By Mark Rogers

September has been an important month for the Gold Standard. In The Times of London, on Friday 28 September, Lord Rees-Mogg wrote a further analysis of the hazards of paper money. He concluded:

“In any reform of the global system, some measure will have to be used to replan the stabilisation that was provided by the Gold Standard.

“I do not expect governments or central bankers to abandon the ability to issue their own currency. But what governments will not do, private individuals can. If individuals want to protect the purchasing power of their savings, gold can do it; paper will not.”

There are, however, two banks that are taking the ideas of the problems of fiat money and of a return to gold very seriously indeed. Can it be a coincidence that they are both German Banks?

We saw that on the 12th September, the German Constitutional Court gave guarded assent to Germany’s participation in the European Stability Mechanism. This cautious response must be seen in the context of the devastating consequences of fiat money systems.

Six days later, 18th September, the London head office of Deutsche Bank published a Global Markets Research paper by Daniel Brebner and Xiao Fu called Gold: Adjusting For Zero, which makes the case for a return to the gold standard and argues for how it may be done. (I shall be writing about this later.)

On that very same day, Dr Jens Weidmann, President of the Deutsche Bundesbank and Member of the Governing Council of the ECB, made the opening speech at the 18th colloquium of the Institute for Bank-Historical Research (IBF) in Frankfurt. His address is entitled: Money creation and responsibility. It is a short and compelling speech, in which he too analyses the hazards of fiat currencies and does so by recalling the money creation scene in Goethe’s Faust. It is a speech so full of good things that commentary is otiose. I urge readers to click here and read the full text.

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"For a mountaineer, the important things are the effort, the posture and the muscles. The rope that holds him serves no purpose when everything works but it gives him a sense of security. In the same way, all gold does is ensure confidence; it's a safe haven."