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Sailing Without an Anchor!

Posted: Thu Jun 22, 2006 8:01 pm
by onepence
Sailing Without an Anchor!
By Puru Saxena
June 16, 2006

... "On 15 August 1971, US President Nixon shut the “gold window”, thereby removing gold from the monetary system. The result was inevitable – currencies started floating against each other and without gold as the anchor, nations gave up on their monetary discipline. A fabulous new era of “endless prosperity” had arrived! Central banks became obsessed with monetary inflation, world-trade benefited and the world’s foreign exchange reserves exploded. Figure 1 captures this development in all its glory. In 1971, the non-gold reserves of all countries were worth US$100 billion and today these have grown to roughly $4.3 trillion – an alarming 43-fold increase in 35 years!" ...

... "Once currencies were no longer linked to gold, the global economy became a ship without an anchor, floating from one “boom and bust” cycle to another!" ...