‘Stability,’ is a simply gorgeous idea, in all fields and endeavors. A stable building with a stable foundation, a stable marriage, and of course stable money, which brings me to a Journal (Wall Street) piece of April 22nd, where economist Judy Shelton argues for a virtual gold backed currency, which would of course make any currency stable. Here’s a quote from one paragraph:
“No wonder advocates of pro-growth economic policies feel compelled to question the vaunted status of central bankers, even as the currency speculators track their every utterance. Stable money is a prerequisite for genuine economic growth and prosperity. The increasing financialization of gross domestic product is unhealthy, because the growing size and profitability of the finance sector comes at the expense of the rest of the economy and increases income inequality. When the value of money is fixed, as under a gold standard, economic growth reflects higher levels of productive output.” She’s a bit wordy.
The basic point, is that the Fed or any central bank, can increase money supplies as it sees fit, to regulate the economy, regardless of how it harms the citizenry and value of the money. (If we increased the money supply, it would be counterfeiting). The U.S. did so in 2008, and many other times, as it does today, by regulating interest rates, as well as the money supply, which it creates out of thin air, transfers it to the U.S. Treasury, and of course charges interest for the ‘loan.’ I’ve been through this before. The problem is that there is not enough gold in the world to back any currency, and the U.S. dollar in particular. To back the dollar, the price of gold would probably be a half million dollars per ounce, or maybe more. Her final sentence on the paragraph is, “Central Bankers and their defenders, have proven less than omniscient.”
Ms. Shelton’s argument is true and pertinent, even though it will never happen as long as governments continue spending more than they receive in taxes, paying for the deficit in un-backed paper monies, and continuing to abuse the citizenry with inflation. ‘Draining the swamp’ might help, but the robbery will continue ad infinitum, ad continuum. Rather than saving surplus assets in dollars or others, which will never be backed by real money, why not save in real money? Real money is gold and is insurance against the world’s inept politicos. don@coloradogold.com