Gold’s rally to record prices is still 53 percent below the 1980 inflation-adjusted peak, an indicator it will continue to climb in value.
While gold rose this year to $1,072 an ounce (on Oct. 14), consumer prices have almost tripled in the past three decades, eroding the metal’s value. Meaning bullion hasn’t kept pace with the cost of bread, fuel or medical care.
In 1980, gold hit a then-record $873 an ounce. In today’s dollars, that would be $2,287, according to the U.S. Labor Department’s inflation calculator.
Bloomberg reportsthat Treasury Secretary Timothy Geithner’s closest aides earned millions of dollars a year working for Goldman Sachs, Citigroup and other Wall Street firms. Yet, they are overseeing the handout of hundreds of billions of dollars of taxpayer funds to their former employers.
The gifts of billions of dollars of taxpayers’ money provided the banks with an abundance of low cost capital that has boosted the banks’ profits, while the taxpayers who provided the capital are increasingly unemployed and homeless.
Goldman Sachs has made so much money during this year of economic crisis that enormous bonuses are in the works.London Evening Standard reports that Goldman Sachs’ “5,500 London staff can look forward to record average payouts of around $800,000 each. The highest paid executives will get bonuses of $16 million.“
Meanwhile, New York City’s homeless shelters have reached the all time high of 39,000, 16,000 of whom are children. Long-term unemployment has become a serious problem across the country. Hundreds of thousands more Americans are beginning to run out of extended unemployment benefits. A record number of Americans, more than one in nine, are on food stamps. Mortgage delinquencies are rising as home prices fall.
Meanwhile, the political system is unresponsive to the American people. It is monopolized by a few powerful interest groups that control campaign contributions.
Robert Fisk writing in The Independent asserts that Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.
Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars.
The plans, confirmed to The Independent by both Gulf Arab and Chinese banking sources in Hong Kong, may help to explain the sudden rise in gold prices, but it also augurs an extraordinary transition from dollar markets within nine years.
The Americans, who are aware the meetings have taken place – although they have not discovered the details – are sure to fight this international cabal which will include hitherto loyal allies Japan and the Gulf Arabs.
The decline of American economic power linked to the current global recession was implicitly acknowledged by the World Bank president Robert Zoellick. "One of the legacies of this crisis may be a recognition of changed economic power relations," he said.
The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the "privilege" of building a huge trade deficit.
"Important progress in managing imbalances can be made by reducing the reserve currency country’s 'privilege' to run external deficits in order to provide international liquidity," UN undersecretary-general for economic and social affairs, Sha Zukang, said.
Speaking at the annual meetings of the International Monetary Fundand World Bank in Istanbul, he said: "It is timely to emphasize that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity.”
