Will China Force the United States to Restore Gold as Money? by Jacob G. Hornberger
(2023-01-12 at 01:30:14 )

Will China Force the United States to Restore Gold as Money? by Jacob G. Hornberger

In response to the United States governments weaponization of the dollar through such measures as sanctions and trade wars, China, along with Russia and other nations, are making efforts to dethrone the dollar as the worlds international reserve currency. For example, Russia and China are now using the Chinese yuan, rather than the dollar, for payment for Russian oil. Saudi Arabia is now talking about doing the same thing.

One of the interesting aspects of this process involves gold. According to an article at Forexlive, China has purchased 62 tons of gold in the last two months. Chinas gold reserves now total 2,010 tons.

An article at BNP Paribas Asset Management by Chi Lo, the companys senior market strategist for Asia and the Pacific, speculates that China might be considering making its currency convertible into gold. Lo writes: "Making the renminbi convertible into gold effectively turns the currency into a global investable asset for foreign renminbi owners, boosting their confidence in and demand for the Chinese currency."

If China goes down that road, then gold, not the yuan-renminbe, automatically becomes Chinas official currency. That is because the paper instruments effectively become debt instruments promising to pay gold.

What effect would that have on the United States dollar? It is impossible to say. But one thing is for sure: The United States dollar promises to pay nothing. Ever since the 1930s, the United States official currency has been irredeemable paper. When given a choice between paper that promises gold and paper that promises nothing, will the world stick with the United States dollar?

The irony is that if China, which is ruled by a communist regime, decides to make gold its official money, it will essentially be copying the monetary system that America had from the founding of the United States until the 1930s.

The official money of the American people for more than a century after the United States was established consisted of gold coins and silver coins. During that time, there were paper instruments of indebtedness, such as bank notes, but everyone understood that they were promises to pay money, not money themselves. The money they promised to pay was gold coins and silver coins.

Americas monetary system was established by the United States Constitution, which is supposed to be the highest law of the land. It gave the federal government the power to coin money but not print money. It also prohibited the states from making anything but gold and silver coins legal tender.

It was the finest monetary system in history, especially since there was no Federal Reserve to debauch the value of the currency by printing gobs of paper money. But it all came to an end in the 1930s when President Roosevelt nationalized gold, ordered Americans to surrender their gold to the government, and made it a felony offense to own gold. It was all done without even the semblance of a constitutional amendment.

The result has been a continual drop in the value of the dollar ever since the 1930s. That is because the Federal Reserve, decade after decade, has flooded the economy with newly printed paper money to finance the ever-increasing costs of Americas welfare-warfare state way of life.

At the same time, United States officials have weaponized the dollar to wage economic war against other nations that they consider to be "enemies", "rivals," "antagonists," "opponents," "adversaries," or "competitors."

If China does adopt gold as its official money, market conditions could force United States officials to readopt gold coins and silver coins as Americas official money. Would that not be ironic - a communist regime forcing a United States regime to restore the sound money to our land that was established by the United States Constitution?

Reprinted here with permission from Mr. Jacob G. Hornberger of The Future of Freedom Foundation!! Their Libertarian Website!!