Some of the key points:

 

 

We lose influence in world affairs whenever:

The dollar is weak in exchange markets There is a major outflow of gold; and/or We are obliged to pressure countries into holding dollars or giving us payments assistance

 

 

Our position can also be improved by action on the international monetary system itself to:

Decrease vulnerability to confidence crises Increase world monetary reserves (liquidity); and Improve tools for adjusting payments surpluses and deficits

 

 

With $33 billion of foreign dollar holdings ($16 billion in official hands) and only $10.7 billion of gold in the U.S. reserve, the risk is clear. To contain these pressures our strategy is:

To isolate official from private gold markets by obtaining a pledge from central banks that they will neither buy nor sell gold except to each other; To bring South Africa to sell its current production of gold in the private market, and thus keep the private price down.

And here are the seeds for the need for a fiat currency: growing an economy when monetary supply (and, by implication, currency devaluation) is limited, can only pad the growth rate for the core economic entities so much.

 

 

Increasing liquidity

 

Trade won't be able to grow, and the system will remain vulnerable to speculation unless there is regular growth in the international money supply.

Gold can't provide the needed increase: industrial and speculative demand is too high. U.S. payment deficits can't either: foreigners are unwilling to hold more dollars when we run large deficits and unable to increase net reserves by accumulating dollars when our deficits are small.

Our strategy is to supplement gold and dollars with a new international asset, Special Drawing Rights (SDR).

And, of course, if the SDR does not work, the fall back reserve currency can always just be printed in limitless amounts, thus allowing massive liquidity-based expansion in the trade system, which will further allow the U.S. to grow its trade deficit to record amounts. Just fast forward 41 years.