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To: John Pitera who wrote (110829)	6/29/2001 6:31:51 PM
From: pater tenebrarum	Respond to of 436258

the BoE IS a private bank as far as i know. similar to the Fed...the Reserve Bank of South Africa is a private bank too, its shares can even be bought on the JSE. this is not Kemp's idea, but Jude Wanninski's. just to point out who came up with it originally. in principle they may be correct, but there are two problems: a) we don't really know what the clearing price for gold is, as the gold market is influenced by the rampant gold lending schemes that have added enormous artificial supply in recent years. b) what is the RIGHT price for gold, to indicate whether inflation or deflation is the problem? why should an arbitrary number like $325 be the 'right' one? if you divide MZM by the US gold reserve, something like $3,000/oz. would be 'right'. i tend to agree however that some sort of Central Bank disciplining mechanism is needed. i also agree that the problem facing us now is gathering deflation, but the mistakes leading to it were made during the boom, as the Fed left rates too low for too long, and pumped up the money supply like never before in history, creating a huge credit and asset bubble in the process. interest rates should be left to the free market, not a gaggle of bureaucrats. of course they don't know what level of liquidity is the optimum for the economy - they're a central economic planning agency, something that is inherently unworkable. i don't believe the central bonkers and politicians will return to any form of gold standard of their own free will. it will take a big monetary/systemic crisis to make them consider a return to honest money. but i'm pretty confident the fiat system will go the way of all fiat systems before it...it's likewise not a workable solution in the long run. credit can't be expanded faster then the economy forever, and that is the inherent flaw. in the early 80's Greenspan was member of a commission investigating the possibility of returning to some form of gold standard, using treasury issued gold bonds...from what i remember it sounded like a good middle-of-the-road solution, also along the lines of involving the market in the determination of Fed policy, with gold as an anchor. imo we'll eventually end up with something like that. have a great weekend...i'm off to the movies.