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Posts Tagged ‘gold standard

“O Gold! I still prefer thee unto paper”*…

 

Gold-coins-e1561933265634

 

The once-fringe fantasy of a return to the gold standard is creeping back into the mainstream.

It has long been dismissed as a fool’s errand, on par with abandoning the Federal Reserve and other trappings of the modern economy. Mainstream economists deride it almost without exception. Reintroducing the gold standard would “be a disaster for any large advanced economy,” says the University of Chicago’s Anil Kashyap, who connects enthusiasm for it with “macroeconomic illiteracy.” His colleague, Nobel laureate Richard Thaler, struggles with its very underlying principle: “Why tie to gold? Why not 1982 Bordeaux?”

Yet the idea that every US dollar should be backed by a small amount of actual gold is more popular than economists’ opinions might suggest. Advocates include members of Congress and president Donald Trump. Enthusiasm for a return to the gold standard has become more prominent since Trump’s most recent nominees to fill the vacant Federal Reserve governorship have endorsed a return. The first two—Herman Cain and Stephen Moore—both dropped out of consideration, but the third, economist Judy Shelton, announced… in a Trump tweet, may be the most ardent in her support

What exactly is the gold standard, and what would it mean if it were re-established? Timely questions: “The quiet campaign to reinstate the gold standard is getting louder.”

* Lord Byron

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As we ponder the pecuniary, we might recall that it was on this date in 1795 that James Swan (who had financed privateers during the Revolutionary War, and used some of his proceeds to support the Continental Army) refinanced the national debt of the United States– $2,024,899 in obligations to the French government– by assuming them personally, at a higher interest rate; he then sold them off to private investors in the U.S. and Europe.

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Gilbert Stuart’s portrait of Swan, 1795

source

 

Written by LW

July 9, 2019 at 1:01 am

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