China, Money, and A Watershed Moment

Two weeks ago China announced that they were now backing their financial system with gold. So I ask, ‘Who is going to invest in American Treasury bills backed by dollars roughly equivalent to the dollars in a game of Monopoly when they can invest in something backed by gold? Along with China’s announcement, a buzz has arisen around the web that the money system is going to change and all debt will be erased. You will get to keep what you have – house, car, appliances, and whatever else you have purchased but not paid for yet. This probably sounds good to some, but our debt would not be erased in isolation. There would be other erasures...such as the loss of your savings, pensions, 401k accounts, Social Security, and disability income. Of course, the loss of savings, investments, and money in the bank is bound to be less exciting than the disappearance of debt. There is also the problem of losing the money that keeps businesses going – everything from corporations, to grocery stores and gas stations. The reassurance has been that the disruption would only last a couple of weeks…but what would we do in that couple of weeks? Obviously, everyone would have to have enough food and toilet paper on hand to last at least a couple of weeks. But the big question would be ‘How are they going to allocate the new money?’ Bix Weir ( reports that this question of allocation has been the big obstacle, but something akin to a decision and a plan may now be in place. Those who have paid the longest and the most into the Social Security system would be first to get the new money. This is all well and good, but if I were in charge the question would not be “Who has paid the most into Social Security?” It would be: How can we allocate money in a way that eradicates the ‘I’m-better-than-you’ attitude that having more money promotes? If we were going to let the money system go down, we could use this moment in time as a watershed opportunity to remove barriers and inequalities between us. Maybe we couldn’t eliminate every instance of these, but perhaps we could at least make a dent in what has been, for a very long time now, unequal access to money, a serious stumbling block to peace, and a source of serious crime. Can we even imagine a world where everyone is taken care of and the majority of needs are met? What kind of creativity and personal growth would that unleash? Is it time to rethink not only the financial system but our capitalist assumptions about who deserves what?


  • Hi Doug,
    I have to back down on my statement and do some bowing and apologizing. I have someone who is a very good advisor who called and told me that China was now backing their financial system with gold. I accepted what he said because he is a financial guy and is usually correct. When your question came in, I tried to get hold of him to ask him to verify his source. He was out of state, but gave me the name of a site to check out, so I went there. The site was full of information about China, what they were planning, what they were actually doing, and many details about their gold and their currency, but I could not find the actual statement that said, “China has officially announced they are now backing their currency with gold.” It’s obvious China is moving in that direction. It’s clear that they are flaunting the global agreement to NOT back currency with gold. It’s clear that they are willing and perhaps ready to dump dollars and risk chaos because they know there is guaranteed craziness if they trust in the U.S. money-printing presses. But nowhere did it say there has been an official announcement that they are now backing the Yuan with gold. So I can only conclude that what I said isn’t true – yet – and apologize for jumping the gun. And I also want to say a big thank you to you for reminding me that I have to check things out for myself, and not just take other people’s word for something! At the intuitive level, I have seen some big changes/events/challenges coming this fall and I’m wondering if what I’m seeing is enough to prompt China to make the “big move!”

    Penny Kelly
  • China backing their financial system with gold? Where is your source for that?

    Doug Jacoby

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