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[Posted
May 21, 2007]
Petro
Dollar Jitters
His Divine Grace A.C.
Bhaktivedanta Swami Prabhupada
Reuters
- May 20, 2007 - ULF LAESSING UPDATE 3-Kuwait drops peg in body blow to Gulf
currency union KUWAIT, May 20 (Reuters) - Kuwait unshackled its dinar from
the tumbling U.S. dollar on Sunday and switched the exchange rate
mechanism to a basket of currencies, throwing plans for currency union
with other Gulf Arab oil producers into disarray.
Kuwait's central bank, which battled speculators for weeks to defend
the peg, said the dollar's slide against other currencies had forced it
to break ranks with fellow Gulf states to contain inflation from the
rising cost of some imports. go
to story
Inflation
means the government is printing paper money [or issuing bonds] without
sufficient gold in reserve. During inflation, money is abundant, but it
is worthless. If we buy something at a fixed price this year, 10 years
from now, if money has inflated 20 times, we shall have got the same
thing for practically nothing. Soon the economic bubble will burst, and
all the paper money will become completely worthless. The public will
lose its faith in paper money. People will start bartering—"I have a
banana, and you have an apple, so let's trade." The more money
inflates, the easier it is to pay off debts. During inflation, the debt
collector loses while the debtor is getting ahead, because the debt
collector is getting nothing; whereas the debtor is getting something
in tangible goods. more
Prabhupada: It is very simple. Don't accept
paper currency. It must be gold or some metal worth. Just like one
dollar, it must be worth one dollar metal. Then it is solved. But they
want to cheat. How it can be solved? Because if I pay you one dollar, I
must pay you value for one dollar. But it is the cheating process is
going on, "I pay you one dollar, a piece of paper. That's all." So you
accept cheating, and I also cheat. Government allows. So how the
problem can be solved? It is cheating. But the government allows it as
law. And you accept, I accept. Then how they can be solved, solution?
This is the solution.
Prajapati: In the economy
itself there isn't actually enough money to, that's even in the banks...
Prabhupada: That is cheating.
Therefore I say cheating. I have no money. I give you simply paper. I
promise to pay hundred dollars. What is the use of that promise if I
have no money? But you want to be cheated. I cheat you. That's all. You
are satisfied of being cheated by me; so I take the advantage and I
cheat you. I give you a paper. That's all.
Bahulasva: Real money is gold
and silver.
Prabhupada: Any... It must be
value. According to the market price, it must be value. Whatever it may
be. Gold is taken, because gold is the most valuable metal. A small
piece of gold, it can carry two hundred dollars. But if I give you
iron, then you have to bring another, what is called, bus, to carry it.
[laughter] So therefore gold standard is accepted everywhere. There is
a standard price of gold, so when I pay you money, it must be, carry
the value in gold. That's all. Then there is no inflation. The people
want to be cheated, and people cheat. That's all.
UPDATE 3-Kuwait drops peg in body blow to Gulf
currency union