Re: (OPE-L) recent references on 'problem' of money commodity?

From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Wed Nov 24 2004 - 04:02:48 EST

At 11:20 AM -0200 11/23/04, cmgermer@UFPR.BR wrote:
>The fact that gold still performs fundamental functions of
>money is clear before our eyes. Why should we deny it? ... (T)hus, if one
>looks at the *monetary sphere* of today with Marxian eyes, one sees gold
>very distinctly in fundamental monetary functions.

OK,  Claus, gold was traditionally used by central banks as a 'war
chest' to provide security in the vent of a crisis. However, it was
of little use during the collapse of the Asian Tiger economies. Being
less liquid than forex reserves, it can't be readily used to defend a
national currency from speculative attacks. It was growingly
considered more of a "commodity" than an "asset". Of course this may
or is changing with a flight out of  all  major currencies to gold,
and convertibility may be forced on central banks. But this is not
yet clear before our eyes.  So I don't understand what proves to you
(and Paul B) that gold is still performing in Nov 2004 the
fundamental functions of money.

Hasn't the world been on a dollar rather than gold standard? And the
US the beneficiary of exorbitant privileges? If we say that gold is
still world money, then we are discouraged from understanding what
has allowed to dollar to usurp that role to this day. And whether
that usurpation is unravelling before our eyes.


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