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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: benwood who wrote (14453)	11/13/2008 10:06:02 PM
From: Don Earl	Read Replies (1) \| Respond to of 71409

I don't follow your reasoning if gold was the only commodity to be inflated. You would be pegging a new gold standard to existing currency, by creating new money in the form of gold certificates. There'd be no reason to inflate anything else. Instead of the old practice of setting a gold standard at artificially low prices, you would set them artificially high, if "artificially" is the right word considering the amount of manipulation that has gone into keeping gold prices low over the past century. In fact, central banks could do most of the work by going into the market and running up the price ahead of the program. What is needed is a bubble that can be blown up and fixed at the top, instead of a bubble that always bursts. Gold would work for that about as well as anything - a whole lot better than dot com stocks or real estate or out of control lending. Once the bubble is blown up, the central banks would step up to lock in the price and could keep the price locked in simply by trading paper money for gold to anyone that wants to sell it. And, of course, anytime you need to increase the money supply, all you'd have to do is raise the price of gold. Not to mention that once governments owned most of the gold, there'd be no need for taxes - government would pay expenses out of its gold stash. It isn't any goofier than what governments usually do with money, and a lot less goofy than the usual policies.