Wednesday, March 21, 2012

Bernanke Educates the Kids About Gold

I won’t spend time on the benefits of an economy based on free-market money (as opposed to centrally-planned money). There are plenty of good sources that discuss this subject, including The Mises Institute and The Daily Bell. In any case, witnesses to the collapse of the Soviet Union should have enough evidence as to the efficacy and results of a centrally planned economy.

However, one paragraph from the attached struck me:

The gold standard poses both practical and policy problems, Bernanke said. On the practical side, it can be a waste of resources to secure all the gold needed to back currency, moving it from South Africa to the basement of the Federal Reserve Bank of New York, for example, or as he put it, "all this gold is being dug up and being put back into another hole."

I think the biggest “political and policy” problem that a gold backed currency poses to a central banker / planner is that said central banker / planner would be out of a job, as would countless tens of thousands of other highly paid Ph.D. economists.

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