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Lips: Monetary Pollution and the Gold Standard

05/22/2004

In a speech by Swiss banker Ferdinand Lips, he discusses the abandonment of the gold standard and the consequences for the world economy. Lips is the author of the book Gold Wars: The Battle Against Sound Money As Seen from a Swiss Perspective, which chronicles how what was once the world's soundest national currency became much less so.

Central banks are printing paper money like there is no tomorrow. It’s fiat paper money. Inflation, the great destroyer, is showing its ugly face again and bond markets are heading south. In some countries real estate markets resemble a bubble and a crash is looming in many parts of the world. Why is all that happening? It is because our money and in particular the world’s so called reserve currency, the U.S. dollar is polluted. Up to the 15th of August 1971, there was never a period in history during which no currency was linked to gold. The world’s history is full of examples of devaluations, coin clipping and bankruptcies. Yet it was always possible to switch to other currencies that were backed by gold. But if you disregard the Swiss franc, this was no longer possible since 1971. All of the economic, monetary and financial catastrophes of the past 30 years can be traced back to this event.

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