Whole monetary system will perish
05.11.2008, 10:21The following column is written by
Alar Tamming, chairman of supervisory board at Estonian gold and currency
exchange company AS Tavid.
For the first time since 1971 there is a situation in world’s monetary
history where not a single currency is guaranteed with anything. It should be
called an experiment that is about to end.
There is humour as well – Estonian kroon is guaranteed with currency reserves
based on euros and euros are not guaranteed with anything. And Estonian kroon
isn’t guaranteed with euro cash, but likely there is a mix of German, US and
Japan’s bonds that are simply promises and at the end of the crisis become
worthless together with reserves Estonia has saved for bad times.
Greed steps in when money is nothing but stamped paper and loudly said
promises. Through history not a single power has stopped bankers and other
people near money taps from taking money from the air to use it as one wants. On
previous times bluff came out at some point and ended with bank’s bankruptcy or
country’s monetary system perishing through hyper inflation.
Currently the whole system is global which is why it has survived longer than
predicted. Process that Germany went through in 2-3 years in ‘20s now lasts
20-30 years. But through history no monetary system has survived when it hasn’t
been guaranteed by noble metal or some equivalent accepted by everyone.
Current experiment that has brought singular amount of capital that is
mistakenly considered as wealth, can’t survive. Monetary system that is built on
sand will inevitably go into chaos and perishes, so new and better one could
rise.