Once again, news has reached these electronic shores that a Mediolana blog post – yesterday’s, no less – has been featured on the venerable financial news portal MaxKeiser.com. Big up to Stacy Herbert, Recep Tayyip Erdoğan and 240 million Indonesians ッ Stay tuned for more virally incisive posts!
Tag Archives: gold
Turkish Prime Minister Erdogan to Fifth Bali Democracy Forum: Abandon Dollar for Gold!
Love him or hate him, Turkish Prime Minister Recep Tayyip Erdoğan is rarely anything other than eminently quotable. But from time to time he expresses an idea which strikes a chord with many people outside his natural constituency, and during a recent riff during the Fifth Bali Democracy Forum – an annual event that has been held since 2008 and which focuses principally on democratic developments within Asia – he did so again in a series of remarks directed to the International Monetary Fund (‘IMF’), where he openly questioned the value of cross-border transactions being denominated in a currency belonging to any single nation (or, by implication, a group of nations). According to Erdoğan, the world should consider switching ‘to a monetary unit such as gold, which is at the very least an international constant and indicator which has maintained its honor throughout history. This is something to think about.’
A few years ago, such comments would have seemed implausible, but it is now easy to imagine many economic sages agreeing with the leader of the Justice and Development Party, a political entity that has ruled Turkey since 2002. With major paper currencies losing value against precious metals and gold in particular enjoying something of an international renaissance, it seems logical enough to suggest alternatives to the present (and still largely dollar-based) arrangements of international finance and trade. But we believe that there are also other plausible reasons behind Erdoğan’s position:
1. Losing Faith in the United States. While Turkey has generally excellent relations with the USA, it does not seem entirely convinced of the future economic health of its NATO ally. A keynote speech by Erdoğan’s Deputy Prime Minister Ali Babacan at the 2012 Istanbul Finance Summit (24th-25th September 2012) was instructive in this regard: ‘When we take a look at the United States, we particularly see an ambiguity in its finance policies…after the election if [the new American government] does not take quick decisions about the debt ceiling and automatic [spending cuts] and does not carve out a reliable programme for 2013 and the period after, 2013 may be a year that the economy of the U.S. is debated…Governments cannot rely on central banks that provide liquidity to markets by printing money and say, “we have overcome the crisis.”’
2. Culture. Owing not least to a long experience of persistently devalued paper currency during the republican period (1923 -), Turks value gold much more than most people in the West. Turkey is a country where gold vending machines, gold-based mutual funds and deposit accounts evince a solid belief in gold as a store of value that is unequalled even by the considerably revalued Turkish lira; there is an estimated 5,000 metric tonnes of gold within Turkey, most of which is held privately.
3. Lirazone? The Turkish Prime Minister’s remarks should also be seen in the context of his recent floating of a potential ‘lirazone’. Although Turkish lira are unlikely to be perceived as a viable reserve currency anytime soon, the lira’s international cachet has rapidly accelerated since 2005, with a new, fetching lira symbol being introduced internationally earlier this year; a gold-backed lira could potentially make the lirazone a more realistic proposition.
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Education, Education, Education? UK’s ‘Tuition Fees Chancellor’ Enjoys Unlikely Reinvention
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Filed under Education
Austrian School Economist Detlev Schlichter: The BBC Takes the Strudel
Perhaps unsurprisingly given the extraordinary magnitude and implications of the ongoing financial crisis, in recent years there has been a significant number of fresh voices in the field of economics: names such as Max Keiser, Marc Faber and Alessio Rastani will be familiar to anyone who has taken a serious interest in the collective fiscal meltdown that seems to be engulfing much of the planet. Slightly more surprising is the fact that despite the incredibly bad economic predicament across most of Europe and North America, these same new voices seem to be heard relatively rarely; Alessio Rastani’s legendary ‘rogue trader’ BBC News Channel interview of 26th September 2011 represented a shock not so much because of the content of what he said, but the fact that the usually limp British Broadcasting Corporation would feature someone so lucid and frank.
So when we at Mediolana heard that none other than Detlev Schlichter would be featured on the 16th January 2012 edition of Start the Week – one of BBC Radio 4’s flagship current affairs programmes – it was almost enough to make us reconsider our breakfast options. For the uninitiated, Schlichter is the author of the instant classic Paper Money Collapse: The Folly of Elastic Money and the Coming Monetary Breakdown, an intriguing and highly readable tome which essentially posits that all fiat money systems – that is, systems where money is decreed by the state to have a certain value which is not contingent on its linkage to anything of actual worth, such as a commodity like gold or silver – are doomed to eventual collapse and replacement, either by a relatively painless switch back to commodity-based money or by a hyperinflationary tsunami that compels the cancellation of the fiat system(s) in question.
To our surprise, our very worst fears that the immensely charismatic former J.P. Morgan and Merrill Lynch investment ace would be marginalised in a panel that included Angela Knight – the Chief Executive of the British Bankers’ Association who these days all too often has the unfortunate remit of defending the indefensible – proved largely unfounded: Schlichter was given a reasonable-ish amount of airtime, his central thesis was not completely ridiculed, and a good discussion, seemingly, was had by all.
However, we were still left unsatisfied at the end of proceedings by the following two lacunae:
1. Economic Categorisation. Schlichter was introduced by the programme’s host, Andrew Marr, as a ‘radical’ economist, a description that made us fear the worst for the rest of the show. While the Ruhr-Universität Bochum graduate’s views are far from commonplace in the United Kingdom, Schlichter self-identifies as an member of the longstanding and not especially far-out Austrian School of economics. Marr’s evaluation is a stark reminder that the BBC is making a habit of labelling anything which does not accord with ‘orthodox’ thinking, particularly in economic matters, as ‘radical’ or, when proven to be demonstrably correct, simply ‘annoying’. Yet if Marr had been better informed, he would have known that at least some of the general dispositions of the Austrian School are actually the norm in much of the world: witness the constant preference for commodity money across countries such as Turkey, the United Arab Emirates and India.
2. Educational Values. Towards the end of the broadcast, there was a point in the discussion when Knight, together with Labour peer Maurice Glasman, noted the overwhelming tendency of the best and brightest in the British university system to gravitate towards jobs in the City of London. But there was no realisation that this was not an issue which could be solved by new policies or tinkering with incentives: it is a profoundly and profound moral problem which goes to the heart of so much that has characterised society in the United Kingdom over the last couple of generations, not least greed, short-termism and insane levels of materialism that have distorted the economy beyond recognition – and made Schlichter’s warning all the more worthy of consideration.
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Filed under Culture, Economics, Education, Finance, Political Science
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