|
Icelanders voted in a referendum
to address their debt problem. Germans have a problem too, but they are
voting with their pocketbook. They are dumping the euro and buying
physical gold, the demand for which is soaring in Germany.
The problem Germans face is a
broken promise. Despite all the rhetoric and assurances that it would
be a prudent and wise monetary authority, the European Central Bank is not
managing the euro in the judicious way the Bundesbank
managed the Deutschemark. Most importantly, in stark contrast to the
steadfast independence from government influence that marked Bundesbank decisions, it is now clear that the ECB is
controlled by EU politicians.
After repeated promises not to
buy government bonds, the ECB recently announced that they would buy
government bonds, obviously bowing to pressure from political leaders.
Germans of course know from hard-learned experience the consequences of this
foolhardy policy – the currency is debased. It loses purchasing
power, which lowers the demand for the currency, which in turn means more
lost purchasing power. It is a vicious circle, and the euro is now
caught in the middle.
The ECB put the euro into this
maelstrom and is itself now being inexorably pulled down into it.
According to Der
Spiegel:
“The ECB already has about €25 billion of Greece’s mountain
of debt on its books, and it is adding another €2 billion a day, on
average.” There is no exit for the ECB from this paper that no
one else wants. In the words of Der
Spiegel: “The truth is that good money is being paid for bad
debt.”
As a consequence, Germans are
taking the advice of George Bernard Shaw to heart: “You have to choose
between trusting to the natural stability of gold and the natural stability
of the honesty and intelligence of the members of the Government. And,
with due respect for these gentlemen, I advise you, as long as the Capitalist
system lasts, to vote for gold.” Given the dubious outlook for
the euro, it is good advice.
James Turk
Free Gold Money
Report
Article originally published by the Free
Gold Money Report.
James Turk is the
founder of the Free Gold Money Report and of GoldMoney.com. He is also the co-author
of The Coming Collapse of the Dollar (www.dollarcollapse.com).. Copyright
© by James Turk. All rights
reserved.
Copyright © 2008. All rights reserved.
Edited by James Turk
This material is prepared for general circulation and may not have regard
to the particular circumstances or needs of any specific person who reads it.
The information contained in this report has been compiled from sources
believed to be reliable, but no representations or warranty, express or
implied, is made as to its accuracy, completeness or correctness. All
opinions and estimates contained in this report reflect the writer's
judgement as of the date of this report, are subject to change without notice
and are provided in good faith but without legal responsibility.
|
