
China's Gold Army - tmlee
https://www.bullionstar.com/blogs/koos-jansen/chinas-gold-army/
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mark_l_watson
Interesting article. It mentioned James Rickard's book "The Death of Money"
which I would recommend.

US economists openly mock using a gold standard for currency, simply because
with our debt and need to generate fresh fiat currency, a gold standard is not
a possibility for us. I believe that things will get 'interesting' with our
economy but probably not until after the 2016 elections.

That said, I think that a hybrid approach with currency backed by (for
example) 20% gold reserves would have much of the stabalizing benefits of a
gold standard.

~~~
hga
While I'm not up on all or even much of the theory about this, it seems to me
that the amount of gold reserves doesn't really matter. The utility of a gold
standard is that the government has to redeem your paper dollars at, say,
$20.67 to the troy ounce, until it doesn't, and, oh, confiscates all the
nation's gold
([https://en.wikipedia.org/wiki/Executive_Order_6102](https://en.wikipedia.org/wiki/Executive_Order_6102)).
So you have a great degree of stability until you don't, and you know exactly
when the game is officially up and the economy is running under new rules,
particularly political ones at that.

History suggests this pretty much _always_ happens, sooner or later when a
government gets desperate enough. Maybe not as severe as our New Deal, but
e.g. the Swiss franc underwent a series of devaluations until a referendum
took the country entirely off the gold standard in 2000.

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IsaacL
People interested in the theory of an impending return to the gold standard
might enjoy [http://keithweinereconomics.com/2013/12/28/the-theory-of-
int...](http://keithweinereconomics.com/2013/12/28/the-theory-of-interest-and-
prices-in-paper-currency/). The author is a proponent of "new Austrian
economics", basically Austrian economics with an appreciation for bid/ask
spreads.

------
GeorgeMatthews
Please correct me if I didn't understand this correctly, I think I
misunderstood China's move. So, are they setting up a unified gold account for
entire Asia, then promised if China get to control 60% of it then rest of the
countries will also somehow benefit? If so, why would any Asian country join?
Giving China gold so it can become more powerful.﻿

------
edge17
>>China’s domestic mining output grew by an incredible 2,964 % from 1976 until
2014

interesting reading

~~~
mikeash
China's GDP grew by something like 20,000% over that same period, so that
really doesn't seem very impressive.

~~~
gonvaled
GDP measured in an inflationary currency? I can also write big numbers; here
you have one: 123456789. Not very impressive, is it?

Mining output of a real world, scarce, extremely wanted commodity? Impressive!

~~~
mikeash
No, GDP measured/estimated in "real" value.

China in 1976 was poor, with little productive capacity, and barely able to
feed its people. China today is the manufacturing powerhouse of the world and
more or less tied for largest economy on the planet. You can quibble over the
exact number, but a couple of orders of magnitude increase in wealth in China
is real.

~~~
gonvaled
[https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&...](https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_kd_zg&idim=country:CHN:IND:USA&hl=en&dl=en#!ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_pcap_kd&scale_y=lin&ind_y=false&rdim=region&idim=country:CHN&ifdim=region&hl=en_US&dl=en&ind=false)

China 1976: $166 China 2014: $3865 Growth: 23 times increase -> 2300%

Exactly the same as gold production. So yes, increase in gold production is
impressive (as is increase in GDP)

~~~
mikeash
That's per-capita GDP. The population has also increased substantially. So the
increase is more like 4-5000%.

Put another way, the gold mining industry has shrunk by 50% relative to the
overall economy.

