Money: How the Destruction of the Dollar Threatens the Global Economy - and What We Can Do About It by Forbes Steve; Ames Elizabeth

Author:Forbes, Steve; Ames, Elizabeth [Forbes, Steve; Ames, Elizabeth]
Language: eng
Format: epub, mobi
Tags: Itzy, Kickass.so
ISBN: 9780071823715
Amazon: B00JFG7080
Publisher: McGraw-Hill
Published: 2014-06-15T04:00:00+00:00

Gold Takes the Politics out of Money

Gold takes decisions about the value and supply of money out of the hands of bureaucrats whose judgment is too often in error or driven by politics. Bureaucrats can no more guess the need for money than central planners could run an economy in the days of the Soviet Union. Seemingly sophisticated equations and various measures of money can never anticipate what people actually do.

The job of a government’s central bank would simply be to maintain a stable gold price. In a gold standard system, the price of gold acts as a barometer. It indicates whether there is too much liquidity in the economy and whether we’re heading toward inflation or if there’s too little liquidity and possible deflation.

The demand for money reflects the ever-shifting actions and desires of billions of people in global markets, many of whom are reacting to thoroughly unanticipated events. Gold prices convey these changing needs better than anything else.

Why isn’t the United States on a gold standard today? There are a number of reasons. The traumas of World War I and the Great Depression spurred the rise of neo-mercantilism and a new infatuation with activist government. If government could win wars by mobilizing the economy, many believed, imagine how society would benefit from its vast powers in peacetime, including greater control over money.

Then there are the hostile myths about gold that, like barnacles, remain stubbornly attached even today. Allegations range from “there’s not enough gold in the world” to “the price of gold is too volatile” to even that “a gold standard constitutes the price fixing of money.”

You’ll also hear accusations that the gold standard caused the Great Depression and later created pressures leading to the end of the Bretton Woods system. That’s like blaming a skyscraper’s implosion on the tools used to build it, not on the violations of building codes that caused the collapse.

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