Friday, April 16, 2010

Digital Gold Currency and the Establishment of Sovereign DGC Systems

David Knox Barker, founder of Long Wave Dynamics, LLC, was recently interviewed by Clif Droke of the Gold & Silver Stock Report and he spoke extensively on digital gold currencies and their role in the future world monetary system. The most interesting aspect for readers of The Monetary Future revolves around the notion of sovereign players entering the digital gold currency market alongside the private digital gold currency banks. Barker states:
"All of a sudden for the first time in 20 years the central banks aren’t sellers of gold. I think we’re in a window here where gold is effectively the world’s second reserve currency. It’s not acknowledged publicly and people aren’t aware of it but I believe gold is the second reserve currency behind the dollar. Depending on what government policy does will depend on whether gold becomes more dominant. I think fiat currencies are here to stay but what most people have not yet recognized – James Turk has recognized it; he’s the founder of – is that during the next long wave advance gold will become even more important. [Turk] has created a new currency based on gold. If you combine the data system of the Internet with gold and with secure vault storage in Switzerland or London, Digital Gold Currency has the potential to become huge. Right now you can open an account with DGC at any given time and you can move in and out into other currencies into your gold account. It’s coming.

Imagine yourself as a Wal-Mart or an IBM and you operate in hundreds of countries and you have to hedge your currencies in all these countries. With James Turk’s company, businesses can open an account in Digital Gold Currency and operate in a way that prevents their having to do a lot of the hedging and eliminate a lot of the expenses they incur in their hedging activities. That’s one reason why I’m optimistic about the drivers of the next long wave advance.

Object oriented programming is another thing I’d like to mention that’s going to be a dominant force in the next advance. What you see is that these are the technologies that selected by industry during the long wave winter and begin to be capitalized but they don’t get fully implemented until the advance. For instance, the object oriented paradigm, which was converted to the object oriented computer programming approach, is making the world more efficient. But it’s also doing a few other things. The world really is a loosely coupled object model and object oriented programming, or OOP, is realizing that and allows companies to deploy in a more efficient manner. I think OOP is going to be a major driver in the next advance of the long wave. There’s also a connection between OOP (object oriented programming) and digital gold currency because under the hood of the systems running major corporations and banking institutions is an object oriented paradigm, a view of the world, which allows everyone to operate more efficiently and what it allows is for your computer systems to more intelligently reflect the real world. The way this will play into Digital Gold Currency (DGC) is that it will be a driver to make DGC a logical option for people. I think there will be a combination of private digital gold currency banks as well as sovereign players. I think you’ll see certain countries buying into Digital Gold Currency and effectively establishing sovereign DGC systems."
In another question from Clif Droke about what realistically can be done to balance the power of the Federal Reserve, Barker answered:
"I sincerely believe that Digital Gold Currency (DGC) will balance the Fed; it’s coming. The Internet has met gold and secure vaults in Switzerland, London or New York and we’re going to have international currency. It’s interesting that for the first time in 20 years central banks are no longer selling gold, they’re holding it.

I think what we’re effectively seeing is the development of the world’s second reserve currency. You’re going to see DGC combined with the Internet to see some very interesting dynamics in the currency market. I can actually see Fort Knox being turned into a Digital Gold Currency bank before this crisis is over with independence from the Federal Reserve and run by the U.S. Treasury.

So if you had a central bank that had only a price stability mandate and actually maintained higher reserve requirements and didn’t juice the system, and if you also had a competing Digital Gold Currency system, it would make for a very interesting world and I think it’s where we’re headed."

David Knox Barker is the founder of Long Wave Dynamics, LLC, and the publisher and editor of The Long Wave Dynamics Letter. Barker is one of the world’s foremost experts on the economic long wave and stock market cycles. He is the author of Jubilee on Wall Street (2009), published earlier as The K Wave (1995) by McGraw-Hill. He is a writer, inventor, entrepreneur, technical market analyst and world-systems analyst. He has researched and written on the impact of the long wave on international financial markets and the international political economy for over twenty-five years. He has applied long wave dynamics to entrepreneurial business development decisions throughout his business career. Barker was founder and CEO for ten years from 1997 to 2007 of a successful life sciences market research and marketing services company, serving a majority of the top 20 global life science companies. Barker holds a bachelor’s degree in finance and a master’s degree in political science.

For further reading:
"An interview with a long wave master (part 1)", Clif Droke, April 12, 2010
"The Great Republic", David Knox Barker, DGC Magazine, February 2010
"A Historical Review of the American Gold Market"
, Steven C. Kennedy, January 2002

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