This is my attempt at answering the question posed here:
The EU's walls of Jericho moment?
Open Europe blog team
On Monday, April 18, 2011
At 4:28 PM
FreeGold means that the currency should have a Gold component and a paper component, but should put a "firewall" between the two so that Gold’s valuation as a wealth-preserving asset cannot be pulled lower by the inevitable inflation of the paper component of circulating currencies. It is the marking to market (MTM) of Gold reserves which should provide that wall.
The wall of Jericho is a Pre-Pottery Neolithic A (PPNA) defensive wall dated to approximately 8000 BC. It is thought to be the first city wall ever built. It surrounded and protected a Neolithic settlement which contained anywhere from 2000 to 3000 people. The wall was complemented by a stone tower built into it. The tower had stairways and is thought to have reached a height of ten meters. The wall is thought to have been built in order to prevent floods but the height of the wall (approximately 5 feet (1.5 m) thick and 12 to 17 feet (5.2 m) high) as well as that of the tower suggests a defensive purpose as well. Furthermore, the construction of such a project implies some sort of social organization,
As I understand it, the question is
the guiding principle of European integration, which would have always been 'build the institutions and the facts of life will follow'
is not being endangered by the fact that True Finns don’t want to defend the euro, whatever it takes.
My answer starts by pointing out that True Finns never said it didn’t want to defend the euro. It only said that it didn’t want to pay for the bailout of the guv’mints established on the territories on which the euro is legal tender. Like most "analysts", the question confuses the euro with the eurozone.
And you know what? An end to bailouts means that it is certain that the guardian of the euro, the ECB, will not use the printing machine to create the necessary digital banknotes to pay for the bailout.
You want to know more? The European System of Central Banks, the Eurosystem, has excess gold reserves. So even if the ECB prints, the euro’s value does not suffer. (Yes, inflation is always a monetary phenomenon, said Milton Friedman. So yes, printing could nevertheless lead to problems.)
[The ECB has] just released the new market-based revaluation of their monetary reserve assets, including gold. They do this once every three months. It sort of lets the world know the true, market-based strength of their monetary foundation. It's not that the currency is redeemable in government gold like the old gold standard. They simply make sure physical gold is available, tax free, at the floating market price. http://fofoa.blogspot.com/2011/04/reference-point-gold-update-2.html
The process of marking to market (MTM) the Eurosystem’s gold reserves has resulted during the FIRST decade of the Freegold (ECB MTM FLOATING gold price) "experiment", in gold rising from 30% to 60% of the Eurosystem's (international liquidity) reserves.
The wall of Jericho protecting the euro and insulating it from the present flood of digital banknote-printing was pointed out or indicated by ECB President Duisenberg as being the result of the severance not only of the euro's link to gold, but also its link to the nation-state.
The euro, probably more than any other currency, represents the mutual confidence at the heart of our community. It is the first currency that has not only severed its link to gold, but also its link to the nation-state. It is not backed by the durability of the metal or by the authority of the state. Indeed, what Sir Thomas More said of gold five hundred years ago – that it was made for men and that it had its value by them – applies very well to the euro.
(International Charlemagne Prize of Aachen for 2002
Acceptance speech by Dr. Willem F. Duisenberg, President of the European Central Bank, Aachen, 9 May 2002
As I said, FreeGold means that the currency should have a Gold component and a paper component, but should put a "firewall" between the two so that Gold’s valuation as a wealth-preserving asset cannot be pulled lower by the inevitable inflation of the paper component of circulating currencies. It is the marking to market (MTM) of Gold reserves which should provide that wall.
One final point:
True Finns wants welfare benefits to be maintained in Finland, but by refusing to bailout the other welfare states …
Some of the consequences of the war will thereby be erased in Europe.
Truth, ad-equation of thing and the intellect (Thomas Aquinas), will be achieved.
It is at this moment, mid (two-thirds?)-April 2011, that the euro’s MTM-firewall will, amid the present orgy of digital-banknote printing, show how it can defend … euroland.
It is euroland which must be ad-equated to the euro.
Not, the euro to euroland.
Is the guiding principle of European integration, which would have always been 'build the institutions and the facts of life will follow', not being endangered?
No, the institution which has been built is the euro, not euroland.
The latter may be endangered. The former is not.
The latter should ad-equate itself to the former. Not the former to the latter.