We tried to kill gold like we try to kill terror. We could have succeeded, except there is an element of Nature in gold. In every activity of human civilization, there is an element of Nature which effectively tries to do the balancing act. We should never attempt killing that linkage. Gold can be killed, not Nature; similarly terrorists can be killed.

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Gold was money since the beginning of human civilization. It evolved naturally. And in 1945, the world was assured by global leaders in the formation of Bretton Woods system that dollar is gold. So dollar effectively became global money and gained more acceptability.

In 1971, as US unilaterally closed gold window effectively destroying the linkage but retaining dollar is money footage, it eventually dropped the metaphorical 'Tsar Bomba' (codenamed 'Ivan' by Soviet Union, it is the largest, most powerful nuclear weapon ever detonated back in 1961) in global monetary world. However unlike other atomic explosions, there was no immediate casualty of this explosion in the form of this monetary bomb. And unlike any criticism against breaking the promise made in 1945, global leaders hastened to arrive at a damage control exercise by measures to stabilize dollar when the destabilization was effectively over.

And that explosion and all those attempts of stabilization paid off. Global economy grew year after year at a pace that was never seen before. Inequality was growing, however that was always there before 1971 too.

Were there indeed no casualty and only benefits of this metaphorical atomic explosion in global monetary world?

No, there were casualties ? but not as we saw in Hiroshima and Nagasaki. Gold was a casualty as an investment class (though it gained spectacularly in the 1970s). But that did not matter as long as human civilization grew and prospered on planet earth. So why should we bother and unnecessarily chew our heads about the nuclear analogy in the beginning?

There were other casualties and those came up eventually. It showed the shortsightedness of our policy-makers, expectedly. The biggest of them all was Mother Nature. What followed next over last 35 odd years is a mad rush of pumping of paper money all over the world. If US could do that and still sustain, why not Japan; and if Japan could do that why not China, and India, and all the rest. True that few suffered in-between in over-doing money circulations, but those were incomparable against the magnitude of benefits globally human beings saw in last 35 years by following Henry Kissinger's model, who called the gold standard 'that barbarous relic.'

So what followed next after the barbarous relic came to an end is a mad race in this world on who can rape and exploit, I repeat rape and exploit, Mother Nature and that too how fast and by how much. Nature does not give credit. We can't have fruits of tomorrow today. Nature gives us fruits continually but does not give us credit. However now with credit money, mankind on earth can consume today what s/he otherwise could possibly consume tomorrow, and thereby let the growth engine run as fast as it can. Who bothers about repayment when present system of indebtedness of all major economies have reached a point of no return. So our Governments and central bankers borrow knowing well that's not to be repaid. People would be happy to vote them back to power as long as they had money, and as long as inflation could be contained.

And from whom do our Governments and central bankers borrow? Well from some stupid people who save for future uncertainties inspite of their poor consumption levels, and also from some rich people who can't consume as much as they earn. Otherwise how do we explain high savings rate in China (40% of GDP) and India (20% of GDP) and other emerging developing nations to be much higher when compared to negative savings rate of US (-1%). But that source of savings increasingly proved to be inadequate against the shortfalls our Governments ran year after year. So what did they do ? they, matter of fact, borrowed from Nature, directly by creating money or indirectly through rest of us. They state that it's their right to create money as the economy demands. But little probing would show that they create that money from air by borrowing from Nature. And presently the level has gone up so much that further increased borrowings clearly show that they don't even have the intention to pay it back ever.

However as Nature per se don't give credit at all, we aren't sure whether she receives the pay-back without any collateral damages. Effectively it means the pay-back needs to be much higher, not purely in monetary terms but probably in other Natural terms as well.

If we begin with the fundamentals - why do we need money for? The answer would be for easy and convenient transactions ? in buying goods and services to consume. Can we think of any goods or services that's not sourced from Nature ? directly or indirectly? Probably not. And I am not alluding to the fact that mankind by virtue is also part of Nature. Even if one takes IT and BPO outsourced services, the money paid is eventually used by the employees in India and elsewhere to consume more goods ? made from Nature again. So when we transact with significant amount of borrowed money out of total available money, as encouraged by our Governments and central bankers year after year, we effectively consume more and more.

We even consume things that we apparently don't need, but because others in our society consume them. So new needs are created, new products come and well, we feel that we need them as badly as ever.

And till yesterday we were living happily without any such need! How strange...

And no one owns Nature. Aristotle said about common goods "that's which is common to the greatest number has the least attention bestowed upon it. Everyone thinks chiefly of his own, hardly ever of the public, interest". And thereby our Governments took care of respective citizens and economies, business organizations took care of their shareholders, and no one as such bothered for poor Mother Nature. We all eyed Her resources to build our resources before it is too late for us to join the party ? the party of exploiting and raping Mother Nature.

Otherwise did you ever ponder that in present set-up of capitalism where nothing is absolutely free, how can we still have free air and water. Because none could master the art of owning and managing them. And when we could not do that, we started consuming these two free goods, probably most valuable assets that human beings need, as much as we could with a mindset as if there is no tomorrow. That too when water and air effectively are free of cost in this era of capitalism.

And thereby most of us increasingly created more and more assets out of these two still free natural resources.

And then many realized that pure drinking water is no more available free of cost. And if things continue this way, sooner than later we will realize that refreshing clean air too comes at a price. Sounds incredible ? isn't it? But the writing is on the wall that if things continue the way it's been continuing now ? Mother Nature would collapse in her way to sustain human needs against credit money where we consume today what she is supposed to make available to us sustainably tomorrow.

We all studied Aesop's masterpiece story of the goose that laid the golden eggs. Only thing is Mother Nature is so vast and so rich that it does not die in a minute. And we should note that it's not Mother Nature who dies because of our collective greed and consumerism wave with credit money, it's rather human kind who would perish in another kind of harsh conditions as Mother Nature naturally adjusts to these increased credit driven demands.

We are no longer talking about economic sustainability of this 'fiat' money, we are rather talking about sustainability of human civilization for years to come in Mother Nature.

And expectedly we don't learn. Governments had to win the next elections, corporates had to win shareholders' confidence, and we all wanted to have as much as we could because who cares what happens to the world fifty years down the line. Each of us individually live only one life. "Treat the earth well: it was not given to you by your parents, it was loaned to you by your children. We do not inherit the Earth from our Ancestors, we borrow it from our Children."[1] Unfortunately, in present world we know that we don't treat the earth well. And more importantly by now we know the possible consequences ? so we can't blame it on ignorances any more.

And the bauty is our children can't hold us accountable for our borrowings ? unlike me borrowing from a bank and the bank again borrowing from central banker. What a nice system our policy makers developed to sustain short-term growth and prosperity by 'killing the metaphorical golden goose' systematically and without any accountability, Mother Nature all over. And unlike the Aesop's story where the farmer failed to get rich quick, in our case we would have a much more catastrophic effect, globally.

But again, it's not me and you per se who would face the catastrophic effect because of again the vast resources of Mother Nature ? it's our children and theirs and theirs who would pay the price for this catastrophic deliberate mistake.

And when the system of this exploitation of Mother Nature is institutional and followed globally, we can either be part of it happily or we can grudge and be forced to be part of it umwillingly. It's a relative order of who can exploit Mother Nature more and that too how fast.

And I said in the beginning ? gold was supposed to be the first casualty when gold window was closed by US unilaterally back in 1971. But as long as we prospered sustainably, it didn't matter. Now we feel that present system of credit is not sustainable on Mother Nature. So why not look back what's happening to gold which was money since the beginning of human civilization till 1971.

And this is what another legend, Alan Greenspan, who just retired from the helm of the system that run this 'fiat' currency globally against gold said (albeit at a younger age):

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation."[2]

So where do we go from here...

All of us globally are aware of the overt global war led by US against terror. Very few of us are aware about another covert global war of dollar against gold since 1971. Are they linked together? Directly or indirectly? Can the outcome of one potentially determine the outcome of other? Why should there at all be a global war of gold against dollar? How is this war fought? Who are the participants? What happens if gold wins and what happens if dollar wins?

Is it a hallucination that I am trying to build as a hype or there exists truth in it? More important is to ask, if there is some truth in it, which side would you support as an individual in this global war of gold against dollar?

We will examine that...well...with my personal bias. We all try to be neutral; but we all have our own individual prejudices and bias.

Let's repeat the first question ? is the overt war against terror and covert war of dollar against gold linked together, directly or indirectly.

The answer is yes. They indeed are, and very much directly. But by how much ? I don't know. Chaos theory suggests movement of a butterfly in Beijing can influence the weather in Bahama. However I am not talking about that type of linkages here. The linkage is substantial, and if there was no war of gold against dollar, my guess would be there may not have been any war against terror. However these 'if but' stories are hypothetical situations which has not happened as the war of gold against dollar preceded the other by thrity years; and therefore is difficult to ascertain to.

Let's repeat the 2nd question: can the outcome of one war potentially determine the outcome of other?

Again the answer is yes, indeed they can. However unlike other wars that we have seen in the past, the beauty of these two wars are - all (major) global policy makers and powerful bodies, including the present super power who actually is leading both the wars belong to the same side in this war. They all are uniformly against terrorism, and they are against gold, to a varying degree based on their intrinsic interests. And in spite of that, the wars go on for years. And they are likely to go on for years till fundamental changes take place that can bring equality and sustainability globally.

Let's repeat the 3rd question ? why should there at all be a war of gold against dollar? Well, this is difficult to answer. However we know the story of the goose that laid the golden eggs. Why did the farmer kill it? It was pure greed ? to live better, to be richer, to cosume more, to be more powerful, etc. Well, that was a story. Something similar was happening in reality in the backdrop of cold war when the war of dollar against gold was declared after the warring sides realized there was no chance of diplomacy against Mother Nature (and a few gold-bugs!) in 1971. And that's when human greed dropped the metamorphical 'Tsar Bomba' on global monetary system against gold through dollar. Soviet Russia collapsed as a correction as it was not a major party to global monetary system, and could not sustain the load of overspending on defence far too long alone. And people who matter ? be it our Government, policy makers, and corporate leaders had to show better growth, employment, profitability, etc. year after year. Otherwise they were shown the doors. So each of them individually had to fall in line as rest all in their category did in a relative mad race to exploit natural resources ? free or charged by some human organization by now in our capitalistic society. And Government continued pumping in money that generated and sustained demand.

Everybody was indeed happy barring a few who never had capital to start with as in this system capital bred capital.

Gold didn't breed gold!

And that underprivileged section remained as bad as they ever were. But they were there all the time in history ? so why bother...Money breeds money in present economy. So if you don't have any, sorry ? bad luck this time. And though this underprevileged didn't consume more - thro' money or borrowed money, because they didn't have any, they too now pay the same price, probably more because their livelihood is more dependent on Nature.

And barring another entity i.e. Mother Nature...because She could not sustain the increased human demand inspite of her rich unending resources and balances. And the tell-tale signs became visible, and with time they grew bigger.

So the war of gold against dollar can be termed, in a way, as the first covert war of mankind against Nature, willingly or unwillingly. We wanted more ? Nature failed as gold supply was limited; and had some costs too. So why not dump gold and create money and have policies where all over the world that money is accepted with credibility.

So far so good... barring again Mother Nature and thereby sustainability of mankind in Nature....

Let's look at the fourth question now ? how's this war fought. It's not another war that ended apparently with the dropping of the metaphorical atom bomb in global monetary system. Policy makers wanted it that way, but they could not destroy our age-old practices, and some logical thinking of mankind, and there were gold-bugs too.

People all over the world don't change overnight. We know how difficult any change management is. So people globally, who looked at gold as money for years, didn't dump gold. They still bought it, and retained whatever they had accumulated as family treasure. And unlike policy makers who took to selling gold covertly in this war, individuals started accumulating gold overtly.

And if one looked at Gold from an investment perspective, for a long time the gold-bugs lost out. Because inflation adjusted dollars returned more ? anyway it depends on timeperiod of holding. Because global policy makers didn't want gold to be accepted as money or even any measure of money where there existed no meansure any more after winning the initial war without much of a fight for over twenty years, post 1980s. First ten years was expectedly difficult as practice of thousands of years was abandoned, but then there was almost no war ? it was an easy victory for global policy makers in their covert war against gold with dollar.

And they enjoyed their power to be creators of wealth. Gold having being beaten, they started misusing that more often. Remember the elections after every four to five years...

But the war was not over yet. Gold started to make a come back since last couple of years ? and then made a spectacular run in 2006 itself until May this year. But then again it collapsed (and regained part of the loss too!).

Before proceeding more ? we must know who is fighting for gold against dollar. Yes, a few gold-bugs and few investment gurus and many people all over the world who still consider gold to be the monetary safe heaven and thereby following tradition give gold to their daughters at the time of their weddings, more as jewellery overtly but as safe money covertly. Unlike paper money and promise of some mankind, gold is gold is gold. And we know how often our Governments globally and locally have failed us in maintaining their promises.

And then there were few emerging central bankers, now flooded with dollar who wanted better port-folio for their rapidly increasing forex reserves. So for the first time since 1971, gold was not supported by individuals alone!

All the Governments put together could not maintain their promise of dollar is gold made in 1945 while launching Bretton Woods even for twenty-six years. And now there is a promise printed in all paper currencies globally ? common sense defies me to understand even what that promise is to begin with.

So when gold fell by 20% in matter of days globally in May 2006, people started wondering who could be the sellers. And different theories emerged ? one school of thought with available facts and figures suggested US Treasury to have manipulated in bringing the gold price down. And none denied[3].

Questions rise whether it is fair for Government agencies, who create paper money and regulate economy to trade and manipulate any commodity price. Any fair guidelines should say no - the guidelines do also say no. But who will bell the cat? How much gold does Government agencies have? Are they truthful about it or an Enron like scandal is brewing up there?

We aren't sure. We can only speculate in the absence of any neutral audit. Published figures show gold reserves with central bankers falling globally, however they still hold significant gold to manipulate its prices for few more years at present demand-supply scenario. What may happen when down the line Fed runs out of gold? Can Government again confiscate holding gold in retail level as US did in 1930s? Governments can do anything, we know.

They are empowered to do the wrong things with justifications. How strange!

So the war is effectively fought in COMEX and all other exchanges globally through paper gold where JP Morgan and the rest like them representing policy makers like Fed, with ammunition that may very well categorize as insider trading trade in gold with paper-currency against gold-bugs and physical gold.

And against Nature too!

And gold-bugs have been fighting a losing battle since 1980s as inflation adjusted price of gold never reached nowhere close to where it was in 1980s. But fundamentals are in their favor, they are aware that they are fighting a war against global central bankers who can produce endless paper money against which gold is traded anyway. So the covert war is on, and after some years with apparent victory of dollar against gold, policy makers realized again in 2006 that the war was not yet over.

And the war against terror in-between just began compared to the thirty-five years long covert war of dollar against gold.

And till a sustainable solution is reached in both, these categories of war would go on. West is predominantly preoccupied by Muslim fundamentalist driven terrorism in its war against terror. Living in Indian sub-continent, I live with different categories of terrorism. The Mao movement is another that's spreading its wings from grassroot level, where years of neglect and poverty have partly fueled that ideology. These are more of a result of economic-neglect in an apparently new-found affluency in Indian society[4].

And many of these wars against terror can't be won over unless we correct the sustainability and equality issues globally. And these issues, as we have seen, when the competition globally is to exploit Mother Nature the most and that too the fastest can't at all be resolved locally.

That effectively means that these two wars would go on till a sustainable (and hopefully more equitable than present system) monetary system evolves globally. Therefore war against terror in all its forms would end only when gold registers an emphatic victory against dollar in the covert war that started back in 1971.

Nature is strong and Natural forces are strong. Nature don't need backing of any super power when it acts overtly or covertly through its Natural forces that bring both creation and destruction all over. Terrorism is the creation of Nature to safeguard Herself against the imbalances inflicted upon Herself by dollar hegemonistic policies, the primary one being the covert war of dollar against gold. Americans may not have liked killing innocent civilians anywhere, however US policies to maintain dollar hegemony (militarily and through covert economic means) made it wage war against nation after nation year after year at some pretext or other[5]. And it killed many innocent people - civilians and children. Similarly terrorists are misguided when they look at any American citizen (read western citizen and global citizen in same context) and treat him or her as their enemy number one. Terrorists want to to destroy dollar hegemonistic unfair policies of US, however as they can't do that ? they mistakenly do the 2nd which is as erroneous as few unfair hegemonistic policies and actions of US.

Market forces are also strong ? and it showed that strength many times. However gold against dollar can't be rectified by market forces alone because authorities have gagged 'free' market through manipulation. And there came Natural forces as all other options were eventually closed. And as 9/11 happened through reactive Natural forces, gold also started making a come back.

A covert war by policymakers and thereby mankind on earth were launched against Nature and natural gold for more than thirty years. Nature responded by various natural means which we saw but ignored to satisfy our collective greed, and Nature also responded by another covert war against mankind using mankind himself through terrorism. Our policy makers didn't understand; even if they understood they didn't acknowledge their mistakes. They rather felt they were strong enough to kill the terrorists, but they read the signals wrong by mistaking that terrorism can be killed by killing terrorists alone. We made one mistake in 1971 and we continued our policies thereafter globally in that mistaken path.

Hope our policy makers wake up, acknowledge the catastrophic mistakes done so far and take corrective steps to make human civilization in this world a sustainable and peaceful one. We tried to kill gold like we try to kill terror ? we could have succeeded unless there was an element of Nature in gold. In every activity of human civilization, there is an element of Nature which effectively tries to do the balancing act. We should never attempt killing that linkage which binds mankind with Nature, because effectively it becomes a suicide - for mankind in coming generations. Gold can be killed, not Nature; similarly terrorists can be killed, not terrorism unless the policies that fuel terrorism is rectified.

© Ranjit Goswami. Ranjit is a Research Scholar with Indian Institute of Technology, Kharagpur, India; and is the author of the book 'Wondering Man & The Internet'. He can be reached at ranjit.goswami@gmail.com

[1] Ancient Indian Proverb http://www.ilhawaii.net/~stony/quotes.html
[2] Alan Greenspan, Ph.D, Gold and Economic Freedom by Dr. Alan Greenspan, 1966

[3] 'Did the US Treasury Manipulate the Gold Price Down' dated 1st August 2006 and a follow up article on 30th August titled 'The How and Why of Gold Price Manipulation' both by Greg Peel in FN Arena News; Commodities
[4] The Economist, 17th August 2006 'A spectre haunting India' explained this Mao-movement of terrorism as 'A primitive peasant rebellion based on an outmoded ideology is out of keeping with the modern India of soaring growth, Bollywood dreams and call-centres... it covered 170 of India's 602 districts... and one-quarter of Indian land-mass'
[5] 'The so-called "free trade" bottom line: Poor countries producing commodities cannot possibly compete against rich countries producing credit money. Yet they are being forced to do so.
Meanwhile, during the past 30 years the US has bombed or attacked Syria, Lebanon, Nicaragua, Sudan, Korea, Vietnam, Cambodia, Laos, Iraq, Guatemala, Japan, East Timor, Nicaragua, El Salvador, Colombia, Dominican Republic, Somalia, Haiti, Yugoslavia, and Panama. The common denominator of these nations is that they are all non-members of the World Trade Organization. Since the invention of the WTO only Japan has joined willingly; the South American countries have been "persuaded" by friends of the system.' From 'Money', Library of Halexandria, http://www.halexandria.org/dward299.htm And how much unsustainable this whole economy is understandable when agriculture in rich countries with all modern amenities is economically not feasible against agriculture in poor countries using age-old technology and labour. Rich countries (US & EU) continue providing substantial subsidy in farm products which was one contention of developing nations in the recently concluded Geneva round of WTO where discussions finally broke down.

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Authors Bio:
©Ranjit Goswami. Ranjit is a Research Scholar with Indian Institute of Technology, Kharagpur, India; and is the author of the book 'Wondering Man & The Internet'.