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Up From the Ashes - A New International Currency

A 1 Ounce, Gold LibertadOctober 1, 2014 | by Steve McCurdy


As we pointed out here, all the world’s monetary systems have been based upon fiat currencies since President Nixon closed the gold window in 1971. Jeff Thomas, writing in the Casey Research publication “International Man,” tells us that in the last 100 years more than 20 fiat currencies have collapsed due to hyperinflation. Some of the more notable collapses were those of the Weimar deutschemark, the Yugoslavian dinar, and the Zimbabwe dollar.



It appears that most of the world’s fiat currencies are now on the brink of collapse, and there is much speculation about what a new monetary system might look like post collapse. Jeff Thomas suggests that Mexico might inadvertently have created the model prototype for a new world monetary system when it minted the first Libertad coins in 1981. The Libertades are minted in both gold and silver, and they are issued in the convenient sizes of 1/20 oz, 1/10 oz, ¼ oz, ½ oz, and 1 ounce.
But it is not their convenient sizes that make Libertades unique; it is the fact that there are no denominated values on the faces of the coins, but instead just their weights.

Traditional Problems with Coinage

Silver and gold have been used in coins for over 5,000 years, basically since man recognizedThe 1/2 Ounce Silver Libertad the need for money. As civilizations progressed, however, inflation and deflation began to affect commerce and influence the prices of goods and services, and the use of silver and gold coinage as mediums of exchange became increasingly impractical.
Paper currencies have no intrinsic value, and their worth is established entirely by government “fiat.” Gold and silver coins, on the other hand, do have intrinsic values, values that are impacted significantly by inflation and deflation. Accordingly, over time the face values the coins are denominated in begin to drift away from their real values, and eventually their denominations become totally meaningless. For example a US, one ounce St. Gaudens gold coin minted in 1914 has a denomination of $20, but an actual value 75 times higher. 

The Present Fiat Currency Dilemma

For this reason, when fiat currencies have collapsed historically, they have been replaced not by coins, but by the most readily available, alternative fiat currency. For example, the Yugoslav dinar was replaced by the German mark, and the Zimbabwe dollar was replaced by the US dollar.
Mexican Gold Libertad Front & ObverseIn the present dilemma, however, it is likely that all the world’s principal fiat currencies will fail together. What will happen when the entire system of fiat currencies fails? Obviously, with or without an acceptable currency, commerce must continue. People must have groceries, gasoline, and life’s basic necessities. History would suggest that in an emergency of this gravity people are likely to turn to a form of currency in which they have trust, and for more than 5,000 years that has been gold and silver.
Despite the logic of gold and silver, however, the denomination problem we discussed above would prohibit a quick switch to coinage were a widespread currency collapse to take place right now. That is, unless other countries followed Mexico's lead and replaced values with weights on the faces of their coins.

The Libertad as a Solution to the Dilemma

Thomas suggests that the Libertad, by having solved the denomination problem, is the perfect solution to a worldwide collapse of fiat currencies. Because its face shows only its weight, the Libertad’s value changes daily just as gold and silver prices change. In Mexico Libertades are legal tender with floating values that are quoted daily by the Banco de Mexico. Libertades can be exchanged for pesos anytime at designated Mexican banks. If every country had its own version of the Libertad, then the only international difference among monetary systems would be the name of the issuing country on the coin’s face. Exchange values could be quoted instantly anywhere in the world just as market prices for gold and silver are quoted now.

Mexican Silver Libertad 

Thomas acknowledges that at present no government will voluntarily acknowledge the weakness of its fiat currency or the need for a new system, but his thesis is that is that as the current system continues to deteriorate more and more countries will pick up on the idea of the Libertad and begin instituting copy cat versions. Ultimately, he believes that if a dozen or more countries implement the Mexican model, then the concept of gold and silver coins as a reliable international currency will already have established itself in the minds of merchants and consumers, and its choice as the new international monetary system will be assured.
You can be certain we’ll continue to watch as the drama unfolds, but the Libertad represents the simplest and most universally acceptable solution we have seen thus far.

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