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Tuesday, July 22, 2014

Restore the Gold Standard! (Part I)

This morning we at Mighty Whig will begin an occasional series advocating the restoration of sound money through some version of the venerable gold standard.  The Federal Reserve's monetary policy under Greenspan and Bernanke has been disastrous.  Yellen, too, is said to be a weak dollar woman.  Fed policy created the real estate bubble, has inflated commodity prices, and has failed to stimulate the economy.  But the real problem is our fiat money system. We now are so used to its instability that people just assume another crash is around the corner! (See Jamie Dimon's of J.P. Morgan's comments not too long ago.)

Amazingly, in the last presidential election, no candidate criticized publicly the Fed's absurd "quantitative easing" policy (buying bonds to put more dollars in circulation), which did nothing to stimulate the economy or cut unemployment.   We just assume weakening the dollar is normal behavior now.

The Fed has lost the confidence of so many Americans because it now tries to run the economy.  (Never successfully.)  Perhaps realizing this, Yellen pledges to "taper" quantitative easing, i.e., bringing us slowly off the heroin needle.  

I'm posting a long piece from 2009 by James Grant lamenting the damage done by money with no bounds. Requiem for the Dollar  Worth reading to begin the discussion.

Upcoming:   My review of Steve Forbes's new book "Money," which makes a strong case for a new gold standard. 
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