"NATIONAL TREASURE"

NATIONAL TREASURE

2009 Outside the entrance to Churchill's War Cabinet Rooms .

As I have noted on several occasions lately, I am not sure if our Great Leader alias "ScoMo", believes I am a "National Treasure" to be bottled up and protected or a "Prisoner" to be confined lest I contaminate others. Either way, he and his mindless minions of the Mass Media keep telling me to "Stay at Home".

Not wishing to believe that I am a "Prisoner" I have begun to reflect on the idea of a "National Treasure". My reflections grew from thoughts of what is to happen when the present Chinese Communist Virus "EMERGENCY" is announced to be at an end. (We might wonder who will make that decision and who elected them.. because it is highly unlikely that our Great Leader will actually make the decision himself.) Clearly, the nation is going to be left with a huge burden of debt and a dramatically reduced capacity to repay it.

The concept of  "National Treasure" made me think of Gold which in turn suggested the "Cross of Gold" speech made famous by William Jennings Bryan at the Democratic Nominating Convention on 9th July 1896 in Chicago. (NO. I was not there ...I am not THAT old!).

WILLIAM JENNINGS BRYAN Failed 1896 Democratic Candidate for the Presidency

PRESIDENT WILLIAM MC KINLEY ASSASSINATED 1901

President Franklin D.Roosevelt (1933 -1945)

 

There were two big issues at the time for Bryan :

a. Will I be the Nominee and 

b. that the United States should abandon the Gold Standard and embrace "Bi-Metallism" 

Specifically, Bryan advocated that the United States should adopt Silver ( at the rate of 16 ozs. to 1 0f Gold, as well as Gold, to back its Currency, whether any other Country did so or not. The Republicans opposed any move away from the Gold Standard and embraced a policy of High Protective Tariffs to strengthen American Industry. As it happened, the Republican candidate William McKinley won the 1896 Election. His policy was adopted and the United States economy was greatly strengthened. 

President McKinley was the 25th President of the United States. He led the United States to victory in the Spanish - American War. The President was assassinated on 14th September 1901 by a crazed anarchist. Memory of the President seems to have been diminished by a general desire not to encourage anarchism - though we seem to have more than enough fruitcakes on the streets these days- but also by the horrors of the First World War and the ensuing Great Depression and the subsequent Second World War etc.

The Gold Standard was not abandoned until 1933 in the depths of the Great Depression. Reacting to the tendency of wealthy Americans to buy up available stocks of Gold, the latter-day Democrat Franklin D. Roosevelt - himself the Polio crippled scion of a wealthy eastern family, went even further than his earlier fellow Democrat  Bryan,  and abandoned Gold altogether as far as United States citizens were concerned.. This was very satisfying to many Democrats on the basis of the politics of envy. For President Roosevelt, it had the great advantage of enabling the United States Government to spend freely by simply printing more money. At that time it was still possible for foreign Governments to redeem United States Dollars in exchange for Gold. 

In 1971 President Nixon - a Republican - brought even this to an end. Dollar Rich foreign Governments were depleting the United States Gold reserves. At present, the United States holds more gold by far than any other country in the world: 

                 

                 USA            8,133       tonnes
                 Germany  3,367.9   tonnes
                 Italy            2,451.8   tonnes
                 France       2,436      tonnes 
                 Russia*      2228.2   tonnes
                 China          2,141      tonnes 

* Russian Gold Reserves grew by one-third in the last 12 months, in a deliberate campaign of Gold purchasing as noted by The Economist.

Gold producing countries are interesting to consider in light of the above:
                  

                  China             399.7 tonnes) annually
                  Australia      312.2  tonnes)
                   Russia          281.5  tonnes)
                   USA               253.2  tonnes)

All of the top three Gold producers need their Gold production to maintain and even build - as in the case of Russia - their Reserves whilst meeting their needs to finance imports or service debts. The position of the USA is somewhat different since its currency has been regarded as the international reserve currency in recent decades. There will be, must be an ultimate day of reckoning.

But, there are factors to consider that tend to undermine Party political representations of the significance of these matters :

Foreign Debt as a percentage of GDP :

Looking at  the Gold Reserves holders we find:

USA National Debt represents 106.70% 0f GDP     Popn.  331,002,651

GERMANY  ditto                               56.93%     ditto     ditto        83,783,942

ITALY            ditto                             133.43%     ditto    ditto         60,461,826

FRANCE        ditto                               99.20%    ditto    ditto         65,273,511

RUSSIA          ditto                               13.79%     ditto    ditto       145,934,462

CHINA            ditto                               55.36%    ditto     ditto   1,439,323,776

                                                                                                                     XI JINPING PRESIDENT OF CHINA "FOR LIFE"(?)


Even so, all is not necessarily what it seems. Starting from the bottom: both China and Russia remain truly undemocratic, totalitarian regimes and the reliability of many of their other published figures is highly suspect and no doubt conceals many "nasties" the rulers do not wish to have exposed. France and Italy have both been subject to the disciplines of the European Union and ought to be more reliable, but in the case of Italy in particular, the situation might not be as bad or may be worse than it appears, Thirty or forty years ago even major international Banks treated official Italian Government figures as being close to valueless because of the size of the grey economy. The propensity for creative accounting on the Italian Peninsula has,  in the last decade, created huge problems for even the Holy See as Cardinal Pell recently re-emphasised. Germany's figures and those of the United States are probably more reliable. In the latter case if only because of the regularity with which the information is published and the intense scrutiny it receives both legislatively and in the professional media.

There are some interesting stories of course not disclosed in the above figures. One relates to the United Kingdom and another to Japan. And if we were able to get to the truth of it, the story of China would be even more fascinating ....but that is not going to happen under the present regime, for as long as it may last.

The United Kingdom was virtually bankrupted by World War I and the Great Depression made the job complete. However, prestige and reliance on the Empire enabled her to muddle through into World War II. Once this great effort was embarked upon, the immense resources of the United States were, with some difficulty, introduced to shore up the tottering structure to ensure the defeat of the enemy and thus the survival of Western civilisation. For if the United Kingdom had fallen and its Royal Navy and Imperial Navies had fallen to the Nazis, the United States was vulnerable to attack upon its mainland. President Roosevelt saw this clearly especially after Winston Churchill succinctly drew it to his attention.

That was all well and good. But the parlous state of the United Kingdom's finances remained, even in Victory.

At present the financial position of the United Kingdom pre recent crises was highlighted by this figure: Its foreign debt represents 313% of its GDP in US Dollars. the only Country with a greater foreign debt is the USA itself and this is frequently held up as a cause of worry, but that debt is only 95% of that GDP. The per capita debt of the United Kingdom is USD 127,000, that of the USA is USD 62,000.

The other case we referred to is Japan,  in this case, the per capita debt is USD 28,200 while the foreign debt is 74% 0f GDP.

The more one looks into this real "National Treasure, the more fascinating it gets :

Gold reserves in the Bank Vaults are one thing, but Countries are keenly mining Gold to support their National Financial policies. Rates of production are known and verifiable, as are "reserves" in the ground  yet to be mined :

The leading holders of "Gold yet unmined" are :

                                                 No of years production at present rates:

Russia                                           Approx. 20 years

South Africa                                    Ditto   40 + years

Australia                                           Ditto   30 years

United States                                   Ditto   12  years                     
 China                                                 Ditto      5 years

South Africa is ranked as the 32nd largest country in the World by GDP and there seems little prospect of its standing changing too greatly, so its long-lasting "Gold in the ground "reserves, though important within the Country are not necessarily of great international significance. 

At the other extreme is China which has the second-largest economy in the world ranked by GDP. Should its capacity to produce Gold be exhausted in 5 years or so, it would seem highly likely to become a major buyer of Gold on world markets, forcing a much higher price. This might explain Russia's eager buying of the metal during 2019. Australia could also be seen as holding a very sound position if its policy settings are maintained at prudent levels. The United States already holds a strong Gold position, and the prospect of another 12 years production at present rates,  allows sufficient time, particularly with current foreign trade reforms and tight discipline on international defence commitments ( by having Japan and the NATO countries carry their fair share of the burden - it is interesting to note that the entire annual Russian defence expenditure does not equal the annual increase in NATO spending since President Trump took NATO to task) to allow a Second Term President Trump to begin solid reduction of the foreign debt problem.

SUMMARY

All things considered, and especially looking at the at present incalculable, but no doubt severe, economic effects of recent international Government actions in response to the Chinese Communist Party Virus "Pandemic", these factors show that the world is in for a very interesting time in the next twenty years or so.

At age 80, the odds of my seeing it through to its conclusion ( unless that is an imminent surprise Second  Coming ) are not necessarily strong. But I do wish you all well with that lot! I have especial concern of course for our children and grandchildren and for my many younger friends.

SIR PHILIP GAME  Governor of NSW in 1932

But, just as the "Pandemic " panic was sprung on an unsuspecting world in a two day period, I never underestimate the power of surprising developments. I recall the story told of the daughter of the New South Wales Governor. Sir Philip Game.   She said of the State Premier Jack Lang, who was advocating repudiation of the State's international debt during the Great Depression: "Mr Lang was going to 'bolish Daddy, but Daddy 'bolished him." Lang was dismissed by the Governor on 13th May,1932. We never know what is 'round the corner!The present "Emergency"(?) has amply demonstrated that.