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Julian Phillips: Europe is managing gold price but not pushing it down
12:52p ET Saturday, April 2, 2005
Dear Friend of GATA and Gold:
Don't miss Antal E. Fekete's third installment of "The
GoldBug Variations," where he asserts, in part:
"It is true that the international gold standard confines
the foreign exchange rate between two countries
adhering to it to a narrow range between the gold
export and import points. This is not a drawback of
the gold standard; it is its main excellence. It is
responsible for the promotion of division of labor
between countries. Each country will produce the
goods and services for which it is best fitted, and
import other goods and services which can be
produced more efficiently abroad.
"The regime of floating exchange rates (that should
be properly called the regime of SINKING exchange
rates) destroys international division of labor and
promotes autarky. But it destroys division of labor
domestically as well. Previously the exporter could
concentrate his talent and energies on production,
knowing that as long as he is the best, no foreign
competitor could harm his business. This is no
longer true under floating.
"Foreign competitors could nail his business on the
foreign exchanges. The central banks, as advocated
by dismal monetary science, could manipulate foreign
exchange rates to his detriment. It goes by the name
'beggar thy neighbor.'
"To be successful as an exporter it is no longer
sufficient to excel in production. The exporter also has
to be a skillful speculator in foreign exchange.
"This is what has killed many a small business during
the past 35 years. The principals could not cope with
volatility in the foreign exchange market.
"Big business, on the other hand, decided that it was
less risky to export jobs than goods, and this is exactly
what they did. An unprecedented dismantling of
production facilities on American soil was the result,
because the price of the imported ingredients rose faster
than export earnings, thanks to the deliberate dollar
debasement.
"Floating exchange rates were a giant step backward
in division of labor, discouraging talent from going into
productive enterprise. Talent now goes into financial
speculation, as witnessed by the snowballing derivatives
market where the commitment of speculators is
estimated at more than $200 trillion dollars, or more
than the market capitalization of the entire globe."
You can find Fekete's essay at Gold-Eagle here:
http://www.gold-eagle.com/gold_digest_05/fekete040105.html
Or try this abbreviated link:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
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