As we’ve been reporting, a number of central banks have been aggressively adding gold to their reserves over the last several years. Globally, central banks accumulated 651.5 tons of gold last year. It was the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second highest annual total on record. Last week, Serbia and the Philippines joined the race for gold.
A move to minimize dependence on the US dollar, especially by countries like Russia and China, is driving this central bank gold-buying spree. Peter Schiff recently appeared on RT’s News with Rick Sanchez to talk about it.
SchiffGold’s It’s Your Dime features “straight talk” interviews with movers and shakers in the world of precious metals, investing and economics.
In this episode, host Mike Maharrey talks with economist Bob Murphy about his Contra Krugman book, how Keynesian economics goes off the rails, the time Paul Krugman ridiculously compared HealthCare.gov to UPS, the trade war, the gold standard and the Great Depression, Bob’s favorite Krugman flip-flops, and more.
Some people claim gold isn’t “sound” money any more than dollars or euros. They argue that the gold supply can be inflated just like a fiat currency. After all, gold is constantly being pulled out of the ground, right? They say a gold standard actually makes the boom-bust cycle worse. But commentators who make this claim miss a number of important points.
The following article was written by Peter Schmidt. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
When Nixon closed the gold window in August 1971, the US found itself in exactly the same economic circumstances as Britain had in September 1931 when she reneged on her gold standard obligations. If Ben Bernanke’s theory on the Great Depression is correct – namely, that ‘countries that left gold earlier also recovered earlier’ – the United States should have received an enormous economic shot in the arm after finally freeing itself from its formerly golden fetters.
So what has all the resulting money creation and credit expansion from the Fed’s PhD economists with total freedom of action wrought since 1971? A cursory review of the automobile industry, which is not an unreasonable proxy for the entire US economy, reveals that the economy did not receive a shot in the arm by freeing central bankers from their “golden fetters”– unless of course the shot was loaded with some sort of highly-toxic economic poison.
The following article by Ryan McMaken was originally published on the Mises Wire and is reprinted with permission
Earlier this month in the Wall Street Journal, James Grant explored the latest academic attack on the gold standard — this time in the form of One Nation Under Gold by financial journalist James Ledbetter.
Not that the establishment economics profession needs another book trashing gold. Among the university- and government-employed PhDs who hand down their wisdom about economics from on high, few have anything but disdain for the yellow metal.
Grant knows this all too well.