GoldMoney white paper: Gibson’s paradox resolved

A new white paper resolving Gibson’s paradox is posted on GoldMoney’s site, here:

The full ramifications will take further analysis and thinking, but the immediate implications appear to be:
*       It shows that in a free market commodity prices rise and fall in phase with interest rates, and not, as commonly supposed, the opposite way round.
*       It causes us to rethink the relationship between borrowers and savers. In a free market it is borrowers that set the rate.
*       It undermines the quantity theory of money, as originally proposed by David Ricardo in 1809 and further refined  by Irving Fisher and Milton Friedman.
*       It throws into doubt the whole basis of central bank monetary policy.
*       It is wholly consistent with Say’s law, reaffirming its validity.

I strongly urge everyone to read it.


Alasdair Macleod | Head of Research

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