Yesterday, they announced some new “regulations” to fix all of our financial problems. Buried deep inside was a reference to activate an obscure “Metals Act” regulation from January 1945.
It seems that the US came very close to going bankrupt while fighting World War II. Some metals became so scarce that even the common nickel was minted from silver since nickel was needed for the war effort. Near the end of the war, the silver was running out and all the gold was being used to back loans needed to keep fighting. The Metals Act of 1945 was designed to allow the government to change the US Dollar from the Gold Standard to the Zinc Standard very quickly if the emergency of that time or any future emergency warranted it. This option was never activated, but remained on the books.
The activation is scheduled for January 1st of 2009. At that time, the dollar will be backed by zinc, and all US coins intended for general circulation will be made from zinc or zinc alloys so that the value of the zinc in the coin matches it’s face value (very much like the silver and gold value in coins when the US was on the Gold Standard).
Currently, the government is hoping that word of this does not leak out as they are in the process of rapidly expanding the vaults at Fort Knox and filling the new space with as much zinc as they can get before the price jumps when the new standard becomes known. Needless to say, projections are that there will be panic buying of zinc at that point.
Several members of the Federal Reserve have been in China quietly negotiating to see if the Chinese government will also move to this new standard in order to fix the relative price of the US Dollar and the Chinese Yuan. It seems that the Chinese Central Bank has instead decided to move their currency to an Aluminum Standard.
Similar negotiations with the European Central Bank also broke down, and the rumor is that the Euro will be backed by copper in 2009 or 2010. Currently, the Bank of England’s Board of Governors is debating whether to move to one of these 3 standards or to consider the radical move of backing the British Pound with titanium, thus ensuring that it remains the world’s strongest currency.
Faced with this sudden divergence of financial policies, the Canadian banking system has decided to reject metal standards completely and will back their dollars with a mixed basket of commodities based on their primary exports. Therefor, the Canadian Dollar will be backed by oil, lumber, and beer. Since none of these are easily minted into coins, the obverse side of all new Canadian coins will depict a tree, and oil well, and a beer bottle.
Following Canada’s lead, Australia and New Zealand will both link their currencies to their primary export, wool. Coins will all depict a sheep on the obverse, and bills will contain at least 10% wool content.
Knowing the financial turmoil that all of this will create, the Swiss Government has decided to make no changes to it’s currency. At least not until April Fool’s Day next year.
