Workers Revolutionary Party

Only Gold Is Money, The Rest Is Paper Masquerading As Money

WEDNESDAY’S announcement by the German central bank (Bundesbank) that it was going to physically repatriate its vast gold holdings from New York and Paris is nothing more than a clear statement that paper money is worthless and the capitalist world is in a currency crisis of historical proportions.

The physical transportation of 300 metric tons of gold from the New York Federal Reserve Bank and 314 metric tons from France back to Germany is the biggest gold move in history and has not been undertaken lightly by the Bundesbank, and certainly not so that they can check the conditions of the gold bars as some have suggested.

The reasons for this move by Germany, the second largest holder of gold in the world after America, was given by their spokesman when he insisted that they would not be selling the gold and that the move was ‘pre-emptive’ in case of a ‘currency crisis’.

Even this statement is an attempt to minimise the significance of this repatriation. Far from being ‘pre-emptive’, it is being done precisely because the hard-headed German bankers are acutely aware that capitalism is already in a currency crisis, a crisis that is seeing the euro and the almighty US dollar becoming worthless bits of paper in the immediate future.

This was certainly not lost on the world’s bullion experts and dealers, one of whom, Jim Sinclair, wrote in his newsletter to fellow traders that this was the ‘beginning of the end of the US dollar as the reserve currency of choice’.

He went on to describe it as the most significant event since French President Charles De Gaulle challenged US dollar convertibility into gold back in the late 1960s by converting France’s dollar reserves into gold.

The result of this was that in 1971 the US was forced to abandon the myth of dollar convertibility – that one ounce of gold was worth $35 – established by the 1944 Bretton Woods agreement which was designed to prop up the shattered capitalist economies after WWII.

Since the ending of dollar convertibility the US dollar has remained the capitalist world’s main reserve currency for all international trade and finances, but it has done so without the backing of any real value, that is gold.

This has led to a vast expansion of credit internationally, paper credit that has absolutely nothing to back it up.

When a vast credit turns into debt then it becomes only too apparent that paper money, without any gold (the universal measure of value) to back it, is worthless – it is made up of various pieces of paper masquerading as money.

The cry from the bankers now goes up for gold – nothing else will do, the dollar and the euro along with the pound and the yen are just bits of paper.

The bourgeois press has referred to the demand to physically control its gold by the German bank as indicative of a ‘breakdown of trust between leading central banks’.

However, it is not just a breakdown of trust but a recognition of the complete meltdown of the capitalist economic system that can only result in hyper-inflation on a scale last seen in 1930s Germany, where workers suddenly found that their wages and savings were wiped out overnight.

With that history behind them, it is small wonder that the German bankers are preparing for this meltdown, and are not impressed by Obama’s desperate insistence that America can pay its bills and to think otherwise is ‘irresponsible’.

The facts are that capitalism internationally is in the depths of the most explosive crisis in its history – for it to survive it must impose the entire crash and hyper-inflation squarely on the backs of the working class.

The only way for the working class to avoid this is to organise the revolutionary overthrow of capitalism.

Central to this task is the building of the WRP into a mass party to lead the socialist revolution along with the building of a section of the International Committee of the Fourth International in every country.

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