Those Who Hold The Gold Make The Rules

The President of the World Bank, Robert Zoellick, obviously has bought a pile a gold and so have his buddies, which is why they are advocating the insertion of an element of gold into the SDR, the IMF’s preferred reserve currency replacing the dollar since 1991.  Nearly all serious commentators have found the idea of using gold as money unworkable, and not so likely to happen, although with gold pushing the roof off,  talking up gold as money is a great way to give the speculators even more rocket fuel, and get those Christmas bonuses planned early .  

Other commentators position the idea of gold as part of the world’s monetary system in stronger terms.  Martin Wolf in the FT writes that it would not be unreasonable to call for a rethink as to the global monetary system and its workings… 

But gold? Does anyone expect politicians to put placating the world’s most speculative commodity market before worrying about a slump? Whom the gods wish to destroy they first make mad.

He sees that stopping deflation in the USA is the key, which is by far and away the primary threat.  With underlying US inflation down at 1%, and that the case, even with oil at $84 a barrel, the Commodity Index at a two year high, and the Dollar in a trough, the much-hyped onslaught of US inflation is nowhere in sight.  

The dollar will power up from here, quantitative easing or not.  It is the inflation/deflation battle that is being fought, and the amount of QE won’t even touch the sides against powerful deflationary forces.  Making gold into money, as proposed by Zoellick, would merely make the threat of deflation worse.  Mad is quite right.  Gold is an irrelevance, buoyed up by talk of non-existent inflation, and soon to crash to earth.

Yet this comment from Lord James makes me think.  He said –

Lord James claims the group, which he referred to as ‘Foundation X’, has more gold on hand than all the world’s bullion reserves combined.

If this is true, then the One World Government has far more gold at its disposal than we know, and might well be in a position to make gold an element of the Special Drawing Right, or SDR.  That could be why they are boosting the value of the metals to way above their natural market level.  It’s got nothing to do with India or China, as market participants might believe, or Reuters will tell you, but all to do with creating an international currency, the SDR, which only the One World Government is in a position to control.  And the gold part is the bit which would enable them to hold the rest of the world in their power.  They could control the world’s money beyond all democratic control.

In fact gold as money is not as mad as it seems, in that case.  It is being made the medium of political power.  The EU (Germany especially) is handing over all its gold to Bank Of International Settlements as surety for the bail-out funds it is borrowing.  The BIS is the central bankers’central bank, privately owned by people who are probably already ruling the world, and have been for decades.

Cameron like Blair (and Clegg) only sees acting as Prime Minister (or Deputy) as a stepping stone within the One World Government power structure.  ZOellick is merely informing the world, like Lord James, as to what is really going on.

If this theory is correct, then gold will rise to a point at which it will stop and be held as if by an unseen force that has decided long ago where the price has to get to, and stay, in order to become part of the SDR, with the OWG in control of it all.

Gold might be declared up to 5% of the value of the SDR, it was estimated by the late Joan Veon.  The USD would be 40% and the Euro 35% with Sterling, the Yen and Gold making up the difference.

As the saying goes, those who hold the gold, make the rules.  The patsies that pose as Prime Ministers and Presidents are all part of the system, it seems.  The revolution will rise up from the streets, but the revolutionaries must at least be told who is running the show first. 

The Tap Blog is a collective of like-minded researchers and writers who’ve joined forces to distribute information and voice opinions avoided by the world’s media.

7 Responses to “Those Who Hold The Gold Make The Rules”

  1. Stuart Fairney says:

    Much of the QE in both the US and the UK is yet to hit the money supply. Watch out when it does. Thus the often wrong Bernanke may find deflation the least of his worries.

    I might add that deflation scares governments more than people since I quite like lower prices and at some point equilibrium will be reached as buyers re-enter the market, so the spectre of a “down the plug hole” deflationary cycle is some what made-up. But if you are a government relying on inflation to take care of your debts, deflation terrifies you.

  2. Tapestry says:

    I think Bernanke is right to see deflation as the main threat that he faces. But as the markets still believe in inflation, his launch of QE is setting off a rush to a peak, from which the price falls will resume.

    I agree that lower prices make life easier of ordinary folk like us, and the sooner things bottom, the sooner they will recover.

    Japan is often given as an example. There too the government has borrowed to boost the money supply stopping a real fall-out from happening, so they get a perma-frost decline, with no bounce.

    These are big decisions that no one really understands. Governments are desperate to get inflation going, you are right, but the higher they jack up the price of commodities, the more people resist and cut back. It’s a no-win strategy.

  3. Tap,

    If not gold (or other precious metal) backed currency, how else could it be done?

    Fiat currency isn’t working.

    I spend a lot of time looking back into history and the gold standard seemed to work then.

    Is it time I threw the rose-tinted glasses away?


  4. Tapestry says:

    The value of gold is nowhere near the value of money in circulation – about 1% of the total. They could limit it to backing of bank notes, but who wants to use those in an age of electronic money, and would it have much effect?

    Fiat money has inflated over many decades but has seen huge increases in the general wealth level for billions. Gold would have limited the growth of credit, for sure, but that would be highly deflationary.

    Nothing will change human behaviour which swings from optimism to pessimism in cycles. We are probably about to see a switch over from a period of great optimism to one of pessimism, and a deflationary monetary device might be exactly the wrong move.

    Martin Wolf of the FT sees it as suicidal. People still believe they are more threatened by inflation currently, but in the USA inflation is 1% – despite $2.6 trillion of QE, high CRB and low interest rates. I think we would do better to see that cash will be gaining in value from here – with assets falling in value.

    The current gold rally is probably just a phase which will soon be dented by the growth of deflationary forces.

  5. Thanks.

    So are you saying we should continue with debt notes as a “least worst” option?


  6. Tapestry says:

    The issuance of debt notes will be inevitable if the world starts deflating, as governments try to persuade companies and individuals to become more economically active. These efforts will probably fail if Japan is any guide as to what happens when a long period of asset price inflation ends.

    The only point is that I would prefer the money went into something useful longterm like Crossrail, a new airport East of London to replace Heathrow and big infrastructure projects of that kind, fast broadband to every business and home and school, new school buildings etc..

    …than being used to pay large salaries to Lesbian Outreach Workers to spend in Sainsbury’s.

    I don’t profess to understand it all, Captain! But like you I find myself forming opinions along the way. Events will show if we are right or wrong to believe what we believe to be the case.

  7. Thanks Tap.

    My crystal ball is at the cleaners, so it is difficult to see what is ahead of us.

    The only way, I think, is to visit and read blogs like yours to try and get a better understanding.

    It (money) is simple and horribly complex at the same time.


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