Monday, July 11, 2011

Anatomy of Money Creation in Singapore 2: SGD vs Gold

Since 1970, SGD has lost 94% against gold
Gold Bubble Scaremongering
At price around USD 1500 or SGD 1900 level, the megaphone of "gold bubble" never ceases from banksters, government propaganda and all privately owned mass media. Instead of gold, SGD seems to be more like a bubble, and on the not so distance future, the value of SGD is going to be zero (unless PAP back it by gold in the future).

Government and Financial elite's loath of gold standard (gold back money)
You can read nothing good about gold standard in all economics textbook. Your teacher will fail you, if you try writing something good about gold standard. All students are force fed voodoo monetary economics, by Irving Fisher and Milton Friedman.

There are countless advantage gold standard that is impossible to enumerate one by one. In the case of Singapore, under the gold standard,

  • Your CPF will preserve its value. There is never a rise in price of gold vs SGD per se, but a debasement of Sing dollar due to MAS money printing. 
  • PAP will never be able to create crazy asset inflation. One policy lever that is designed to cause property inflation is, low and even negative interest rate -- that is possible only under fiat currency standard. Under the gold standard, the government is not able to print monies, unbacked by gold. Hence, when real estate get overvalue, interest rate will automatically be raised as lending get risky. High interest rate will put an end to any bubble.
  • Speculation in property and commodity will be difficult. Under fiat currency, the government will bail out speculator using money from Joe on the street, by means of money printing. Under gold standard, no money printing is possible, all loses have to be paid in gold. The banks and speculators who currently self-bragged themselves as "talent" under this crisis, will go bankrupt if the world follows the gold standard.
  • Much more .....etc
Gold standard is the nemesis of rentier elite class. You can expect the same people to yell "gold bubble" even when Sing dollar loses 99.99% of its value against gold.

Below, Swiss is discussing how to protect its citizen against the worthless Swiss Franc. Don't expect this from robber PAP until they have exhausted all other options.

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