From the Financial Times (London): Germany’s Golden Opportunity

Germany has an opportunity to anchor itself in gold

From Godfrey Bloom MEP and Mr Patrick Barron.

Sir, Martin Wolf is right (“Why exit is an option for Germany”, September 26). When the European Central Bank was formed, it was assumed by the bond market that it would operate like the Bundesbank, which ran pretty much the least inflationary monetary policy in the developed world. In fact, the opposite is true. Although prohibited by treaty from monetising debt, the ECB continues to lend euros to national banks and takes the same debt as collateral. Thus, the euro is plundered by multiple parties and the pot is emptied.

Faced with this, Germany should leave economic and monetary union, redenominate euros for D-marks – one-for-one – and allow the resulting new currency to float freely. It could go one step further and anchor the D-mark in gold. Germany is an economic powerhouse, renowned for its refusal to print money, and already owns more of the world’s gold than any other nation except the US. The benefits of this go deeper: tying money to gold not only ends price inflation and preserves capital but also necessitates a return to limited government, for the simple reason that it can no longer endlessly fund an expanding state by degrading the currency.

Germany can, and should, lead the world. It is in the right place at the right moment in history. The euro debt crisis presents the Germans with a golden opportunity.

Godfrey Bloom, Ukip, Yorkshire and North Lincolnshire, European Parliament

Patrick Barron, Graduate School of Banking, University of Wisconsin, US

http://www.ft.com/intl/cms/s/0/48bfd57c-f8fb-11e1-945b-00144feabdc0.html#axzz27lu3lrmL