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Posted on 03/30/2022 4:31:12 PM PDT by PK1991
OK. Time for a reality check. Pegging the ruble to gold will not have any affect on the dollar as a reserve currency. Reserve status is based on the quality of a country’s debt. Debt spelled backwards is investment and no one in their right mind wants to invest in anything denominated in rubles and protected by the Russian court system.
I agree with you that the folks selling gold should not be trusted—it is a risky investment just like everything else.
That said, a gold based currency is a good temporary solution in a time of uncertainty.
“Reserve status is based on the quality of a country’s debt.”
True—but the value of US debt is on a steady decline—and the rest of the world is starting to pay attention.
Number 2 in production.
OK, but relative to Russia's debt?
I think that the demand for gold will far outstrip the supply and the ruble will be devalued.
That’s great as long as you have the gold reserves to back it up. But with everyone agreeing that one ounce of gold is worth $1910, your reserves will be snapped up in minutes. I know that if I could purchase an ounce of gold for a Bennie, I would convert my IRA to gold in a minute.
So the lesson is if you are going to tie your currency to a commodity, be sure that 1) you have enough of the commodity to meet demand or your currency is going to be quickly devalued and b) tie your currency to the current rate to have any chance of it working.
Seems to me that Putin is simply converting his oil into gold.
Since Europe/France/Germany say they won’t pay in ruble, they can now pay in gold.
Eventually, Russia will have more gold than anyone else... which means they can crush the petro dollar at will if that hasn’t happened already... Thanks to Biden freezing Russian held US dollars.
Nixon had to shut the gold window in the 70’s precisely because countries actually starting demanding the gold. Same thing will hspoen here.
“Well you didn’t really think you could get gold just because we said it was backed by gold...”
Thats a fail. Russia already folded on the demand for rubles and will accept euros.
Two comments:
1) A nitpicky comment is that there gold is measured in Troy ounces, which contain 31.1 grams, rather than ordinary ounces of 28.3. THat moves the calculations 10%
2) A lot of this argument hinges on whether or not the gold ruble is redeemable. Remember when the US dollar was worth 20 dollars per ounce, but the gold window was closed? Russia will have the same issue here if they do not establish and honor gold redeemability.
Or when the price of gold was $35 in the Nixon years?
That’s not at all how it works. The gold standard is about fixing the value of your currency, not about opening your gold reserves for purchase or tying your money supply to any actual gold reserves.
Abandoning the gold standard has more to do with the need To have inflation to offset debt and controlling the money supply to ameliorate recession.
Implementing the gold standard probably means Putin is worried about a manipulation attack on the ruble.
Germany says to still pay for Russian gas in euros/dollars after Scholz-Putin call
March 30, 2022
https://freerepublic.com/focus/f-news/4051026/posts
In a phone call between the leaders, Putin told German Chancellor Olaf Scholz that nothing would change for European partners and payments would be made in euros and transferred to Gazprom bank, which would convert the money into roubles, the German spokesperson said.
Gazprom is NOT sanctioned - so Olaf Doltz gets the fig leaf of not paying in roubles, while Pooty gets the cash through the unsanctioned Gazprom bank.
ALREADY there are Twitter dolts calling for Gazprom to be sanctioned.
"Let's shut down the German economy!" say the dolts.
I wouldn’t say you’re wrong. Things have a funny way of
working out when we think they won’t. On the other side
of the coin, they also turn out worse than we thought too.
We’ll see how it turns out together.
For both our sake I hope you are wrong.
No one cares what the currency is fixed to if its not redeemable. Like saying you have insurace but the insurance company wont actually cut a check.
Russia Pegs the Ruble to a Bottle of Vodka.
There fixed it.
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https://www.bitchute.com/video/jJbeFpkb95JK
MONEY RESET RUSSIA AND CHINA WANT GOLD-BACKED CURRENCIES MAR.30.2022
I may be wrong, but my understanding is that only domestically used rubles will be backed by gold. Everything outside the country will float.
In theory, but not only did the US abandon the gold standard from 1932 to 1944 Roosevelt actually made it illegal to own gold in the 1930s, the very opposite of making it redeemable.
As a result, any ability to actually redeem becomes dependent on the next political whim. Besides which, gold itself is actually pretty clumsy to use as currency for most transactions (as is cash anymore). Even when redemption for gold is defined and possible it usually not particularly useful. Plus I can redeem my dollars for gold whether there is a standard or not. It is just whether I redeem at a fixed or market rate.
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