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    Mario Draghi, James C. Dooge, Wim Duisenberg, & EU 28-29 June Summit

    Posted by Ivo Cerckel on June 12th, 2012

    The 28-29 June 2012 EU Summit should free itself of the bureaucratic intervention by Hollande and Merkel and not lose sight of Freegold, the Union’s Monetary Identity..

    The common theme today is said to be “austerity versus growth”. In reality, we’re hearing little about what’s driving the growth side and a great deal about the disasters to come from cutting benefits

    The concept of growth is an illegitimate import of biology into human action.
    (Murray N. Rothbard, “Man, Economy, and State – A Treatise on Economics”, Auburn, Alabama: Ludwig von Mises Institute, 2001, (originally published 1962), pp 837-838)

    Whereas growth is confined to an organism which grows until it reaches maturity and then declines and sooner or later dies, progress can be transmitted.
    (George Reisman, “Capitalism – A Treatise on Economics”, Ottawa, Illinois: Jameson Books, 1998. 3rd ed., p. 106)

    If you accept this illegitimate import of biology, you should follow the teachings of biology.

    Says Thomas Aquinas in section 2 of the “Prologue” to his “Commentary” on Aristotle’s “On Generation and Corruption”;
    growth is subsequent to generation, for growth does not take place without a certain particular generation, namely, that by which food is converted into the thing fed. Thus Aristotle says in On the Soul II that food nourishes in so far as it is potentially flesh, but it produces increase inasmuch as potentially it is quantified flesh.

    Growth is not always positive, says Saint Thomas.
    Tumours and cancers – like bureaucratic intervention – grow, adds Dr Reisman.

    At his 06 June 2012 press conference after the meeting of the Governing Council of the European Central Bank (ECB), leaving interest rates unchanged at 1%, ECB president Mario Draghi outlined his vision for the 28-29 June 2012 European Union (EU) Summit.

    According to Wolfgang Münchau (“How to save Spain’s banks – and the eurozone”) in the 11 June 2012 edition of The Financial Times, the Summit will have to answer the question whether the eurozone should go it alone in the area of bank regulation and supervision, or whether the European Banking Authority – an EU level institution – should fulfil that role,

    But according to the chancellor of the federal republic of Germany, Angela Merkel, and the newly elected president of the French republic, François Hollande,
    the Summit should promote EU growth,
    Merkel and Hollande advocating contradictory positions to achieve growth (or is it on the relationship between growth and austerity?),
    Mario Monti, the prime minister of the president of the Italian republic hoping to be able to mediate between the French and German positions on how to boost growth at a hastily convened 22 June 2012 Rome summit
    where the three mentioned politicians will be joined by Mariano Rajoy, prime minister of the King of Spain,
    so that the results of this mediation can be formally signed off at the 28-29 June 2012 summit.

    What Draghi basically has in mind is a “vision”, a path towards an objective with all the conditions that have to be satisfied in order to achieve this objective,
    just like the 1988 Delors report in a sense spelled out a methodology.
    There was a road [to European (Monetary) Union] with dates, deadlines and conditions to be satisfied.
    Draghi thinks that this is part of the efforts that “our” Masters and we, ourselves, have to draw up today.

    In his answer to the two final questions at his 06 June 2012 press conference, Draghi said that
    “the [European] integration process has now reached a point where it has to question itself and decide whether it wants to move further or not”.

    On 15 August 1971, USA president Richard Nixon broke the 1944 Bretton Woods system which linked all currencies to the USA dollar and the said dollar at fixed parity to gold.

    Draghi said that
    “after several failures
    [starting with the 1972-1979 Monetary Snake aiming at maintaining stable exchange rates by preventing exchange fluctuations of more that 2.25 %,
    then the 1979 European Monetary System and its definition of the ECU,
    which was replaced in 1998 by the European Monetary Union which created the euro]
    in the process TO LINK THE EXCHANGE RATES and to try to co-ordinate monetary movements, the first step was made towards having a common currency. There was a report, the “Delors report”. That was later changed and finally endorsed by the European Council. The important thing as far as we are concerned today is that this report in a sense spelled out a methodology. There was a road with dates, deadlines and conditions to be satisfied. I think that is part of the efforts that our leaders and we, ourselves have to draw up today.”

    The euro did not link exchange-rates but is the first currency that has not only severed [DE-LINKED] its link to gold, but also its link to the nation-state, said ECB president Duisenberg upon receiving the International Charlemagne Prize of Aachen for 2002.

    The immediate history of the Delors Report was that after the failure of the 14 February 1984 Draft Treaty on European Union which was not approved,
    the European Council summit held in June 1984 at Fontainebleau set up two committees:
    the Adonnino Committee which was to prepare measures to strengthen and promote the Community’s identity and its image for the rest of the world
    and the Dooge committee on institutional affairs.
    (Koen Lenaerts and Piet Van Nuffel, (Robert Bray, ed.), “Constitutional Law of the European Union”, Sweet and Maxwell, 2005, 2nd ed., § 4-005)

    Just like Belgian politician Paul-Henri Spaak had been tasked in 1955 with achieving the European Economic Community and Euratom whose founding treaties were concluded in 1957 by the six original member states,
    so was Irish politician James Clement Dooge tasked by the EC heads of state and government with making suggestions for the improvement of the operation of European co-operation in both the Community field and that of political, or any other, co-operation.
    The Dooge Committee’s informal name was therefore “Spaak II”.
    (Desmond Dinan, “Ever Closer Union – An Introduction to European Integration”, Macmillan, 1999, 2nd ed., p. 114)

    The Dooge Committee wanted to take a qualitative leap towards genuine political entity among European States: i.e. a European Union, thereby finally bringing about the fully integrated internal market envisaged in the Treaty of Rome as an essential step towards the objective of economic and monetary union called for since 1972.

    Draghi said on 06 June 2012 that the internal market, AKA Single Market, has not yet been completed:
    “Competition should be strengthened in product markets, not least by the completion of the Single Market, and wages should adjust in a flexible manner, reflecting labour market conditions and productivity.”

    Although the Adonnino Committee had been tasked with promoting the Community’s identity through material symbols, such as – don’t laugh – a Europe-wide “audio-visual area” with a “truly European” multilingual television channel and a European Academy of Science,
    it was the Dooge Committee, which to the surprise of many, including the Fontainebleau European Council which had established it, went on to suggest a means to fuse the twin goals of a single market and institutional reform and to lay a political foundation for the 1992 programme, the goal of achieving the single market or internal market by 31 December 1992.
    (Desmond Dinan, op. cit.., p. 93)

    The Preface to the Dooge Report says that:
    “Although the Community decided to complete [the unprecedented] construction
    [which was started with setting up firstly the European Coal and Steel Community (ECSC) and then the European Economic Community (EEC)]
    as from the summit in the Hague in 1969 and Paris in 1972, it is now in a state of crisis and suffers from serious deficiencies. ”

    … just like Draghi is saying now to the upcoming European Council summit
    “the [European] integration process has now reached a point where it has to question itself and decide whether it wants to move further or not”.

    The Dooge Report went on to say under
    II. Priority objectives
    A. A homogeneous internal economic area
    (c) By the strengthening of the European Monetary System (EMS)
    “The European Monetary System, which was created and set up pending restoration of the conditions for the gradual achievement of Economic and Monetary Union, is one of the achievements of the Community during the last decade. It has enabled the unity of the common market to be preserved, reasonable exchange rates to be maintained and the foundations for the COMMUNITY MONETARY IDENTITY [emphasis mine] to be laid. ”
    (Desmond Dinan says on p. 85 of his quoted book that this is point 3.5.1 of the Dooge Report)

    compare this Community Monetary Identity to the symbols introduced by the Adonnino Committee – what is the most useful symbol?

    compare this Community Monetary Identity also – and again – to Duisenberg’s statement upon receiving the International Charlemagne Prize of Aachen for 2002 that
    the euro is the first currency that has not only severed its link to gold, but also its link to the nation-state.

    This blogger cannot but conclude that
    what is now known as the European Union should stop devising programmes designed at achieving a common market AKA internal market AKA single market.

    The European Economic Community started trying this in 1957,
    that’s sixty-five (65) years – pension age or retirement age –

    The 28-29 June 2012 EU summit should call a halt to this process of trying to achieve a common market AKA internal market AKA single market and reaffirm the Union’s Monetary Identity as envisaged as the Community’s Monetary Identity by the Dooge Report.

    As the Dooge Report said under
    III. The Means: Efficient and Democratic Institutions
    A. Easier decision-making in the Council:
    “which means primarily changes in practice and certain adjustments to existing rules:
    (i) less bureaucracy within the institutions, as national authorities have, through their experts, gained too much ground over the last 10 years; in particular, the authority of the Permanent Representatives over the various Working Parties.”

    The Report thereby criticised the increasing bureaucratic influence which the national authorities of the member states exercise over the European Council.
    (Dominic Lasok & John W. Bridge, “Law and institutions of the European Communities”, London, Butterworths, 1991, 5th ed., p. 235)

    Let Merkel, Hollande, (and Rajoy) fight on 22 June 2012 at Monti’s,
    the 28-29 June 2012 EU summit should free itself
    of the bureaucratic intervention by the XXX
    and not lose sight of Freegold, the Union’s Monetary Identity.

    Freegold means that the euro has a gold component and a paper component, and puts a “firewall” between both so that gold’s valuation as a wealth-preserving asset cannot be pulled lower by the inevitable inflation of the paper component of circulating currencies. It is the (quarterly) marking to market (MTM) of the gold reserves of the Eurosystem, not to the model of $42.2 like the USA central bank (originally $35), by the Eurosystem which provides that wall.
    Gold is an item not related to euro monetary policy operations.

    Let gold trade freely behind the real firewall – like it did for the Ancients,
    a wealth asset that stands beside money,
    yet has no modern label or official connection to money – or to any Pact.

    The European integration process has now reached a point where it has to question itself and decide whether it wants to move further or not, said Draghi in his answer to the two final questions at his 06 June 2012 press conference.

    Does Draghi think that the journey Freegold can still be stopped?

    The euro is the first currency that has not only severed its link to gold, but also its link to the nation-state, said Duisenberg.

    By openly talking about Freegold our Masters would remove uncertainty about the euro’s future. Our Masters are telling us that the removal of this uncertainty is the necessary and sufficient condition to put euroland back on the track to … growth.

    This is only way to remove the growing tumour of bureaucratic intervention in the affairs of the European Council..

    Ivo Cerckel

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