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Growing Call for Return to Gold Standard.


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Growing Call for Return to Gold Standard As World Approaches Next Great Recession – Bloomberg


Bloomberg discussed the growing number of experts and politicians who are urging a return to a gold standard to combat the reckless central bank policies threatening the economy.

“When times are tough, new economic theories get a better hearing. Maybe some old ones, too. The gold standard is one of the oldest ideas about money, but the hardest of hard-money hawks sense an opening to breathe new life into it. Decades ago, the amount of cash circulating in a country was often limited by the stash of bullion held in its coffers. Especially since 2008, developed-world policy has headed in the exact opposite direction, expanding the powers of central banks to stoke growth. Helicopter drops of money, potentially the next new thing, would be a giant leap further…

For those in the U.S. who see much risk and little benefit in the current course, gold is still a rallying point. And their audience may be growing. ‘The fringe has become the mainstream,’ said Jesse Hurwitz, a U.S. economist at Barclays Capital in New York. He sees the gold standard as a bad idea but “something we’ll increasingly talk about…’

“George Gilder thinks gold-standard ideas are on the way back whatever the politicians do. Founder and chairman of the Gilder Technology Group and a bestselling author who helped popularize supply-side economics in the Reagan era, he says the trillions of dollars that fly around global currency markets every day are a ‘bizarre abuse of capitalism” sucking vitality out of the real economy…

“Gilder sees a political backlash when negative interest rates start taking away people’s savings. Jim Rickards, chief global strategist at money manager West Shore Funds and author of ’The New Case for Gold,’ says the Fed and its peers have expanded their balance sheets to ‘the outer limit of confidence.’ Rickards helped negotiate the rescue of Long-Term Capital Management in the late 1990s and says it’s been downhill ever since. ‘In 1998, Wall Street bailed out a hedge fund. In 2008 the Fed bailed out Wall Street,’ he said. ‘What’s going to happen in 2018? It’s going to be the IMF bailing out the central banks.’

He sees a chance of ‘close to 100 percent’ that a downturn worse than the Great Recession is on the way in the next few years -- and then, ‘you’re going to be hearing a lot more about gold.’”

(“Make America Gold Again: Calls for Everyone's Favorite Standard Are Back,” Bloomberg, 5/17/16.)

 

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