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Dans sa plus
récente étude intitulée ‘Dr. Zijlstra's Final
Settlement: Gold as the Monetary Cosmos' Sun’, l’économiste
Hollandais Jaco Schipper, de chez MarketUpdate.nl, nous fournit
d’importantes informations relatives au schéma de suppression du
prix de l’or par les banques centrales Occidentales.
Jelle Zijlstra est
l’ancien trésorier, premier ministre et banquier central des
Pays-Bas. C’est dans son mémoire que Schipper a pu relever des
informations clé quant à la suppression du prix de l’or,
dont un paragraphe impliquant l’ancien directeur de la Réserve
Fédéral Paul Volker – et dont la participation au processus
de manipulation du prix de l’or avait été
précédemment notée par le GATA :
http://www.gata.org/node/10923
http://www.gata.org/node/8209
Zijlstra savait ce
que ses écrits impliquaient. Il était non seulement directeur
de la banque centrale de son pays, mais également,
jusqu’à son passage à la retraite en 1981,
président de la BRI, dont la suppression du prix de l’or semble
être l’une des fonctions premières :
http://www.gata.org/node/8773
http://www.gata.org/node/11012
http://www.gata.org/node/11257
Comme
l’indique Schipper, Zijlstra détaille dans son mémoire
les efforts répétés du gouvernement des Etats-Unis
à décourager l’utilisation de l’or comme moyen
d’échange, et note également que ‘le prix de
l’or est artificiellement maintenu à un prix très
bas’.
Zijlstra indique
également que les banques centrales ont depuis un certain temps
intégré dans leurs bilans non seulement leur or, mais
également ce qu’elles appellent ‘avoirs en or’, qui
ne sont autres qu’un mécanisme d’inflation imaginaire des
réserves d’or officielles.
We welcome Zijlstra, if only posthumously, to the
ranks of gold "conspiracy theorists," and will have a tin-foil hat
engraved in his honor.
Accueillons donc
si vous le voulez bien feu Zijlstra parmi les rangs des théoriciens de
la conspiration.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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Dr. Zijlstra's Final Settlement: Gold as the
Monetary Cosmos' Sun
By Jaco Schipper
Market Update
Sunday, April 29, 2012
http://www.marketupdate.nl/nieuws/valutacrisis/dr-zijlstras-final-settle...
Whenever I am in Amsterdam, I go to a bookstore and
browse the second-hand shelves in the economics section. Recently I found two
books by Dr. Jelle Zijlstra: "Dr. Jelle Zijlstra, Conversations and
Writings" (1979, second edition) and "Per Slot Van Rekening"
(1992, fifth edition). The latter title is a Dutch figure of speech that may
be translated as "The Final Settlement."
The covers of the books are shown here:
http://www.gata.org/files/Jelle_Zijlstra_book_covers.jpg
Jelle Zijlstra was a renowned Dutch economist and
one of Holland's finer statesmen. Early in his career in 1948, shortly after
World War II, he became a professor, specializing in the velocity of money.
By 1952 he was appointed minister of economic affairs, then Dutch treasurer
from 1958 to 1963 and again from 1966 to 1967. During his last term as
treasurer he led the Dutch Cabinet as prime minister as well until 1967,
after which he became president of De Nederlandsche Bank (DNB). While
president of the Dutch central bank he was appointed as the president of the
Bank for International Settlements (BIS) as well, positions he held until his
resignation in 1981.
You can read a little about this extraordinary man
at Wikipedia here:
http://en.wikipedia.org/wiki/Jelle_Zijlstra
In Zijlstra's first book, "Dr. Zijlstra,"
he writes about his career and his time as president of De Nederlandsche Bank
and the BIS. While he was DNB president the international Bretton Woods
agreement collapsed, and he goes into great detail about what happened. He
writes about the "European" group's interests, about the cultural
and financial ties between Germany and the Netherlands, the relationships
with France and Great Britain, and, of course, about the position of the
United States.
It gets especially interesting when Zijlstra writes
about then-U.S. Treasury Undersecretary Paul Volcker and Federal Reserve
Board member Dewey Daane of the Richmond Federal Reserve Bank. On the July 7,
1971, Volcker and Daane arrived in Amsterdam to urge the Dutch government not
to convert any more of its dollar reserves into gold.
Zijlstra writes (p. 191): "From the beginning
of 1971 we had already converted almost $600 million in return for gold or an
asset on an equal footing."
This phrase -- "an asset on an equal
footing" -- is peculiar, since from an investor's or central banker's
perspective there is no equivalent to physical gold. Let this be very clear:
There is no asset that stands on equal footing with gold. You either own it
or you do not.
But central bank balance sheets account for official
gold reserves under the description "gold and gold receivables" and
apparently have done so back to times before Zijlstra became a central
banker, before Bretton Woods collapsed. This is quite revealing.
In the eyes of gold bugs, "gold
receivables" is a bit of a contradiction in terms and has been the cause
for much suspicion. Can we really trust the numbers on central bank balance
sheets?
The essence of this question is one of accounting,
because gold reserves are either "allocated" or
"unallocated."
The big difference is that when gold is
"allocated" one has legal title to specific metal vaulted by
someone else. But when gold is "unallocated" one has merely a
fiduciary claim on a future delivery of gold. This implies counterparty risk.
Zijlstra and Volcker: 'Monetary Adversaries'
As an economist, I knew of the visit by the U.S.
officials in 1971. It is remembered by many Dutch economists because of
Zijlstra's famous anecdote about a conversation he had with Volcker, who went
on to become Fed chairman.
When Volcker visited Zijlstra as Treasury
undersecretary, Volcker said, "You are rocking the boat." Zijlstra
replied: "If the boat is rocking because we present $250 million for
conversion into gold or something that can be considered an equal asset, then
the boat has already perished." (p. 191.)
Zijlstra refused to heed the U.S. request and
converted DNB's dollar holdings for gold. And since the reasons behind this
"heavy American delegation" -- as he described it -- were quite
obvious, he suspected that the gathering storm he had foreseen for some years
was about to break loose. Or, as we say these days, he knew that "the
fiat was about to hit the fan."
A Man of Precision and Conviction
Also interesting about Zijlstra's first book is that
he is very detailed and precise in explaining his views. For example, he
describes inflation as "the most gross social
injustice" which "hits the less fortunate the most," and he
practiced what he preached.
He explains how, as Dutch treasurer (1958-63 and
1966-67) he managed his Cabinet to be fiscally prudent, which he connects to
his opposition to inflationary policies. To illustrate his objections, in his
second book he writes:
"Despite an additional flow of funds due to
increasing returns on Dutch natural gas reserves and the second oil crisis,
this Cabinet also proved it could grow hungrier while eating."
Also, and in this respect very typically, he defines
the Dutch guilder in terms of gold: "F. 1 = 0.334987 grams of fine
gold" (p. 181), and in a footnote on this page he included the numbers
needed to calculate the value of the guilder after the 1978 devaluation: 0.13333
grams of fine gold.
This points out something really important. Why does a central banker, a former
BIS president, calculate the value of his currency in terms of gold when gold
backing had been officially removed?
'The Final Settlement'
In Zijlstra's second book, "Per Slot Van
Rekening," we find a very candid man, even contrarian. He gives a very
precise description of how central bankers conduct their business and
maintain their independence from government interference.
This makes this particular book so refreshing. For
example, whereas conventionally monetary debasement is described
euphemistically, Zijlstra explains what central bankers actually do, and more
importantly, acknowledges that the price of gold is kept far too low.
Central bankers have thus known what gold bugs long
have been saying. Let me take this one step at the time. Dr. Zijlstra writes
that revaluing is "'putting a bit more gold in your currency' so it
becomes more valuable than other currencies. Summarizing: it is about the
choice between 'adjustment' inflation or
revaluation. Germany decided to revalue the German deutschemark on March 3,
1961, with 5 percent; we decided ... to follow. To my regret, then and still,
Germany did not revalue more; I would have defended a revaluation of 10
percent zealously if Germany would have done so. ... A
devaluation was more or less seen as a defeat, a testimonium
paupertatis for a country." (p. 220.)
Now that's a really honest way of explaining
currency devaluation.
But it gets far more interesting. Zijlstra explains
his understanding of the role of gold in what he eloquently calls the
international "monetary cosmos": Gold functions like the sun, with
all currencies as planets orbiting around it, with only the sun in fixed
position:
"... It is perhaps nice to get into the role of
gold and its meaning in the time before the monetary cosmos collapsed into
more chaotic conditions. Throughout centuries gold
was a protection against [natural] disasters, arbitrariness, and persecution.
... Because natural production levels hardly allow overproduction with
substantial depreciating values as result; because it does not rust and, once
produced, never perishes, excessive scarcity can never occur. That's why gold
developed its image of solidity, stability, and reliability. ... Gold coins
then have been used over the centuries as means of exchange in primitive
currency frameworks and were later, with the development of paper money, seen
as a reliable basis. In the heydey of the gold standard one could take a
banknote to the central bank and -- if you would like that -- get gold in
return. The famous Englishman Bernard Shaw once said one has the choice
between the natural stability of gold and the natural stability of honesty
and intelligence of government. And he was of the opinion this choice was not
hard." (p. 221.)
Zijlstra explains how all this was relevant during
his time as president of the DNB and during his presidency of the BIS. He
explains that the United States was debasing the dollar. Most interestingly,
Zijlstra writes about his idea of a solution for the "international
chaotic non-arrangements":
"A good solution would have been to drastically
raise the price of gold, since it was extraordinarily peculiar that in the
post-World War II world, in which everything became more than three to four
times more expensive than in the 1930s, the price of gold remained the same.
Actually, two things had to be done. The official gold price in all
currencies had to be raised ('their gold content had to be reduced') and,
beside this, the official dollar price of gold had to be raised extra, to
allow the dollar to devalue against all other currencies". (p. 222.)
Zijlstra writes about the American reaction to his
proposals:
"However, the Americans found this idea like
swearing in a cathedral. Because, by that, the dollar would in regard to gold
become second, and the American ideal was and is to have the dollar central
in its role on the economic stage. As a consequence, there was only one exit
and that was cutting the tie between the dollar and gold. That would
eventually happen in August 1971 when President Nixon announced that the
dollar was no longer convertible into gold. After increasing American
pressure, step by step, the actual convertibility of dollars in gold was
curtailed until it was formally ended." (p. 222.)
But it gets even more interesting. Zijlstra
wittingly or unwittingly confesses what most gold bugs assert. He writes:
"An important step on this road was the creation of a whole new
international monetary instrument, the SDR (Special Drawing Rights). This is
about an inventive construction whereby 'something' is created out of
'nothing.' The International Monetary Fund would -- through precise
administrative procedures -- create rights on the fund, with which central
banks can settle their payments among each other. Those rights would --
according to certain measurements -- be credited to the members of the fund.
The idea behind this was that it was expected that in due time there would be
too little gold (I am inclined to say: what do you expect with such an
artificially maintained, much too low gold price) to serve as 'international
means of settlement.'" (p. 222.)
This speaks for itself, but just in case you missed
the elephant in the room of international finance, Zijlstra writes, even if
it is in a mere aside, "Gold is artificially kept at a far too low
price."
He continues that the introduction of SDRs in 1967
was warmly welcomed, becoming soon "a fantasy for intellectuals" to
have the SDR perform the function of the sun in the "monetary
cosmos." But despite this warm welcome, the SDR went the way of the dodo
bird.
Zijlstra elaborates about the SDR that in the late
1980s and early 1990s, "we do not hear much of it. At first, it appeared
as if the foremost Americans were enthusiastic proponents of this new
international monetary instrument, but this proved to be pretence. They
welcomed the SDR to move gold even further away. As soon as gold was removed
as a central point in the international monetary framework, their love for
the SDR disappeared. The SDR has become a piece for a museum." (p. 223.)
And: "But in case there is no complete
international means of settlement, no gold, no SDR, wherein should central
banks settle? The logical end-piece of this development was giving up on
fixed parities" to gold. "The currencies are currently exchanged on
international markets. The resulting prices bring supply and demand in
balance and there is no way of settling. No more cosmos, no sun with planets:
All currencies are formally equal. One can buy and sell them on international
currency markets." (p. 223.)
"It may be so that in the formal sense of
currencies one can say that all are equal, but that in reality it proves that
some are more equal than others. The dollar is back as the material core of
the international financial and monetary arrangements. That the countries of
the EEG [currently the EU] have begun constructing their own monetary cosmos,
I have mentioned already." (p. 223.)
What most pundits are missing about Europe and the
euro is what Zijlstra refers to: The euro has been established as a solution
and is orbiting gold. Now if you took notice of the consolidated European
Central Bank's system-wide balance sheet --
http://www.ecb.int/press/pr/wfs/2012/html/fs120424.en.html
-- you can figure the shadow value of one euro in
terms of grams of fine gold much as Zijlstra explains in his books.
According to my calculation, with the ECB's gold
holdings at 502.5 tons of gold, divided by the number of euros in circulation
(note how all other balance sheet items are "denominated"), one
will find that 1 troy ounce is worth the equivalent of around E55,000.
And that's what you really want to make use of --
that is, after everything else has failed. If there emerges an absolute need
to fix the financial crisis, you can be sure of one thing: We'll have a
pricing mechanism for physical gold at least.
In tragedy lies humor
Even humor finds its way into Zijlstra's second
book, and something that is quite revealing as well. It also illustrates his
adversarial relationship with Volcker, if one of a professional nature.
When Zijlstra stepped down from the BIS presidency
in 1981, Volcker, then chairman of the Fed, gave Zijlstra an "$DR Note
of 10 billion" depicted here:
http://www.gata.org/files/Jelle_Zijlstra_SDR_note.jpg
The note is dated December 1981, carries a photo of
Zijlstra's face, is signed by Volcker, and bears the legend: "The Fund
May Prescribe ... As Holders ... Institutions [and Persons] that ... Perform
Functions of a Central Bank for More than One Member."
Zijlstra writes: "This gift has become a
lasting memory of the feelings on both sides: It will never be something,
respectively, it may never be something with the SDR."(p. 234.)
Knowing his religious and, more generally, his Dutch
background, I think this was Zijlstra's way of saying he appreciated
Volcker's reflection and irony.
The other side of the mock SDR note says: "To
Meet the Need, As and When It Arises, for a Supplement to Existing Reserve
Assets." In between it says: "1 SDR = 0.8886671 gram of fine
gold(?)":
http://www.gata.org/files/Jelle_Zijlstra_SDR_note2.jpg
We'll have to check some numbers, but perhaps we
should make a contest for gold bugs to determine what's behind this
calculation. For the question mark says a lot: Behind the scenes, central
bankers were still discussing their currency values in terms of gold, at
least into 1981 when Zijlstra stepped down as president of the BIS.
By the way, on the left side of the mock SDR note,
it says in small print: "This note is freely convertible into useable
currencies at widely fluctuating rates." Zijlstra must have thought:
"Funny money indeed!"
Conclusion
All this information Zijlstra shared in his books is
quite something. During his terms in office central banks were converting
their dollars into something other than real gold in possession and probably
did so all along from the start of the Bretton Woods agreement in 1944. An
asset "on an equal footing of gold" makes you think: You either
have possession or not. Apparently central banks converted their dollars into
something "funny."
A real giveaway is that Zijlstra wrote this in the
1990s: "The gold price is artificially kept far too low." And most
important, he has provided all the necessary information to reach the conclusion
that central bankers are always evaluating their currency in terms of gold.
Why? Because, before and after all has failed, gold
is the sun in our "monetary cosmos."
As a central banker Zijlstra was a statesman in
heart and mind. His legacy and his insights are a tribute to honesty. He
explained that we must not think of the dollar or any other currency as the
sun of the "monetary cosmos" -- not anything but gold. Not the SDR
either, just gold.
This, in my opinion, is the essential point Zijlstra
is conveying.
He will not speak further. He died in 2001. May he
rest in peace. He provided us with an enduring lesson. Two things were needed
back then but are ever more desperately needed now.
The official gold price in all currencies had to be
raised ("their gold content had to be reduced") and the official
dollar price of gold had to be raised extra, "to allow the dollar to
devalue against all other currencies," to quote Dr. Zijlstra a final
time.
Now you know why you should own some physical gold.
It is like the sun, which, in the end, we are all circling, whether we do so
consciously, with acknowledgment, or in denial.
----
Jaco Schipper is a Dutch economist who wrote this
study for MarketUpdat.nl and GATA. His sources included: Jelle Zijlstra
(1979), "Dr. Jelle Zijlstra -- Gesprekken en Geschriften samengesteld
door Dr. G. Puchinger met bijdragen van Dr. W. Drees Sr.," Strengholt's
Boeken (Naarden), second edition; ISBN: 90-6010-430-7, and Jelle Zijlstra
(1982), "Per slot van rekening," Uitgeverij Contact (Amsterdam),
fifth Edition; ISBN: 90-254-0181-3.
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