March 23, 2011

YEAH, BUT THAT'S ONLY EIGHT CENTURIES OF EVIDENCE....:

Fool's Gold: Eight centuries of Western monetary history show that bullion-based systems offer no benefits over paper-based systems. (Jay Weiser, March 14, 2011, The Amerrican)

The gold standard is a Holy Grail of otherworldly purity for which monetary knights perpetually quest. After all the stomach-churning, post-meltdown improvisations by central banks and governments worldwide—the Troubled Asset Relief Program, quantitative easing, and mortal entanglements with insolvent mega-debtors—it's natural to long for nobler days. Thus World Bank President Robert Zoellick argues for returning to gold as a monetary reference point. And in the credit market, guru James Grant yearns again to pull the Excalibur of the classical gold standard from the stone. While the current run-up in gold is a signal (whether of inflation expectations, credit problems, or lemming-like investor behavior remains to be determined), 800 years of Western monetary history shows that bullion-based systems offer no benefits over paper-based systems.

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Posted by at March 23, 2011 6:02 AM
  

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