But that is precisely what is the gold standard

The dominance of large financial institutions on the markets and, therefore, all economic activity is not diminished, but strengthened by the crisis. And this for a first and compelling reason: States have considerably increased their debt. Large investment banks have need of them to health (if the word to use). But, conversely, treasuries depend on them to place and manage their loans.

When talking about States, should include central banks, even if the rule is now in the West at least, that they are considered "independent" entities The important is that everyone can be observed. For the best or the worst, Governments and institutions to show play the same game. They go to the rescue of the business, they substitute for market failures. Their complicity, so to speak, is particularly evident and total with regard to their relations with banks. The Institute of issue provides liquidity war economy rates (0 neighbours). This allows them to earn a lot of money endorsing massively to the emissions of the Treasury. These massive subscriptions have the effect that the Treasury can also, although more moderately, lowering the rate to which it borrows. A kind of almost perfect arrangement, this close is completely out of the framework of the free market economy.

For another reason, not less compelling, not less destructive of the order liberal and competitive, the financial sphere fully responsible for the crisis, leaves, if it comes out, more powerful or more solid. The only way to prevent the bankruptcy of major investment banks has been to promote their purchase by a competitor. The absolute imperative of solvency has even accelerated the movement of concentration. Financial institutions are still larger than before. It is them, to cite only this example, who have perverted to the notion of "liquidity". Twenty years ago, it was a quality attached to an asset that could sell without loss on the market (a three-month Treasury purchase, short-term loan issued by a company Golden on slice, etc.). The modern design of liquidity, such as large financial institutions have tarnished it, notes nor of the assets but liabilities. Liquidity means easy access to credit. Like many others, this new way of seeing things was lost. What we are witnessing is a formidable and scandalous mobilization. Governments and central banks are summoned by artificial means (nearby 0 rates), to ensure the new-look liquidity for financial institutions in any case,.

Nothing would be more urgent, however, for the economies of the world of the North Atlantic, only to return to a reverse priority order: banks in the service of the productive economy. Hope that it will be not too much later when it will be notified of this: the problem of the relocation of activity, major cause of underemployment would be largely resolved without appeal to an undesired protectionism that financial institutions continue to dictate their law. They are the ones that grow large companies to not just comfortable but not exorbitant profit.

This takeover, one has repeated it often in these columns, was due to the abandonment of the system of exchange rates fixed defined from Bretton Woods dollar-gold. I had started in my previous column a reflection on the "rationality of the barbarous relic". The idea was that the crisis we are experiencing is not fatal. In a dress book published for the first time in 1999 by Cambridge University Press (United States) under the title "the gold Standard and related regimes", its main author, Professor Michael Bordo, wrote that gold has been discredited by opponents "passionate" about this that their arguments are "really convincing nor really comprehensive.

For my part, I would remind you here that the demagogues of the 20th century, starting with the nazis, were opposed to the reign of gold the creation of a currency whose value would be guaranteed by the work of men. But that is precisely what is the gold standard. The reference value is the cost of production of gold. Where is "scale" of all other prices. A subtle system, it has substituted a system of purely nominal currency unable to give rise to any stable prices.