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How to start a parallel currency of real money

Section: Daily Dispatches

2p EDT Sunday, December 24, 2000

Dear Friend of GATA and Gold:

The Mexican businessman and student of economics
Hugo Salinas Price, a great friend to GATA, has
written, in the form of an open letter to the
economic analyst J.N. Tlaga, a meditation on the
future of money and the international economic
system. While its advocacy goes well beyond GATA's
charter, the letter is compelling reading, so I
share it with you below.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

By Hugo Salinas Price

An open letter to J.N. Tlaga.

Dear Sir:

I have continued to give thought to your proposals in
Part II of quot;Euro and Gold Price Manipulation.quot;

You proposed a 5-Euro coin containing 5 grams of
silver. The idea is lovely, but I can perceive

Such a coin might circulate as long as the market price
of silver remained below 31.1 Euros per ounce; but if
the ECB is going to be the buyer of each and every gram
of silver offered to it, the ECB is then -- am I right?
-- going to be setting the world market price of
silver. The ECB would begin bidding up the price of
silver, up to a theoretical limit of Euro 31.1/oz. or a
little less.

Then the 5-Euro coin you visualize would no longer
circulate; it would be hoarded, under Gresham's Law. A
legal tender coin with a precious metal content equal
to or even less than the face value of the coin is
going to be retained by the owner, and payments (that
is, circulation) will be made in paper equivalents, the
currency of inferior quality.

A concrete case: in Mexico, during the presidency of