Friday, December 25, 2009
Sliding Back to Gold
"So the world has bench-tested the Keynesian theory that gold is a barabrous relic, and found it wanting. ... There are three ways in which the world could move towards a gold standard without actually getting there. ... Second, the world's monetary authorities could start targeting the gold price as part of their monetary management, aiming to keep it within a certain range, thereby preventing excessive monetary expansion and dampening excessive exchange rate fluctuations. A 'hard money [Fed] chairman, for example, worried about the value of the dollar, could seek to keep the gold price between $900 and $1,000", Martin Hutchison (MH) at Prudent Bear, 7 December 2009, link:
I first used MH's phrase "sliding back towards a Gold Standard" almost 30 years ago, suggesting MH's second alternative. However, $1,000 an ounce isn't high enough. See Mike Rozefff's comments about the ZDV of gold.