Posted on 07/02/2019 10:04:55 PM PDT by NRx
In tapping Judy Shelton to become one of two Federal Reserve Board governors, President Donald Trump selected one of the minority of mainstream economists supportive of a return to the gold standard and critical of central bank activity.
Shelton, who serves as the U.S. executive director at the European Bank for Reconstruction and Development, wrote as recently as last year in support of pegging the dollar to gold prices.
Trump announced his intention to nominate both Shelton and St. Louis Fed economist Christopher Waller via tweet on Tuesday.
Shelton’s unorthodox monetary beliefs will likely draw questions from Senate lawmakers, who will ultimately need to approve Shelton and Waller to the Fed board.
In a post published by the libertarian think tank Cato Institute in 2018, Shelton drew a comparison between cryptocurrencies and gold.
“If the appeal of cryptocurrencies is their capacity to provide a common currency, and to maintain a uniform value for every issued unit, we need only consult historical experience to ascertain that these same qualities were achieved through the classical international gold standard,” she wrote.
“In proposing a new international monetary system linked in some way to gold, America has an opportunity to secure continued prominence in global monetary affairs.”
(Excerpt) Read more at cnbc.com ...
Not happening.
GEOTUS
this makes sense if gold goes to 20,000@oz or more. which it can.
ft knox gold value goes up by a factor of 10.
• The value of gold is based entirely on psychology and psychiatry, and not on economics of physics. There are equally good conductors which are vastly less expensive and nobody uses gold for dental fillings anymore.
• The trick which Archimedes used to distinguish gold from lead is no longer valid. The difference between densities of gold and tungsten is something like 19.2 versus 19.3 (tungsten didn’t exist in 300 BC). They actually find bars of tungsten plated with gold in bank vaults in New York; if those guys can’t use gold in a rational manner, what makes you think YOU could??
• The use of gold as a basis for money created gigantic grief all during the 18th and 19th centuries, creating cycles of boom and bust as money based on gold was lent out and then called back repeatedly. This led to William Jennings Bryan’s famous “Cross of Gold” speech.
• During the 18th century, Benjamin Franklin had become known as the father of script money, creating a super colonial economy based on pure fiat money. This super economy was crashed into depression by the British Crown re-imposing a gold standard on the colonies, leading to the American Revolution. Nobody ever fights a war over a tax on tea, that’s basically a fairytale.
• There is exactly one use for gold for which no other known material would work as well: soft, totally inert, and half again more dense than lead, gold would be the ideal metal for waterfowl shot. You could kill ducks and geese all day long with ordinary two and three-quarter inch shells, and number seven shot. Nobody would need magnum sized shells or magnum chambers in their shotguns anymore.
• The very things which make gold useful as money, also make it easy to steal and totally untraceable once stolen.
• All money is fiat money, as per Ann Barnhart’s lecture: https://www.youtube.com/watch?v=ruiK7A2Xwi8
• Contrary to what bankers would have you believe, governments printing money, by itself, does not create inflation. It depends upon HOW governments create money and what they use that money for.
• Consider: two shipwreck survivors on an island have five dollars in their pockets between them from their previous life and there are five clams on the island. A dollar is plainly worth one clam. Nonetheless, one of the two finds a machete in the remains of their lifeboat; hacks a coconut tree up into a crude printing press; kills an octopus; prints up five more dollar bills with his press and the octopus ink; and pays them to his companion to dig up 15 more clams… To the unbridled horror of the bankers, the guy has doubled the value of money on the island by printing it. The only two meaningful things in that picture were productivity and an element of trust, no gold or any other metal were required.
Time, money, intellectual capital, and energy used in the production of gold are essentially wasted, as is also electricity and money involved in Bitcoin mining. The coin mining feature of cryptocurrencies of is also basically harebrained.
But gold is up $20 today! /s
me too
Yes and no. For accounting purposes the U.S. government values it's gold reserves at $42.22 per ounce. So while the market value might fluctuate the book value will remain the same.
I would suspect the main objection the Senate would have is that a return to a “gold” standard would not allow them to continue to borrow trillions of dollars to buy votes from the lame and lazy.
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She doesn’t support the gold standard.
She supports a foreign exchange system that would prevent countries from manipulating their currency the way China does.
For the cost of capital (domestic policy) she supports the market over the current system of the Fed manipulating rates.
Congress have become a bunch of progressive, social-engineering, big-spending heroin debt addicts
Problem is, there’s not enough gold in the universe to cover current levels of debt.
President Trump is trying his level best to get this country back on track, liberal-minded, career politicians be damned.
Gold is no longer adequate to back currencies, *by itself*.
But *in combination* with other precious commodities, it makes a great idea. I’m saying not just with other precious metals, but with other metals, and even non-metals, semi-metals, rare earth elements, radioactive isotopes.
Then break free from that. Things like compressed inert gases, alloys and useful compounds.
Back in the good old days, people knew that gold and silver were valuable, so they had very stable prices. However, today we have computers that can track the value of such commodities instantly, and all at the same time.
This would mean measuring much of the economy, so that the price of commodity-backed currency is going to be very stable. Say there is a war. People will still buy gold, but what about zinc, lead, aluminum, etc.?
Their value is not a “leading” economic indicator, but a “lagging” one. Only if there is an economic downturn will their prices eventually go lower, but until then, they moderate the *value* of the currency.
She’s not pushing for a gold standard [unfortunately]; she uses it as a successful example of maintaining a stable money supply.
That said, she’s one of very, very few economists who understand the importance of a stable money supply.
The Market pins the value of gold to the dollar and no government can fix it for long. War almost inevitability leads to removing convertibility of the currency into gold so there have been few, if any, examples of a true Gold Standard.
Speculators (i.e. Soros) would love a return to attempted fixed exchange rates. Much of his fortune came from busting the pound decades ago.
I guess it doesn’t hurt to have different theoretic outlooks on the economy/monetary conditions.
That is already the case since the prices of various commodities are evaluated by the Fed system when looking at the future value of money.
There was no such thing as a stable money supply when you can dig money out of the ground or from the streams.
Our economic progress was predicated on borrowing from Great Britain to finance the decades after independence not the money supply per se.
But, but, but there just isn't enough Gold to replace the money. </s>
Remember when France raided our Gold supply? I always wondered why we didn't just thank them for the payment on their war debt and keep the Gold.
That could be. Baskets of commodities have been suggested as a guide although they are prone to rising in price with the business cycle. Every sort of peg has its issues.
I’m currently reading a book that provides an excellent view of the global gold standard’s feedback mechanism circa 1913. That may sound dull but its not for anyone who is curious about the classical gold standard and how it operated when the British Pound ruled supreme. The book is also an interesting history. I was surprised to find that we owe the Wilson presidency for the dollar displacing the Pound as the world’s premier currency. “When Washington Shut Down Wall Street: The Great Financial Crisis of 1914 and the Origins of America’s Monetary Supremacy” by Wm Silber.
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