Here Comes Sound Money
Our suspicions, just a day or two ago, that gold may not be the metal of choice in a standardised (non-fiat) monetary system, grow stronger today. Russia is likely to take the “palladium standard” as the basis of the Ruble. But first, a short history of alternative toilet paper.
Back in the days of the Soviet Union, in Brezhnev’s era, the edition of Pravda (possibly the most inaccurately named newspaper in history) featuring his speeches was highly prized, not for its content, but for its utility as toilet paper. The Brezhnev editions went so much further than the regular rag. The main disadvantage of newsprint was that it had to be folded and cut, and that it left a nasty black residue on the skin. Things improved somewhat with the dissolution of the Union and the debasement of the Ruble. Rubles were softer, smoother and pre-cut to a convenient size. Users of it still complained of the ink running and the occasional tear during use. Plus, it didn’t come in rolls.
Today, however, things are looking different. Pravda is no longer such a worthless read, and the Ruble is no longer looking like always being such a waste of dead tree. The State Duma’s speaker made this statement:
“We could offer the world the Russian ruble made of palladium. It would be a very strong currency. One may recollect the golden ruble, which Russia had during the tsarist times. It was a freely convertible currency and was circulating very well”
That gold is not the only choice for a standard monetary unit is not a new idea in the least. Silver has also been touted as being a worthy candidate, but both metals are abundant, really, and far too much of these metals exists in the public arena for there to be a fair transition to a new currency basis. Discussion around the Internet still revolves mainly around gold, which is still highly regarded as the currency standard of first choice, although in reality things are not so clear cut:
Goldbugs and Fiatbugs are actually sort of similar; both insisting that it’s an “either-or” situation where gold and paper are mutually exclusive. That’s hogwash. Anything that is able to achieve widespread recognition as a medium of exchange is a viable currency, be it gold, silver, paper, or sand dollars. Empirical evidence shows us that gold has had quite a successful run as a widely recognized form of currency, and suggests that it will continue to enjoy status as currency into the future, despite fiatbugs’ protestations to the contrary.
Palladium is just another one of the group of metals (including gold, silver, platinum) which could be used in minted coins and as the metallic strip in notes. It is already used in Canadian currency. Its price is very highly, currently at around US$250/oz, it was at over US$1000/oz at the beginning of the 21st century.
Russia’s favouritism for Palladium is, of course, because Russia is one of the world’s major sources of the metal, alongside South Africa. It is, therefore, unlikely that other nations would take Russia’s lead and take on the same precious metal as their currency base. This could be a very good thing:
If Russia takes on Palladium for its currency standard, and other nations choose not to (as they well should), it may save the world from a single world currency and the grip of the IMF.