Causes and effects

Thursday, 16 July 2009

Hugo Salinas Price

Let us imagine that in August of 1971 the governments of the world decreed that as of that date all vehicles of the world should run on water rather than on gasoline. Within 48 hours, at the most, all vehicular traffic in the world would have ceased.

The cause – an absurd decree – would have produced disastrous effects immediately.

In human affairs, which are much more complex, it generally happens that bad decisions do not produce all their bad effects immediately, but only in the course of time.

Today the world is struggling with an unprecedented economic collapse, caused by a mistaken decision taken almost 38 years ago.

The distance of 38 years in time, in a world which is undergoing change at such a rapid pace as ours, is a great distance. Those who can remember the bad decision of August 15, 1971, and who can recall how the world worked before that date, are today at least 63 years of age. They are already either retired or about to retire from active life.

For men who are active today, 1971 is a date that is beyond the horizon of their interest. For those men, what they have seen in their lives seems to them completely normal; they think that life has always been as they have known it. Why should it not continue to be so?

Perhaps this is the reason that all we read in magazines and newspapers and all that we see on TV never mentions the mistaken decision taken on August 15, 1971. Both those who govern and those who are governed cannot establish an intellectual link between a cause, which happened either before they were born or when they were still wearing short pants, and an effect, the present global economic disaster.

What happened on that fateful day?

What happened was the equivalent of decreeing that cars should run on water: for the first time in history, the whole world began using fictitious money, papers that simulated real money. This happened when President Nixon of the United States decreed that as of that date, the dollar – the central currency of the world on which rested all the other currencies – ceased to be redeemable through the delivery of one ounce of gold for each $35 dollars which central banks of the world might present for collection in gold.

The effect of this event has taken 38 years to be felt in all its enormity.

Nature does not care if human beings think or do not think. Nature does not care if humans take note of causes and effects, or if they ignore them. Nature does not care if they are wise or foolish: Nature is pitiless about collecting its due. If you do not sow, you will go hungry. Academic discussions do not influence the inexorable operation of the Laws of Nature.

Cars do not run on water, they run on gasoline. Economies – civilizations themselves – cannot function on simulated money, money that is fraudulent, fictitious and imaginary (in the case of bank money).

Tacitus, the Roman historian, wrote: “The man who is ignorant of that which happened before he was born will always remain a boy.”

Only boys, and nothing more, are the great pundits of economics, the great directors of national economies, the great presidents and prime ministers of the Powers, who cannot or will not recognize that everything that has been built in the world since 1971 has had as a foundation nothing more than quicksand.

As long as the use of real money - either gold, or both gold and silver money - is not reestablished in the world, the civilization which we have known is in danger of disappearing.

At the recent meeting of the Heads of State of the “Group of Eight” (G-8) the President of Russia, Dmitry Medvedev, presented a coin which he said was to be the new international currency. He is in the photo below. Note that he is holding a gold coin.

Therefore we have hope that at last, a true Statesman will take the historic decision to reinstate gold as money. The adjustment of the world to this measure will be painful, but the return to real money is indispensable if our world is to endure.

The alternative is too terrible to contemplate.