Those young CB Whippersnappers are heading for a cold, hard slap in the face.
This is what CB's are thinking???? they can't be that stupid. Amazingly, the articel nowhere mentions that the reason that bonds pay interest and holding gold doesn't is that you're taking a risk with bonds that you're not holding gold. Specifically, gold is an asset that not also a liability on someone else's balance sheet. That is what is meant by "intrinsic value." When that someone else defaults--like the fourth largest securities firm in japan or the tenth largest bank for example--the CB's will perhaps understand why they were paid interest.
In fact, if the article accurately describes current CB thinking, I'm surprised they haven't done away with reserve requirement altogether, given that the asset base they do have are subject to soemeone else's whim. If the CB's were exchanging gold with say, Volvos or Computer Chips, that would be one thing. After thousands of years, have our "banks" progressed to the point that thye no longer need to holds assets with intrinsic value??
Personally, I can't believe most CB's see it that way. I think some need currency and others want the price of gold lower.
But if I'm wrong a reality check is certain, if not soon in coming.
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