Another justification-The Golden Standard-Written just a few hours after our post by FT

 

 

 

We prayed we were wrong, yet we were not! The Republican party has decided to propose a re-link of the dollar to gold price. This is undoubtedly the right thing to do, but doing the right thing sometimes is not as good as doing it in time as well. We all pray that Fort Knox still has gold, or at least some gold in order for this reform to start putting the markets into a state of less entropy and anarchy, but…! This move indicates that the dollar as a global reserve is being questioned, both in the framework of finance and Geopolitics. With the recent Arab Spring demonstrations spreading out in Saudi Arabia and Bahrain and the anti-American sentiment booming in the Middle-East, noone is certain if the deals of the past will still be in effect next year, next month, next day (?) The US government is buying oil from Saudi Arabia and pays back in American bonds. The interests are then invested in American companies, which historically took up the task to “modernize” (this is a really soft term we use here for the radical modernization which took place in Saudi Arabia, as before American companies took over, they used goats to carry their garbage) the country’s Infrastructure and as a matter of fact this was a really fair and ingenious deal for both sides. On the one hand Saudi princes were living the Western way of life, enjoying the pleasures of civilization and on the other the Americans took a deep breath after the oil crisis of the ’70s but…but…but…well nothing lasts forever! It is notable that the Reagan government was the one, who pushed the Saudis to drop the oil prices in the ’80s, thus facilitating the collapse of the ex-USSR during the so called “second cold war” before Gorbachev took over and implemented the Perestroika and the Glasnost reforms. His predecessors (as Reagan himself), namely Andropov and Chernenko, were not the type of people who cared much about resolving amicably the two countries’ pressing and deep rooted problems. Lest we forget that the term “empire of evil” was first used by Reagan and Thatcher during the “second cold war” era.

A financial new-old order may look radical and to some extent discomforting for many Wall Street oligarchs, who have been plundering the US (and the world) for many years using paper to build up their capital portfolios, but as Milan Kundera stated it in German, Es muss sein (It has to happen). We judge that such an alteration in those extra radical times, may have the same repercussions to the US, as Perestroika had during Gorbachev’s era (The USSR was dissolved), but still if the US does not “stop the music” now, Europe or the emerging markets will and then noone can (or dares) predict the consequences. In Focus Dynamics we approve the Republican’s party initiative and as a matter of fact we salute it, we should note though that things henceforth will not look that rosy for the US. It will take many years for the country to regain its place in leading the World, but let’s not forget that this came to be primarily through the cultural and political characteristics of the US, the innovative spirit of the people and the chances businessmen and entrepreneurs enjoyed before the coming of this dark era!

 

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