In a speech this week, Federal Reserve Chief Ben Bernanke laid out a very reasoned argument as to why going back to the Gold standard is a nonstarter.

You can see his full presentation here, but I wanted to direct you to a summary from Business Insider’s Joe Wiesnthal, by way of UBS’s Art Cashin:

• The gold standard requires digging up gold in South Africa and storing it in a basement in New York. (Nonsensical)

• Everyone’s currencies become linked. This causes policy in one country to effect another country (see how U.S. policy is transmitted to China, because of the Yuan/Dollar fix).

• William Jennings Bryan observed that the gold standard causes deflation. His “cross of gold” speech: Because farmers had debts fixed in gold, loss of pricing power in commodities were very damaging.

• Gold standard cause interest rates to rise during downturns and rates to fall during good times — the opposite of what monetary policy should be doing.

• The economy was far more volatile under the gold standard (all the depressions and recessions back in the pre-Fed days).

• The were far more bank runs and closings during the pre-Fed, Gold standard era. Bank failures were all too common.

• The only way the gold standard works is if people are convinced that the central bank ONLY cares about maintaining the gold standard. The moment there’s a hint of another priority (like inflation or unemployment) it falls apart.

• Gold standards leave central banks open to speculative runs, since they don’t hold all the gold.

I am sure none of TBP readers have much to say about either the Fed or a return to a Gold standard…

Category: Federal Reserve, Gold & Precious Metals

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

47 Responses to “Bernanke vs the Gold Standard”

  1. gman says:

    “• The economy was far more volatile under the gold standard (all the depressions and recessions back in the pre-Fed days).

    • The were far more bank runs and closings during the pre-Fed, Gold standard era. Bank failures were all too common.”

    Most Goldbugs pine for the “good ole days” of the gold standard…days that only really happened in certain peoples nostalgic memory.

  2. lunartop says:

    Posted on your reading list but worth a repost

    http://www.positivemoney.org.uk/2012/03/fiat-money-or-gold-standard/

  3. Michael M says:

    I guess that means that with the current EazyFed we have:

    No one digging up gold in SA to store it in NY.

    Policy in one country does not effect another country.

    No deflation in global real estate.

    No pro cyclical credit expansion and contractions.

    Few bank closings + no bank runs because of the Fed, not due to deposit insurance – I assume there we also no run on major US and European investment banks a few years ago because we didn’t have a gold standard.

    And most beautifully, the non-gold standard does not rely on people being convinced that the central bank never runs out of ammo or “credibility”.

    Implied is of course the assumption that comparisons between the US economy in 2012 and before 1913 makes a ton of sense. Yes, totally similar except they had a few more single earner farm households and people owned a tad fewer stocks and the social safety net was almost the same but had a different name: In God we Trust .

  4. Petey Wheatstraw says:

    gman:

    When and why did we go off the gold standard, and what standard do we now have in place?

    We haven’t had bank failures because we have bailed them out with 1s and 0s. Despite the QE, our banks are still insolvent, and much of the dreck they held as collateral has ben transferred to you and me.

    Gold is correcting (and it’s not just a sudden drop). How far down will it go? Who knows? I don’t think it will go down as far as any fiat currency.

  5. I agree with Mr. Bernanke on this. (but little else)

    Its completely possible to be a Keynesian at heart but remain convinced that the current monetary paradigms are not only faulty but corrupt.

    Because the real question isn’t the need for fiat money… but who creates it, how its created, and especially how its introduced into the system… and (if avoiding inflation is a goal) it shouldn’t be introduced at a rate greater than the increase in “REAL” production its creators reasonably expect.

    But this isn’t an easy thing to do… I don’t believe all the FED governors are crooks… but the insularity of its class structure and its connection to the F.I.R.E. sector in general have created a groupthink that seems to have infected the political class as well.

    An economy at root comes down to what people DO with the resources they have. .. and how they distribute the hoped for abundance that results.

    I believe the F.I.R.E. sector with the co-operation of the political class has destroyed the healthy incentive structures necessary to make a healthy economy.

    (It would take longer than this comment but the inflation and collapse of the housing bubble and the inevitable same result for the education bubble are perfect examples of a society that’s lost its way in a sea of control fraud produced by childish Randian ideologies.)

    Decision Technologies: Currencies and the Social Contract
    http://culturalengineer.blogspot.com/2010/07/decision-technologies-currencies-and.html

    P.S. None of our recent presidents know Jack about real economics… but the same could be said for Wall Street IMHO.

  6. mad97123 says:

    • The economy was far more volatile under the gold standard (all the depressions and recessions back in the pre-Fed days).

    • The were far more bank runs and closings during the pre-Fed, Gold standard era. Bank failures were all too common.

    So the “Great Moderation” meme still lives. The volatility of the last decade was an anomaly, just a learning/teaching monument to show the great benefits of money printing. No more 50% drops in stocks, 75% drops in commodities, or housing declines in the future. You can trust your counter parties, those CDS contract will all pay, those bank assets marked to model are as good as any marked to market.

    Expect little market volitity in the coming years, the Fed has saved the day. Happy days are here again, print on….

  7. RothcoUDipthtick says:

    It’s a quandary…as without a standard, what is there to prevent successive governments overspending to get elected or for some populist cry, and then for a central bank to appease in the end….to inflate away and in doing so maintain the status quo (elite) and penalise the poor.

    It also seems transmission mechanisms between countries are prevalent these days too along different channels….heck..we’ve created lots more markets by which these happen.

  8. Moss says:

    One must review the circumstances that triggered the decision by Nixon to take the US off the Gold Standard in 1971. The Fed was around for that monumental decision. It allowed the US to flood the World with US dollars and fund all and every War effort with impunity. Since that time other ingenious financial innovations, too many too name, have cropped up. A Standard of some sort would simply limit the amount of fiat that could be printed. This is the reason a standard, Gold or otherwise is anathema to the Fed, their member banksters, other Central Bankers, The Crony Capitalists, and the politicians.

  9. gman says:

    The gold standard was left incrementally from 1913-1972. Fiat is the name of what we have now. I am not going to defend the current system except that the gold standard was worse and was left because it was inflexible and procyclical.

    As Friedman said..Why should a important economic variable like money supply be determined by the luck and skill of gold miners? Or as Mark Twain called the industry “liars standing in front of a hole in the ground”

    Wouldn’t the productive capacity of an economy be a better cue as to the monetary needs of an economy?

    I agree that central bankers have made some errors in the last decade..too lose during the housing bubble..too tight in europe right now..etc too willing to bail out banks w/o strings . Keynes called the gold standard in the 30′s..” a barbaric relic of the past” …IT STILL IS! That does not make our current crop of central bankers perfect either.

  10. constantnormal says:

    “I am sure none of TBP readers have much to say about either the Fed or a return to a Gold standard…”

    :-)

  11. mad97123 says:

    This reminds me of those who cling to the Efficient Market hypothesis after all we’ve recently seen.

    This from the guy who couldn’t see it coming, who said it was all contained. Any chance he may not see the untended consequences of all the money printing and debt? Seems just as obvious as the bubble that proceeded it.

    Seems like the fireman who let the fire start is now bragging about his firefighting expertise.

  12. The Window Washer says:

    Constantnormal,
    Do you feel like a fish saying “You know there’s a big steel hook in that.”

  13. b_thunder says:

    “• The were far more bank runs and closings during the pre-Fed, Gold standard era. Bank failures were all too common.” – maybe now we have too few bank failures? especially among The Big Banks. Is one extreme (too many failures) so much worse in the long run than the other (zombie banks, stagnation, japan?)

    Oh, I forgot. That’s what the Fed system is for: to save their members/owners from going under at any cost (so far $400billion lost by mom&pop savers)

  14. b_thunder says:

    “• The were far more bank runs and closings during the pre-Fed, Gold standard era. Bank failures were all too common.” – maybe now we have too few bank failures? especially among The Big Banks. Is one extreme (too many failures) so much worse in the long run than the other (zombie banks, stagnation, japan?)

    Thanks to the Fed System its member-banks (aka owners of the Fed system) are protected from bank runs and from going under at extreme cost to the rest of the society! The $400billion lost by mom&pop savers among other outrageous actions by the Fed.

  15. CSF says:

    A few of these “reasons” are weak:

    1) South Africa only provides ~7% of the world’s gold production, less than the United States.
    2) WJ Bryan wanted to devalue the U.S. currency to help farmers inflate away their debts, but by 1890 a majority of Americans were no longer farmers. Agricultural commodities suffered from overproduction / deflation, but the broader economy not so much. WJB lost the election.
    3) The boom-bust economy and bank failures of the 19th century were/are typical of developing economies. Since then much has changed besides our currency. We have FDIC, unemployment insurance, and Social Security. The Federal budget is a much larger percentage of GDP, and so is the federal debt, etc, etc.
    4) All central banks rely on faith / trust, and they’re all vulnerable to speculative runs. Remember the 1997 currency crises? Or the runs on the pound in 1967, 1976, 1992? It remains to be seen whether the world maintains faith in the Euro, the Yen, and the dollar.

    The legitimate concerns? The gold standard would indeed restrict monetary policy, current account deficits, and fiscal policy. It would also tie our economy more directly to others.

    My own view is that the fiat U.S. dollar has greatly benefited our standard of living, but we’re in danger of losing this prerogative because of excessive consumer and government spending. We may end up with a new currency system, like it or not.

  16. bubbles says:

    Mish shredded the 2 MSM idiots who wrote articles defending that treasonous fucker http://globaleconomicanalysis.blogspot.com/2012/03/ben-bernanke-inflationist-jackass.html

  17. obsvr-1 says:

    OK,

    A) we swing the pendulum all the way to the right and move to the gold standard … get all the Bernanke and historical issues and resulting financial crisis

    - or -

    B) we swing the pendulum all the way to the left and have our existing fiat monetary system … get all the Bernanke and historical issues and resulting financial crisis

    – seems the common theme is the inherent flaw in man, when left unconstrained will fleece each other and the world of all civility, compassion and prudence.

    So how about doing neither, rather move somewhere in the middle, a monetary system that provides the flexibility to deal with inflation/deflation, stabilizers for controlling runaway credit expansion and some governor/regulator on the derivate and exotic financialization products.

    Monetary System — move to Restore Seigniorage and eliminate the Fractional Reserver Lending.
    See white paper from Jame Robertson and Joseph Huber http://www.jamesrobertson.com/book/creatingnewmoney.pdf

    Steve Keen has some good ideas on breaking the pro-cyclical feedback loops in the secondary equity and housing markets with 1) Jubilee Shares and 2) Property Income Limited Leverage
    see: http://ineteconomics.org/sites/inet.civicactions.net/files/keen-steve-berlin-paper.pdf

  18. you know, for those that, actually, “____ _ ____”…

    this should be Filed Under..

    http://thinkthatthrough.wordpress.com/2011/09/18/logical-fallacies-101-the-false-dichotomy/

    with a Copy to..

    http://www.fallacyfiles.org/strawman.html
    ~~

    see also..

    http://publicbankinginstitute.org/
    and/or
    http://banknd.nd.gov/about_BND/index.html

    as, but, ~one, different ‘way ’round”..

  19. Ridge Runner says:

    I will let Paul Volker speak for me:

    “It is a sobering fact that the prominence of central banks in this century has coincided with a general tendency towards more inflation, not less. [I]f the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with ‘free banking.’ The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy.”

    When I first saw this quote on several ‘gold-focused’ sites, It thought it sounded too ‘convenient’ to be authentic. However, it’s really in the Foreword of “The Central Banks” : http://mises.org/daily/3208/Book-Review-The-Central-Banks It’s not a recent book mid-1990′s : http://www.amazon.com/The-Central-Banks-Marjorie-Deane/dp/0670848239 but I doubt if Volker has seen any good reason to retract since that time.

  20. obsvr-1 says:

    @lunartop Says:
    March 22nd, 2012 at 11:12 am
    Posted on your reading list but worth a repost

    http://www.positivemoney.org.uk/2012/03/fiat-money-or-gold-standard/

    Yes – this is a good read and aligns with the post I made “Restoring Seiniroage”

  21. darth beta says:

    Having monetary sovereignty is one of the greatest freedoms any nation could have.
    Who controls a monetary system that is monetary soverighnty? Our government
    Who controls a gold standard? People with gold.
    Again please please please take time to review US Monetary Sovereignty. (reading the newspaper will never be the same)
    Yesterdays Military Budget Post- Surprises me no one thought to compare defense spending to GDP!
    The US is surprising conversvative when defense spending is taken as a ratio GDP! Protecting our economy! (I am not suggesting it is an economy that benefits all Americans)

  22. AHodge says:

    as usual anything analytical that comes out of his mouth annoys me
    he’s right mostly about gold
    but the real argument is should a central bank or money system have some completely automatic “cross of whatev..”
    and there he has completely waffled between locked in inflation targeting where his heart is
    like friedman and all th other losers
    and a central bank with discretion, whether like the dual mandate
    and especially doing something about booms–where hes massively clueless
    he managed to preside over the 2005-7 creation of boom driven insolvent banks
    that just needed a downturn to reveal
    i give him credit for a liquidity rescue starting mid 2007-while completely covering up why he was actually easing-but overall-get the hook

  23. dsawy says:

    1. The lower rate of bank failures and bank runs is more properly credited to the FDIC and deposit insurance, not the Fed.

    2. The Fed made the Great Depression worse by raising interest rates.

    3. The Fed is a large part of what has caused the current problems, and they show no shame, take no responsibility and will suffer no consequences to their careers for their feckless stupidity. It is natural that the American public would want to see such mendacity as what issues from the Federal Reserve punished.

  24. dsawy says:

    BTW, we have plenty of gold in the US. The Carlin/Eureka Trend in Nevada produces about 7% of the world’s gold, and over 70% of all gold produced in the US. That’s JUST the Carlin/Eureka Trend, not the rest of Nevada, nor the Dakotas, Montana, Alaska, et al where there is gold production in the US.

    In other words, we don’t need to ship gold from South Africa to produce gold. Oh, and BTW – many of the most productive gold areas in Nevada are on public land. In other words, the US government could, if they wished, produce gold with no middleman.

    But because this is so far from the cabal of flapping heads on Wall Street and DC, no one seems to care about facts.

  25. Syd says:

    Going back to the gold standard doesn’t seem like a good idea to me. Too inflexible, too pro-cyclical.

    Maybe the Fed’s role should be changed though. The Fed may be concerned with full employment and price stability, but in recent decades the Fed has been absolutely obsessed with increasing stock prices (and the prices of other financial assets that banks buy/sell), and has encouraged private credit expansion well beyond what is prudent or healthy for the economy.

    In other words, the Fed has encouraged financial bubbles, and the growth of the financial sector into TBTF.

    The Fed’s mission should be to regulate credit expansion in a way that supports growth in the real economy, period. That means it should be a check on the financial sector, which inevitably wants to expand credit and pump up asset prices to infinity. As it stands, the Fed is the financial sectors’ enabler.

  26. Bill Wilson says:

    The FED gives themselves all of the credit for the economic stability of the 20th century without recognizing other contributors.

    We have a social safety net (unemployment insurance, social security, medicare, the FDIC, welfare…) that did not exist in the 19th century. Also, the middle class was much larger in the 20th century than in the 19th century, and regulation was better.

    Another thing to consider, the FED is bragging about the post WWII economic expansion. That expansion ended with the popping of a giant credit bubble. It’s amazing how the FED can take all the credit for the prosperity, but feel none of the blame for the aftermath.

    For the record, I’m not a believer in the Gold Standard. I think we should keep the FED, but we should lower leverage to 5:1 at the most, eliminate TBFT, limit the size of any bank, brigh back Glass Steagal, and eliminate the FED’s dual mandate.

  27. Moopheus says:

    Great, dsawy, so instead of more arsenic in South Africa’s water, we get it in Nevada’s instead. Woopee!

  28. scapescu says:

    No gold standard, unlimited fiat money used to save the big banks (when Fed is bailing out the banks is the banks that save themselves).
    Gold standard, limited amount of money; in order to bail out an industry (the banking one) you need to take money from other industries or from ordinary people (bigger taxes); danger of rebellion.
    Without fiat money, banks would have to function like normal businesses;

  29. dsawy says:

    Arsenic occurs naturally in groundwater in the western US in many areas, regardless of mining activity in the area or aquifer, from less than 10 ppb to over 50 ppb.

    That said, the arsenic problems in SA’s mining industry aren’t seen in the same way in Nevada. The geology of South African gold deposits and Nevada’s gold deposits aren’t the same. If you wanted to point to a mining region of the US where they have/had similar problems to South Africa’s, you’d be pointing at Butte, MT’s mining area.

  30. dsawy says:

    And, BTW, I don’t think we should go back to a gold-only monetary standard. I think the idea of a commodity basket backing our currency is a better idea than a single commodity. If the basket were weighted to contain precious metals, industrial metals, iron ore/steel production, agricultural products, oil and oil products, etc.

    Keynes suggested this in his proposals going into the Bretton Woods in the mid-40′s, the “bancor” reserve currency would have been tied to a basket of 30 commodities.

  31. northendmatt says:

    There is no more logical reason for a gold standard than there is for a praseodymium standard, an ivory standard, or a pine cone standard. All pointlessly tie an important economic variable to an arbitrary medium whose supply has little, if any, relation to the needs of the economy. Find a new mother lode; have a rainy year and get a bumper crop of pine cones. Why should either of those events have an impact on the ability to generate economic activity?

    To make matters worse, in the case of gold, we are talking about something that has actual industrial value in electronics. So when the goldbugs horde gold, they are causing inflation by driving up the price of a raw material input to industry. The idea that a valuable resource should be sitting in vaults somewhere instead of going to industrial production, enjoyment as a luxury, etc., is simply ludicrous.

    On that basis one might actually argue for the pine cone standard… except this would cause the needless diversion of industrial resources towards planting more pine trees than we need. If the idea of people planting acres of pine trees to grow more money sounds ridiculous… well… it is no more ridiculous than people digging up gold to have more money.

  32. mad97123 says:

    northendmatt,

    In the link below Greenspan tells you why gold is better than a a pine cone standard.

    http://www.constitution.org/mon/greenspan_gold.htm

    ALAN GREENSPAN, THEOLOGIAN OF GOLD

    In 1966, Alan Greenspan, then under the wing of Ayn Rand, published an article on the gold standard. It appeared in her newsletter. She later reprinted it in her book, “Capitalism: The Unknown Ideal.” The article was titled, “Gold and Economic Freedom.” It began with this take-no-prisoners paragraph:

    An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

  33. Haigh says:

    Given the choice of trading my labor for

    1. a currency whose creation is subject to the mouse clicks of a PhD/committee/politician.

    or

    2. a fungible commodity with severe supply constraints

    I’ll take #2 any day.

  34. Petey Wheatstraw says:

    Gold is an element. All of the alchemists who tried to make it failed, as would we, if we tried today.

    Ivory and pine cones, OTOH, can be grown, and other chemicals synthesized.

  35. mark says:

    The gold standard is not about gold. It is about the use of commodity money which is not under the control of the government rather than fiat money which is controlled by the government. It is a political argument made by primarily by libertarians. It is not fundamentally an economic argument.

    If you want a weaker government then you want commodity money. If you think a strong central government is important then you want fiat money. Everything else is commentary.

  36. mad97123 says:

    Mark, I’m not sure about weaker or stronger government, but fiat money certainly gives the government the ability to distort markets and redistribute wealth at will.

    A strong government (i.e. having moral strength in the face of difficulty) would not be hell bent on strapping future generations with mountains of unpayable debt because they are too cowardly to face the people with the facts. Fiat money lets them kick the can and act like weaklings when facing trouble.

  37. Winston Munn says:

    Damn straight, Ben. Platinum Standard….that’s the future.

  38. Bridget says:

    Standards are bad. At least if you’re Greece. If you’re Germany, not so much.

  39. “…Standards are bad…”

    I’m not seeing ‘Ink Blots’, am I?

    B-,

    wtf?

  40. Graphite says:

    George Selgin wrote a good article deconstructing Bernanke’s distortion of the historical record and addressing many of these highly (almost obnoxiously) orthodox anti-gold arguments, most of which seem like they were cribbed straight from a high school history textbook: http://www.freebanking.org/2012/03/21/anti-bernanke/

  41. Graphite says:

    Given how rapidly the economy grew during the nineteenth century, one is left to wonder just how high a cost was actually imposed by its much-ballyhooed financial instability. Making a given financial system less volatile is an unalloyed good thing only if it does not come with some tradeoff (faster economic growth, for instance), but advocates of the status quo seem to simply assume that has been achieved without consideration of some of the side effects of the status quo. Certainly, a greater portion of the US economy has now been given over to financial activity and speculation than was ever the case during the days of the Big Bad Gold Standard, and anyone with eyes to see can perceive how our current monetary arrangements have fostered that state of affairs. Is it a positive development? I don’t know, but I’m less willing than many to assume that everything comes up roses under the PhD Standard we have now.

  42. SumDumGuy says:

    Wait, I thought inflation meant less pain for borrowers like our guhv’ment, while deflation means it’s even more painful? So wouldn’t going to a non-fiat based currency be a bad thing considering how much debt we already owe?

  43. ElSid says:

    Well, we know he’s wrong, not because it has anything to do with the gold standard, but simply that he’s essentially always lying.

    This point is wrong:

    “• The economy was far more volatile under the gold standard (all the depressions and recessions back in the pre-Fed days).”

    What, you mean Apple shares? Globalization? LOL. There was no economy as we know it, all streaming down from the great exalted Jamie Dimon. It was all commodities prices. So to smooth out those commodity prices the took to financializing the entire economy? Yeah, and that’s solved the volatility! Has anyone been paying attention?

    And the below point is ludicrous as it makes no pretense of showing any causation. I mean, people died younger back then too, but the Fed is not what helped that. That people even accept these are arguments shows the level of discourse. Banks used to set themselves up and print their own money back in the good old days. There was no FDIC…aw forget it, I’m going to finish my beer.

    “• The were far more bank runs and closings during the pre-Fed, Gold standard era. Bank failures were all too common.”

    Why does this idiot think he has to go around dissing the gold standard anyway? What’s he afraid of? Oh, right, he’d lose his job, and his bankster fueled 6-figure speaking tour after his “retirement.”

  44. David Fuller says:

    Federal Reserve Chairman Ben Bernanke:

    BERNANKE’S POINTS

    In his slide presentation, Bernanke stressed the following points regarding what he feels are problems with the gold standard:

    –The strength of a gold standard is its greatest weakness too: Because the money supply is determined by the supply of gold, it cannot be adjusted in response to changing economic conditions.

    –All countries on the gold standard are forced to maintain fixed exchange rates. As a result the effects of bad policies in one country can be transmitted to other countries if both are on the gold standard.

    –If not perfectly credible, a gold standard is subject to speculative attack and ultimate collapse as people try to exchange paper money for gold.

    –The gold standard did not prevent frequent financial panics.

    –Although the gold standard promoted price stability over the very long run, over the medium run, it sometimes caused periods of inflation and deflation.

    –The gold standard would not be feasible for both practical resources and policy reasons.

    –I understand the impulse, but I think if you look at actual history, the gold standard did not work well,” Bernanke stressed in his lecture.

    And part of the conclusion:

    When asked by a student why there is still an argument for returning to the gold standard and is it possible to do so, Bernanke said the argument has two parts. “One is the desire to maintain the value of the dollar. … So the argument is that paper money is inherently inflationary, so if we have a good standard tool, you won’t have deflation [Ed: surely he means inflation].”

    “And as I said, that’s true to some extent over long periods of time. But from a year-to-year basis, it’s not true, and so looking at history is helpful there.”

  45. constantnormal says:

    I prefer the Plutonium standard, where there are risks associated with accumulating a massive fortune … and the money is toxic … should crank up the velocity of money, as no one will want to hold onto it for very long …

  46. mdradar says:

    I’m really not smart about these things. Could someone please explain how a gold standard is less “fiat” than “fiat” money? With fiat money, a dollar is worth a dollar because the state says it is. With a gold standard, a dollar is worth X amount of gold…because the state says it is. In both cases, the “value” of the money rests on the credibility of the government. Are people assuming that the state would become automatically more credible on a gold standard? Are we to assume that the state wouldn’t tinker with the value of gold when it feels it’s necessary?

  47. Bridget says:

    “I’m not seeing ‘Ink Blots’, am I?

    B-,

    wtf?”

    Guess my comment was a bit cryptic. Seems to me that most of the arguments against a gold standard are arguments against any standard. If you aspire to be Greece, you lime yhe lack of standards. If you aspire to be Germany, you don’t.