When the facts change, I change my mind. What do you do? -- John Maynard Keynes

Thursday, February 5, 2015

Gold Standard, Central Banks, Economic Outcomes

Link: Would a Gold Standard Brighten Economic Outcomes? | The Big Picture

Let me spare you the TLDR version at the link above:

A gold standard ties the value of money to a country’s stock of gold reserves. While some argue that a gold standard can effectively maintain price stability over long periods, governments still have the ability to change their money supply and price level simply by changing the official gold-to-money ratio. Moreover, a gold standard can be problematic because of sudden gold inflows and outflows that cause the supply of money, and therefore prices, to fluctuate. In theend, a gold standard is not needed to preserve price stability as long as a country’s central bank is independent and has a clear mandate to achieve price stability. (emphasis added)

The problem is that the Federal Reserve, like most if not all Central Banks, does not have a clear mandate to achieve price stability--instead the Fed has a clear mandate to inflate and create bubbles in the hope of achieving "full employment."

The Big Picture

Financial Crisis - The Telegraph

JohnTheCrowd.com | The Sailing Website

Craig Newmark - craigconnects