A podcast for the GoldMoney Foundation …
James Turk and Alasdair Macleod discuss the pros and cons of the gold standard, the benefits of competition between different currencies and the historical role of gold in international monetary systems.
James Turk points out that he is actually not in favour of a classical gold standard as it grants excessive monetary authority to governments and central banks. He prefers free competition between currencies, and thinks that gold has proven itself as the best form of money over thousands of years. He says that gold will always be the ultimate standard for economic calculation.
Both men agree that money should not be a product of governments, as most modern monetary theories advocate, as well as influential people such as Warren Buffett. As a result of on-going debt monetisation and expansion of the money supply, James Turk ultimately expects an Argentinian style hyperinflation. Macleod argues that it will be almost impossible to raise interest rates to re-establish faith in the bond markets because the current debt levels are way too high already.
While James Turk is optimistic that a solution will eventually be found to our financial problems, he expects a serious crisis before gold is reintroduced in one form or another back into the monetary system.
Good point about how the old-style gold-standard gives governments too much control. Maybe governments should still be allowed to issue currency but they need to do so in competition with (a) one another and (b) real money like gold. In fact, many countries allow private possession of gold, so that could circulate as currency. Governments should allow for the settlement of tax-bills with gold and there should be a way of sending gold-backed money electronically. Arguably, just one bank needs to issue gold-backed electronic money and everyone in the world could start to use it if they had a computer or cellphone. Col Gaddafi was constructing a gold-currency. Maybe the British sovereign could be the global standard, predating as it does the United States. It has just over seven grams of gold and is thus $384.
As usual, we get this blithe statement that ‘gold has proved itself the best money over centuries’ when, in fact, silver has been much more widely used – both geographically and temporally!
If Mr Turk new a little of his own history, he would find that, until, the arbitrary decision to change the mint ratio during Andrew Jackson’s presidency in the middle years of the 19th century, his countrymen used silver – why does he think the money he routinely uses is called the ‘dollar’ – i.e., the Joachims-thaler – from the mint associated with the output from a prolific 16/17th century European silver mine?
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