Skip to comments.Back to gold - eventually
Posted on 10/04/2012 9:25:25 PM PDT by DeaconBenjamin
To see a world with multiple reserve currencies, you need to go back to a world before Britain's smashing victory in the Seven Years War (1756-63) took it to both military and economic supremacy.
In those years numerous currencies circulated, with their use determined largely by local availability. In the American colonies, the greatest circulating medium was not gold (British) guineas, whose supply was very limited, but silver "pieces of eight" from the Spanish colonies, coins of 8 reals that had been minted to the same standards since a currency reform in 1497 - these remained legal tender in the new United States alongside the dollar until 1857.
A currency reform of 1751 made the Maria Theresa thaler, also silver, the common currency of the German speaking world. The coin's reserve currency status spread far beyond Germany; it circulated in Africa and also the Middle East long after Maria Theresa's death in 1780, coins minted after that date being date-stamped "1780" even though they were freshly minted.
Thus when my father visited Saudi Arabia in 1963, Maria Theresa thalers still circulated. The last coiner of Maria Theresa thalers was not Austria but Britain, which finally abandoned the practice in 1962, after representations from the post-war republican Austrian government.
At some point, whether because of a resurgence in inflation or the dawning of doubt about long-term US solvency, international demand for both dollars and Treasury bonds will decline sharply, and the world would seek the benefits of diversification.
It all sounds very jolly and free-market, except for one factor. "Pieces of eight" and Maria Theresa thalers had a real value; they were silver coins and had the value of the silver contained in them. This will not be true of the multiple reserve currencies of 2015-16.
(Excerpt) Read more at atimes.com ...
Gold crosses $1800 tomorrow
on its way to $2400... roughly 33% increase since QE3 was ‘approved’
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