Don, I am no economist and have trouble grasping complicated economic concepts (in college I did better with calculus and thermodynamics) but I do have some idea of what has happened in the past and how we got where we are.
I do know that there has been a long history in this country by government to regulate the size of the money supply (generally upwards over time) as the need was percieved and reflected by political forces. In the 19th century the method was by coining a huge amount of silver dollars and in the 20th by paper "fiat currency". Do you think that silver coinage was proper? It was certianly inflationary at the time as we had a huge amount of silver available from the western mining operations. And that was the whole idea, to "inflate", to "soften" (to use 19th century language) the currency base so that more of the nations wealth "trickled down" (to use 1980's speak) to the farms and rural areas where nearly 90% of the population lived in those days.
Under the New Deal gold restrictions where private ownership of gold was outlawed I can see why a person might find fault with these regulations on libertarian grounds; but now a person can own gold, as much as he wants I suppose or any other metal (except plutonium ect.) so why the fuss.
And it seems to me that gold can be manipulated and "abused" by hoarders just as governments can mismanage currency. Let me cite an example: I have heard numbers ranging from 90,000 tons to 120,00 tons as the estimated amount of "white gold" (in national mints, the London and Zurich gold pools, ect) and maybe a similar amount of "black gold" (in private hoardes, illegal and otherwise) in the world. There is abundant evidence that in the 1970's and 1980's gigantic quantities of the metal moved from Asia to Europe, mostly the "Marcos Black Eagle" gold from the Philippines.
Wild conspiracy theory? Maybe not; for years the Swiss government steadfastly denied holding ANY Marcos assets, then after a group (nearly 10,000 individuals) won a multi-billlion dollar class action suit against the Marcos estate in US federal court a Swiss bank (Union Bank) admitted to having half a billion dollars of such assets. In this case documents were presented alledgeing the existance of a much larger tranche, tens of thousands of tons of bullion and supported by voluminous testimony of Marcos era military and others.
This led to other lawsuits and other admissions (and retractions) by the Swiss. One ongoing suit aledges the existance of some 1,200 tons of Marcos gold in a particular Zurich bonded warehouse (and backed up by testimony, paperwork and an admission by Swiss officals, then later denied).
The point of all this is that if gold were the single standard, I think it would be manulipated just like any other vehicle.
WSR |
