World Bank President Robert Zoellick's Solution for Currency Wars seems to be back to Gold Standard.
Leading economies should consider adopting a modified global gold standard to guide currency rates, World Bank president Robert Zoellick said on Monday in a surprise proposal before a potentially acrimonious G20 summit. Writing in the Financial Times, Zoellick called for a "Bretton Woods II" system of floating currencies as a successor to the Bretton Woods fixed-exchange rate regime that broke down in the early 1970s.
The former US trade representative, who served in several Republican administrations, said such a move "is likely to need to involve the dollar, the euro, the yen, the pound and (a yuan) that moves towards internationalisation and then an open capital account. "The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values," he added.
Those who are familiar with the Gold Standard are very much against it and say that this economically stagnating and suffocating system does not allow more wealth (progress) into the system as more money cannot come into the system. Critics also point to the growth of Gold Cartels who can easily manipulate the whole economic system and that Gold Standard was responsible for the first two world wars.
Are we jumping from frying pan to the fire?
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