"Profs. Ronald McKinnon and Steve H. Hanke in their 'Rescue Plan for the Dollar' (op-ed, Dec. 27) incredibly ignore the real reason for the continuing fall in the value of the dollar relative to the euro and other currencies: the astounding U.S. trade deficit. ... Foreigners and their governments--which accumulate dollar financial assets (the modern version of gold and which, unlike gold, earns interest)--are what we call in a forthcoming book 'dollar mercantilists'," Professor Raymond Richman (RR) in the WSJ, 3 January 2008.
I agree with RR, see my 27 December post. I like his term "dollar mercantilists" and will use it in the future. I disagree with one thing RR said, "dollar financial assets ... earn interest". Huh? Interest is what a government pretends to pay you to steal your principal! I'm a Franz Pick man on this. Consider, in 1933, 74 years ago, gold was $20.67 per ounce. As I write, it's $863. Therefore, the compound dollar rate of return from holding gold for the last 74 years is: 5.17%. Who says gold doesn't pay interest?
I agree with RR, see my 27 December post. I like his term "dollar mercantilists" and will use it in the future. I disagree with one thing RR said, "dollar financial assets ... earn interest". Huh? Interest is what a government pretends to pay you to steal your principal! I'm a Franz Pick man on this. Consider, in 1933, 74 years ago, gold was $20.67 per ounce. As I write, it's $863. Therefore, the compound dollar rate of return from holding gold for the last 74 years is: 5.17%. Who says gold doesn't pay interest?
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