This exceeded the maximum comment length, so I added it as a new post.
“Anyway, I got another thesis: "The Euro has to be destroyed before the dollar, in order to have a chance of freegold evolving". The Euro is a bunch of crap: It does not allow Gold to flow to balance the currency flows inside the EU, or to have a currency adjustment like in the EMS before. The european bond markets are a minor problem, what FOFOA never looked at, is are the TARGET2 account (im)balances and with it is an self-accelaration imbalance, with the PIGS being driven more and more into depression (the economist Hans-Werner Sinn made some awesome presentations of that). “
I see no thesis, only a statement. Perhaps you would be kind enough to share your arguments supporting that statement.
Mayhap you think this is supporting of your position : “ The Euro is a bunch of crap: It does not allow Gold to flow to balance the currency flows inside the EU, or to have a currency adjustment like in the EMS before. “
Logically however that view does not support your 'thesis'. You see, the United States of America is similar to the United states of Europe in this regard. A group of clearly defined regions, each with their own set of books that share a currency.
Your suggestion is that within a shared currency zone, it is impossible to settle balance of trade between entities. If this were true then it would be impossible to settle balance of trade between the different states in the USA. At a finer grain it would also be impossible to settle trade imbalances between the different provinces in a country, or for that matter between different cities, or even different neighbourhoods. This is obviously not true. Prior to the current system balance of trade was settled, by the flow of gold; on the individual, community, city, province, state and international level. So we know it is possible. All that remains is to envision how this will occur under FreeGold.
Now. Under the current paradigm it is true that the balance of flows is emphatically not settled within the EU. All that happens is that trade imbalance heaps up in another country's central bank as debt. This is obviously not sustainable, and leads to the resentment and anger building up the the populace as you mentioned.
Of course, our position is that the current system is not sustainable and will not be sustained. Hence the transition to FreeGold. :P
Upon reflection it is clear that each currency zone will have a singular price for gold(within the margin of error of transport costs). When an individual acquires gold he will do so at the lowest possible price point, which means there will be no differential between the price in say France or Germany, for if it were cheaper the individual would simply order from another country.
This is akin to how the individual choice will be made on an international level. If it is cheaper for me to buy gold in China than Europe, being a European citizen, then I will buy gold from China (factoring in transportation costs).
Now. Let us return to the European union, and consider how balance of trade may be accomplished between the countries in a FreeGold paradigm.
Now it should be clear that in order to facilitate the equalization of the balance of trade (deficit in this country), gold must cross the border of my country. In this case gold must flow out of the country in order to balance the deficit.
Amazingly, and contrary to your claim, FOFOA covered this exact thing in his last post. I shall quote from The Gold Must Flow :
Imagine that Germany is shipping more goods to London than it is getting in return. So Germany is supporting London's trade deficit in the same way that China is supporting ours. Germany is letting London "borrow" extra goods and then consume them. In exchange, let's imagine that London pays for its trade deficit with paper gold, just like the US pays China with US Treasury debt. Germany will start stacking the paper gold in the same way that China stacks Treasuries. The debt will grow. The imbalance will grow. Nothing has actually flowed opposite Germany's goods and services except debt. (TF : Current system)
If, on the other hand, physical gold flowed from London into Germany and the price was high enough that it offset the trade deficit, then there would be no trade imbalance. There would be no accumulation of debt. Everything would essentially be settled on a cash basis with no international debt. But in order for this to work in reality, the price of gold will have to be much higher than it is today because there's simply not enough gold to flow at today's prices in order to fill the trade gaps that already exist. (TF : Under FreeGold)
And here's another interesting note. It won't matter if London is still using the pound or if they switch to the euro. The gold still balances trade as it flows. So no, it's not a flaw of sharing the same currency that the PIIGS can't balance trade with others in the euro's core. It's a flaw of the current system which existed long before the euro was even born. Within the current system, the euro does remove the possibility of local currency collapse as an alternative adjustment mechanism, but honestly, that's part of what they wanted with the euro. The current system is one of irreversible debt-buildup and gold-debt which sterilizes the flow and price of gold.
Spur and Brake
Once gold is flowing at a high enough price to balance international trade, it will start accumulating in countries that run a trade surplus excluding gold (including gold, trade will balance). Likewise, it will start disappearing from those countries running a trade deficit ex-gold (excluding gold). This is how the spur and brake forces work on an economy in Freegold.
As the gold supply within a "deficit ex-gold" nation dwindles (think: USA), each piece remaining will become more and more dear in terms of other goods and services within that zone. In other words, the purchasing power of gold will rise in the "deficit ex-gold" zone vis-à-vis goods and services in that zone. Likewise, the purchasing power of gold will begin to fall in the "surplus ex-gold" zone (think Germany or China) versus goods and services in that zone because of the large and growing accumulation of gold.
At this point the large quantity of gold in the "surplus zone" will have a lower purchasing power against goods in its own zone, but a higher purchasing power abroad in the "deficit zone" and demand for imported goods will grow while exports will start to fall. This growing demand from abroad will be felt in the "deficit zone" and will be met with new supply. Likewise, the falling demand for imports from the zone with a declining volume of gold will be felt in the "surplus zone" and be met with decreasing supply. Incrementally, the "surplus zone" will slow production and increase consumption while the "deficit zone" experiences the opposite effect. Excluding gold, the balance of trade will shift back and gold will start to flow in the other direction.
(TF : In real terms, in Germany a ounce of gold will buy you less bread than in the UK...and so in terms of value it would make the Germans want to swop their gold for bread...thus spurring the flow of goods from the UK, which would settle the trade imbalance)
Notice, please, that I'm not even talking about the flow of currency or price inflation/deflation in currency terms. Inflation or deflation in currency terms can be happening in either zone depending on how the monetary authority is managing the currency. But what matters in terms of the real trade flow will be the purchasing power of Freegold (not in currency terms, but) vis-à-vis the rest of the trade flow of goods and services.
If you have high currency inflation in the "deficit zone" because the government is printing like crazy, the price of gold will be rising even faster than the price of goods and services. On the contrary, if you have high inflation in the "surplus zone", the price of gold will be rising more slowly than the CPI, exerting its brake force on the economy because gold will still be found to have increasing purchasing power abroad and decreasing purchasing power on goods from its own zone. In other words, gold will be exported to other zones where its purchasing power is higher, spurring those other zones to produce more and putting the brakes on the overheated economy in the "surplus zone".
This flow will continue reversing back and forth forever, as it should be, because there is no such thing as a perfect equilibrium. And again, I want to draw your attention to the fact that I'm dealing only in the physical plane, ignoring the monetary plane. This is what Freegold does. And it doesn't matter if the "surplus ex-gold" and "deficit ex-gold" zones each have their own currencies or if they share a single currency. It still works the same way. Savers run the economy. Savers are the marginal surplus-producers and consumers. When the savers start saving more, it means the economy is producing more. When the savers start dishoarding and consuming, the economy is producing less vis-à-vis its balance of trade. This is the spur and brake force of Freegold, the international demand driven by the fluctuating purchasing power of gold as felt by the savers, regardless of any transactional currency effects with which the debtors may be tinkering.
I hope that clarifies that for you.