2024 Gold Standard: From Debt to Blockchain, Geopolitics, and Digital Transformation in the Great Reset

Hi!

What is the gold standard and why is it known as the best monetary system that has ever existed?
Today, I thought about discussing the most prominent model of the international monetary system: the gold standard.

Source

Gold is a commodity that doesn't lose its substantial value over time. Therefore, gold was globally accepted as a common medium of exchange. By the 19th century, with widespread acceptance of paper money, a formal gold species standard was established. Starting with countries like Britain, Canada, U.S., France, and Germany, the gold standard is a system under which a standard unit of currency is based on the value of a fixed quantity of gold. The government of a nation will fix the price of gold, thus fixing the value of its currency. For example, the U.S. fixed the value of 10 grams of gold to be $500. This means that the value of one dollar is equal to 0.02 grams of gold.
Some countries adopted a similar model known as the silver standard. Under this system, a standard unit of currency was based on the value of a fixed quantity of silver. Countries such as British India, China, Hong Kong, and the Philippines followed the silver standard.

But which are the benefits of this system?
The gold standard is a system under which gold backs the value of money. Because countries have limited reserves of gold, it limits the power of banks to issue excessive paper currency, thus preventing inflation. Exchange rates of foreign currencies become comparatively stable, creating certainty in international trade. The system could help nations achieve a zero unemployment situation. The phase of the gold standard was an ideal period of global peace and development. The system was established around 1870 and was disrupted by the First World War in 1914. World War triggered some problems for the system, such as changes in political alliances, an increase in international debts, and deterioration in government finances. This highlighted the various disadvantages of the gold standard system, such as the system not providing flexibility to the supply of money.
A country may not be able to isolate itself from a global recession, and it is almost impossible to boost economic expansion due to these problems.
The system collapsed, and nations moved from representative money to a more flexible model of fiat money. Some attempts were made in 1944 to revive this system through the Bretton Woods Agreement. Under this system, the value of a U.S. dollar would be based on a fixed quantity of gold, and all other currency would be based on a fixed amount of U.S. dollar. This system also collapsed in 1970 as the U.S. government disassociated the U.S. dollar from the value of gold, thus marking the end of the gold standard era.

Now, let's end it up with this brief history and look at what we have so far and what can possibly change soon.

I keep having some questions in mind, related to gold and the near-by future. So, I'll just simply share them with you here and maybe you can engage so we can draw some conclusions on what can happen and how.

Please allow me to address these questions in the context of debt, national economy, geopolitical changes, the Great Reset, and digitalization.

Is it possible for the US to go back to the gold standard?

While the idea of returning to the gold standard may hold nostalgic appeal for some, it's unlikely to materialize in the modern economic landscape. The U.S. economy has evolved significantly since the abandonment of the gold standard in 1971. The complexities of global trade, financial markets, and monetary policy make a return to a fixed gold-backed currency impractical. Pluuusss, the sheer size of the U.S. national debt and the need for flexibility in monetary policy to address economic fluctuations further diminish the feasibility of reinstating the gold standard.

Will gold replace the dollar?

Gold replacing the dollar as the world's primary reserve currency is highly improbable in the foreseeable future. While gold retains its intrinsic value and serves as a hedge against inflation and economic uncertainty, the dollar's status as the global reserve currency is deeply entrenched. The dollar's dominance in international trade, financial markets, and central bank reserves, coupled with the stability of the U.S. economy and the depth of its financial markets, make it unlikely for gold to supplant the dollar in the near term.

What would happen if the world went back to the gold standard?

Returning to the gold standard would have profound implications for the global economy and financial system. While proponents argue that it could bring stability and discipline to monetary policy, critics point to its limitations in addressing modern economic challenges. A return to the gold standard could constrain governments' ability to stimulate economic growth through monetary expansion, potentially exacerbating recessions and limiting policy flexibility. Aaaaannnd, such a shift would require significant adjustments in international trade and finance, likely leading to periods of volatility and adjustment pains.

Is BRICS backed by gold?

BRICS (Brazil, Russia, India, China, and South Africa) is not officially backed by gold as a collective entity. Buuutt yeeeeahhh...., individual BRICS countries may hold significant gold reserves as part of their foreign exchange reserves. And gold reserves provide countries with a measure of financial stability and diversification, particularly in times of economic uncertainty. While some BRICS countries, notably China and Russia, have been increasing their gold reserves in recent years, I think we should know that gold does not underpin the BRICS grouping itself as a formal standard or mechanism.

So, I'm thinking, from what I have noticed so far....Gold and the gold standard are strongly connected right now on what I am reading in Web3 and Web 2 with the topics of debt, national economy, geopolitical changes, the Great Reset, and digitalization, serving as both a symbol of stability and a store of value in times of uncertainty for those that are writing about these matters.

First of all, the gold standard, which pegged the value of currencies to fixed quantities of gold, played a crucial role in shaping national economies and international trade. By providing a tangible anchor for monetary systems, the gold standard helped to maintain price stability and instill confidence in the financial markets. But we've seen it, the inflexibility of the gold standard also posed challenges, particularly during periods of economic upheaval, when governments were unable to adjust their monetary policies to address changing economic conditions.

Now...lately, the concept of cryptocurrencies backed by gold is a trend with a new taste and smell which, I think, is combining the benefits of digitalization with the intrinsic value of gold. These digital assets, that we find as gold-backed tokens, seek to provide investors with a digital representation of physical gold, offering a convenient and secure way to access the precious metal. So, it's simple, by leveraging blockchain technology, gold-backed cryptocurrencies' objective is to enhance transparency, reduce counterparty risk, and facilitate cross-border transactions.

Then we see more, in this Web 3.0 nowness :) -> digitalization projects in the financial sector are increasingly incorporating gold and gold-backed assets into their platforms, harnessing the power of technology to democratize access to precious metals and promote financial inclusion. Digital gold platforms can now enable individuals to buy, sell, and hold gold in digital form, and they are eliminating the need for physical storage and logistics while providing liquidity and accessibility to a wider audience.

My 2 cents on this. In the context of the Great Reset, gold is being reevaluated as a potential cornerstone of a more stable and resilient global financial system. As calls for reform grow louder in the wake of economic crises and geopolitical tensions, gold's attributes as a trusted store of value and a hedge against uncertainty are gaining renewed attention. Advocates of the Great Reset argue that incorporating gold into monetary frameworks could help restore confidence in currencies and promote long-term stability.

So me and you and .... others can think now that gold and the gold standard continue to play a significant role in shaping the modern economic landscape, intersecting with key themes such as debt, national economy, geopolitical changes, the Great Reset, and digitalization. But whether through traditional monetary systems, innovative digital assets, or through ambitious reform initiatives, I think that gold is still to remain a timeless symbol of wealth, stability, and resilience. But who knows? So much is changing so rapidly....

Thanks for reading!

What do you think?

With respect,
Zpek

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