I don't have much time to write, since I'm at work, but I thought that I would post this.
So, apparently Russia is pushing to move back to the gold standard for currency (link). China is somewhat on the same page. I can't say that the idea scares me too much, in fact, I think it could be a really good thing. Just looking at the history of the Federal Reserve -how it came about and how it functions- makes it look like one of the shadiest systems ever invented. The thought of going back to something that at least has some intrinsic value (and a somewhat limited supply) could be a very good thing for world economic stability.
5 comments:
I guess they really want a synthetic currency with some gold mixed in...seems a little bit like alchemy to me, and I guess the IMF would control that currency, which seems sketchier than investing in the US Government.
I think you could just let markets decide interest rates. The maybe I could earn something on my interest-bearing checking account.
I guess this is nearly a year old post but I'll comment anyway. I definitely sympathize with the idea that the money in my pocket or bank should be pegged to a fixed quantity of gold but there have been certain problems with that standard. Since gold is still freely traded on the market, it would be really hard for the US to just switch over without causing a significant revaluation of the Dollar and buying back all those treasury bonds from the Chinese.(old(current) dollar= probably 10% of the new gold standard dollar)
Also the past year(2009-2010) has kinda shown some merit of this worthless in real terms currency. This crazy printing of money by the fed did really work in the short term to stop the world economy from free fall. I guess there really needs to be a band in which the central banks are allowed by law to print money as a ratio of their gold reserves. Go to the lower end(near 1:1) in normal times, the higher end in exceptional circumstances which clearly needs to be substantially lower than what it is at right now.
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