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Returning to Bretton Woods....
leijierong, you are confused. The Bretton Woods agreement was abandoned more than 30 years ago. I'm actually proposing that we return to something similar. Don't trust me (or anyone), see for yourself. You can start here (first the website, then a quote from it):|
"The chief features of the Bretton Woods system were, first, an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold; .... In face of increasing strain, the system eventually collapsed in 1971, following the United States' suspension of convertibility from dollars to gold."
The only revolutionary idea that I'm proposing is that China be the country that backs its paper money with GOLD.
muzeseeker, first, thanks for your maturity. You've set a fine example for others. Second, I agree with you, when a country's currency is fixed to gold, there is little the country can do to manipulate the system. That is exactly the reason that President Nixon took America off of the gold standard.
HOWEVER, the benefits to the country that maintains the GOLD standard far outweigh the limitations. The lack of manipulation is exactly what attracts others to buy that currency as their 'reserve' currency - and this is the real benefit.
If the Yuan is pegged to GOLD, then oil will be priced using the Yuan - because it will be the same as pricing it in GOLD. The first major country that returns to the GOLD standard will find that their currency becomes the world's reserve currency. The benefits of this are enormous.
The advantages of being the world's reserve currency are primarily that A. foreigners will accumulate your currency (with their savings), thus 'loaning' you their money, and B. if/when all Hell breaks loose, your currency is the least affected.