An article at En.rian.ru, a Russian site, asks, "Time for a gold rouble?",
which made me initially laugh in a Disrespectful, Xenophobic Mogambo Way
(DXMW), as it looks like the damned Russians are so stupid they can't even
spell "ruble"! Hahaha!
My levity was soon abandoned, however, as the paper reports "the decision by
the US government to inject US$700 billion into the financial system means that
the already gigantic annual budget deficit of the American state (previously
some $450 billion a year) will now rise by a factor of three. The total state
debt of the USA will rise to well over $11 trillion. It is obvious that such a
colossal debt can never be repaid. Instead, it will be serviced by more debt in
the future," which they attribute to the collapse of the
financial system, as "the collapse of those markets is only a symptom of a much
deeper problem, the basic insolvency of the American state itself."
Then, to show you that there is a perspective beyond the American perspective
where we are the Center Of The Freaking Universe (COTFU) and everybody has to
do what we say, even if they don't like it, the paper says, "What can Russia do
about this?"
Since I never think of Russians except as humorless bad guys who speak English
with terrible accents and who are always out to kill James Bond, it is novel to
me that the paper concludes that "as a major exporter of hydrocarbons, her role
in the world economy is actually very important. As the age of the dollar draws
to a close, Russia will have to consider selling her oil and gas not in the
devalued American currency, but instead in the euro used by most of her
customers."
I thought is was strange that they thought that "most of her customers" would
use the euro as a common currency, which means that they do NOT think that the
Chinese would be most of her customers, even though they are right next door,
they outnumber Europeans 2-to-1, and they have almost no consumer debt.
So I thought that was a little strange; but it got spooky when they wrote the
line, "the age of the dollar draws to a close", as my heart withered in fear
and I suddenly mistrusted everyone around me, but before I could ask them to
explain such a remark, it suddenly made sense when they went on, "It is surely
unnatural for two geographical neighbors to do such large volumes of business
using the currency of a distant and now ailing nation." Oops! They're right!
We're freaking doomed!
I was just beginning to dismiss this odd appearance of intelligence in Russians
- about whom I know next-to-nothing except that they drink a lot of vodka and
as indicate above instinctively hate James Bond for some reason - when I was
forced again to give them at least grudging respect when the paper wrote, "the
Russian leaders might also consider making their own currency, the rouble,
convertible into gold"; although they lose points when they are forced to admit
that "the idea of gold convertible currencies is extremely unpopular among most
economists" as these hotshot weenies "dismiss gold as a 'barbarous relic' (to
use the famous phrase of John Maynard Keynes) and suggest either the present
regime of paper currencies or, at best, a link to a basket of commodities."
Hahaha!
Russian economists are as stupid as the rest of the world's economists; they
prefer a paper, fiat currency, and (if not that), then a currency priced in
terms of a basket of commodities! Hahaha! These Russian morons want a currency
whose value is dependent on the good fortune of blights not destroying any of
the world's cereal crops, a virus not decimating the livestock of the world,
and ecological, geological and political accidents don't upset the economic
status quo! Hahahaha!
I think they heard me laughing, and their feelings were probably hurt, which
allows that "Both these solutions are highly artificial and based on the same
level of state control which has now just so spectacularly failed." Hahaha!
Yes! Exactly!
Somewhat mollified and again ready to give them the benefit of the doubt, they
finally win me over when they conclude, "The contempt of the Keynesians
notwithstanding, it is an indisputable fact that gold does remain the ultimate
store of value, which is precisely why states own so much of it."
Russians! Who knew they could be so smart?
Richard Daughty is general partner and COO for Smith Consultant Group,
serving the financial and medical communities, and the editor of The Mogambo
Guru economic newsletter - an avocational exercise to heap disrespect on those
who desperately deserve it.
(Republished with permission from
The Daily Reckoning. Copyright 2008, The Daily Reckoning.)
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