace was the worst, that of Brest or that of Versailles; and how, for the sake of this same gold, they certainly intend to kill twenty million men and to maim sixty million in a war, say, in 1925, or 1928, between, say, Japan and the U.S.A., or between Britain and the U.S.A., or something like that. (http://www.marxists.org/archive/lenin/works/1921/nov/05.htm) ---
"public lavatories"? A not so anal proposal. However no Central Bank in the capitalist world up to now decided to follow his advice. Thats why we could a little postpone the debate on the demonetarization of gold and take care not only of the question of legal convertibility, but of economic convertibility of credit money too. Marx made in vol. III the remark, that for interior use of credit money no gold reserve is necessary - in contrast to the situation in foreign exchange. He could not image a international credit system, making possible huge trade deficits not cleared by gold transfer. But the possibilities of international credit are not unlimited. And on the balance sheed of the FED gold would play a much more visible role, if they would apply here some mark-to-market pricing too. (The Bundesbank for a long time took a similar position, defendig big hidden reserves in their asset account.)
Dealing with gold is not a problem of declaration only: The Nixon decision to end legal convertibility of Dollar in gold was not dictated by the idea to get rid of this obsolete monetary gold. The decision was guided by the strong will not to give away the nice FED gold to the foreign US-Creditors.
The analysis and the "reform ideas" of current goldbugs are mistaken because they do not see that the monetary function of gold is already realized in the current financial system - in the more or less only way possible.
Sebastian
________________________________________________________________________ AOL eMail auf Ihrem Handy! Ab sofort können Sie auch unterwegs Ihre AOL email abrufen. Registrieren Sie sich jetzt kostenlos.