Dedicated to the prospect of setting up a full reserve bank in the USA, as well as analysis of the current economic environment.

Friday, February 13, 2009

Wall Street Journal Calls for Return Gold Standard

This title made me do a double-take. I know the WSJ is considered to lean to the right, but up until now, I had thought abolishing legal tender laws and allowing money to be decided on by the market to be the domain of ultra-libertarians.

Here's a quote:
Under a gold standard, if people think the paper money printed by government is losing value, they have the right to switch to gold. Fiat money -- i.e., currency with no intrinsic worth that government has decreed legal tender -- loses its value when government creates more than can be absorbed by the productive real economy. Too much fiat money results in inflation -- which pools in certain sectors at first, such as housing or financial assets, but ultimately raises prices in general.
And here's the link.

What's next - a call to abolish the Fed? Of course, if government fiat currency were to have some competition, that might be the natural result anyway.

And, once the Fed were abolished or marginalized, we'd likely see banks returning to much higher reserve ratios.

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