I dont think ANY countries back currency with gold
but some hold gold in National Treasuries
for what purpose? dunno, and maybe they dont either
most of them have participated in the gold carry trade
when tiny nations like Netherlands participate, you know it is wide
I have read a few times lately that on a combined basis, the European Union imposed some strictures on its member nations, whereby they were required to maintain a certain level of gold in their treasuries, and keep govt deficit spending within certain limits, which made the EU far more fiscally sound
the end result is that the EU has 15x as much gold as the USA does, when compared on an outstanding currency basis
wow, 15x the gold backing the Euro vs USDollar
this is a central point of mine for expecting a 40% decline in the dollar over the next few years
40% from 121 top, that is, down below 80
the USGovt will spend its way to larger deficits
the USEconomy will spend its way to larger trade gaps
while the US Leadership and Military see erosion of trust
thus, the USDollar decline will continue
and US$Decline effects along the way will accelerate the decline
(the vicious cycle I keep citing and developing)
all US$ fundamentals are looking absolutely terrible
and worse by the month
I am beginning to believe that the USGovt Admin actions will very likely avoid an outright recession
we may get several brief bouts with recession
but a long and very deep one is not so likely
maybe I am expecting too much here, optimistically
BUT THE PRICE WILL BE SOME SERIOUS POCKETS OF INFLATION
a recession would cascade into a depression very easily
I think they will accelerate the MZM money supply, increase TaxRebates, increase all manner of public assistance via extended unemployment benefits, SBA loans, increase liquidity like we have never seen...
all to forestall a recession
the end result will be mindboggling price inflation in a couple years, after the deflationary forces wind down, after the bankruptcies clear the deck
while the USdollar gets trashed, which brings with it some extreme distortions
e.g. flat to declining goods & service prices
e.g. a new bubble in commodities on wide basis
(with gold leading the way, inverse to USDollar)
/ jim |
