The True Gold Standard (Second Edition)
Is Wikileaks founder Julian Assange channeling Don Draper in the TV series Mad Men—the brilliant but ethically challenged publicist with retro lifestyle issues? Assange got the Daily Telegraph breathlessly to report an old June 2009 "confidential" cable from the U.S. London Embassy to the U.S. Treasury, State Department, Beijing and Moscow embassies, headed "LONDON-BASED EXPERTS AGREE THE U.S. DOLLAR WILL MAINTAIN ITS RESERVE STATUS."
The significance was hardly that Treasury Secretary Timothy Geithner deemed HSBC and Deutsche Bank economists' stumble-along-further prognosis a policy endorsement. At most it was that U.S. monetary authorities hadn't previously spelled out to U.S. diplomats that "recent proposals to make the SDR a global reserve currency lacked viability"—which had long been obvious to HSBC's Currency Outlook and James Grant's Interest Rate Observer (and LBMC LLC's Market Watch).
Since the dollar standard isn’t sustainable and the SDR isn't viable, the next successful U.S. president will undertake the remaining practical alternative: restoring the gold standard without reserve currencies. The chart below compares the U.S. dollar against gold, the yen and Euro/DM since monetary 'experts' famously predicted in the '60s that gold would fall from $35 to $6 an ounce if it were demonetized. Instead, the gold price multiplied forty-fold while the dollar slid against other currencies.
The Federal Reserve System's James Narron and David Skeie, career officials with the Federal Reserve System, are two eminent historically erudite figures. Writing in the New York Federal Reserve Bank's online publication, Liberty Street Economics, they recently provided a continuation of their valuable historical "revue," Crisis Chronicles: The Collapse of the...
Jul 14, 2014
On July 6th, Nobel economics laureate and Princeton Professor launched, in the New York Times, one of his occasional polemics, entitled Conservative Delusions About Inflation, against proponents of the gold standard. Krugman Caricature under creative commons license from DonkeyHotey As usual, Prof. Krugman is, conveniently for the position he takes, beyond lopsided...
Jul 23, 2014
An article headline in Saturday’s Wall Street Journalread “Rate Talk Heats Up Within The Fed.” As Journalreporters Jon Hilsenrath and Michael Derby...
Nov 30, 1999
Key Monetary Writings
In October, the Royal Swedish Academy of Sciences awarded the Nobel Prize in Economics to Robert A. Mundell.
Why the Gold Standard?