If you had asked me to bet in which year the President of the World Bank would recommend that we consider some version of a gold standard, I would have picked the wrong number:
The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.
Indeed that is 2010 and the full proposal is here. I feel like I should pay something to somebody, but I am not sure to whom. Or in which medium of exchange.
I feel like I should offer to take your money just to stop some goldbug getting it.
Since in reality, I'd have been on the same losing side of that bet as you, I'll donate my winnings to endow a Chair in Unconventional Monetary Economics at Harvard. Or better yet, use it as margin for shorting gold.
The gold standard confuses me. Couldn't a person put themselves on the gold standard by substituting a vault for a savings account? And if it turned out that the evils of fiat currency came true, wouldn't that gold saver be rich?
I can't see why someone would both believe in the gold standard and also want to tell people about it.
"an international reference point of market expectations about inflation, deflation and future currency values"
So has gold been predicting inflation, disinflation or deflation? Why can't gold and TIPS spreads just get along?
The comments at the FT are, as usual, borderline insane. They are, however, good reminders that such insanity is in most cases worse outside of the United States than in.
This is a bluff to get China to raise its currency. If China undervalues its currency, it can buy less gold.
Well, it makes a certain amount of sense. After all, fiat currency is only worth something because people say it is. We need to back it with something real, like gold. Of course, gold is only worth something because people say it is. We should back our gold standard with something real, like rubies. Of course…
Everything is worth something only because people say it is. Gold has physical properties that match the desired properties of money, that is why gold functions as money whether there's a gold standard or not.
Gold is a stable store of value over long time frames, most fiat currencies have gone extinct. What is the value of the dollar bills you stuffed into your mattress in 1950, versus the gold coins you have in your safe deposit box? I don't think you will get as much for $35 as you will for 1 ounce of gold.
We don't need to get rid of paper currency, all that needs to happen is gold returns as a tool for central banks to settle transactions, rather than with debt.
Gold is terrible as a currency but it has some value as an investment. Even if it's only by the Greater Fool theory, still the price of gold often goes up.
But for precisely the reason that its value inflates, you do better not to spend it at current prices even if you can. Spend some inflating currency instead and keep your gold.
Awesome, Doc.
"I understood it to be shut down because it was being used to launder money."
Royyyyyyyyt.
I feel like I should pay something to somebody, but I am not sure to whom.
Probably Ron Paul. In twelve hours he's gone from someone we should be concerned about overseeing the Fed, to someone on the cutting edge of monetary policy.
@Doc Merlin,
"Gold is not an investment any more than Yen or Swiss Franks are. Gold is a merely an asset that is very difficult to increase in supply. That is all. You can speculate on the price, but you can't really invest by buying gold."
Yes, you are right.
I should have said something more like, "If you have money you do not need to spend soon, then gold like real estate is a good place for the worth of your possessions to increase.".
I should have made a clear distinction between investing versus speculating in gold, real estate, the stock market, commodities markets, fine art, antiques, etc.
Far too many people think of their speculations as "investing".
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