Originally posted by Vitchilo
Well! It just took a year and half before they admit it! This whole thing ``started`` in august 07. They've just come across the word ``recession`` in the last weeks... now they are already at depression.

What would cause a depression... would be to dump the US dollar as the international currency on november 15... which what they will probably do and they will say that it is a necessary evil to save the world in the long run or something like that.

This coming weekend's G20 cuckoo's nest in Washington will --apart from witnessing governments attempt to spend and borrow their way out of a crisis created by spending and borrowing -- address the construction of a new "global financial architecture" to make sure that this never happens again. Again.

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The IMF and the World Bank are among the greatest examples in world history of unintended results. The IMF, which was created to nurse and cajole fecklessly run countries back to financial health, instead created a world of moral hazard. A fine example of the kind of disciplined mentality induced by the IMF is to be seen in Argentina, whose government is trying to steal the nation's pension funds. But that probably won't be a barrier to another bailout!

The World Bank -- designed to help the poor -- has similarly wasted billions while singularly failing to approach the record of curing poverty achieved by capitalist private investment. Its president, Robert Zoellick, warned the G20 pre-meeting meeting in Sao Paulo last weekend that "unless they were quickly able to prime the pump of global credit, the poorest countries in the world -- already reeling because of soaring food and fuel prices earlier this year -- would pay a steep price." It wasn't recorded whether he commented on the role of governments in creating the food and fuel price crises. Somehow -- as Milton Friedman noted -- the answer to government failure is always more government.

Gold surged on Friday as world leaders gathered to battle the economic crisis, amid talk of a new Bretton Woods agreement to shore up the financial system, but calls to revisit the gold standard are unlikely.

The gold standard, a monetary system of fixed exchange rates in terms of gold, had been the cornerstone of Bretton Woods, which created the International Monetary Fund and the World Bank, until President Richard Nixon took the U.S. dollar off the standard in 1971.

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"I think the anticipation of something from the G20 meeting is helping gold," said George Gero, vice president of RBC Capital Markets Global Futures.

World leaders, including British Prime Minister Gordon Brown and French President Nicolas Sarkozy, have recently vowed to change the international monetary system created at the Bretton Woods, New Hampshire conference in 1944, which helped draw up the post-war financial order.

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OBAMA: NO GOLD STANDARD

But it seems that central bankers and governments around the world have already put a stop on a comeback of the gold standard as they prefer monetary policies without being restrained by gold reserves.

In August, then presidential candidate Barack Obama said he did not think a return to the gold standard was a good idea and noted that the U.S. currency was strong in the 1990s, even though there was no gold standard.

Obama was speaking in response to a question about if he thought the country should return to the gold standard, given that the weak dollar is exacerbating the rise in oil prices.

"I don't think they want to do that. I think that would panic the world," said COMEX gold options floor trader Jonathan Jossen.