Friday, November 17, 2017

New St. Louis Fed Hit Job on Gold

The Federal Reserve Bank of St. Louis just put out an essay, Here’s Why the U.S. No Longer Follows a Gold Standard.

The conclusion of the piece:
There are significant problems with tying currency to the gold supply:
It doesn’t guarantee financial or economic stability.
It’s costly and environmentally damaging to mine.
The supply of gold is not fixed.
These people are seriously delusional.

There have been 18 recessions since the launching of the Federal Reserve System, including the Great Depression and the recent Great Recession. Some stability the Federal Reserve brings.

Since the start of the Federal Reserve, the dollar money supply has increased by more than 12,230%. And they are concerned that the gold supply isn't fixed? 

Thus, by their own standards, the Fed is a great failure. I agree.

End the Fed!



I should add that during the period the dollar was redeemable by the Fed into gold, it was never a real gold standard. The Fed during the period recklessly printed and printed dollars that would have been tightly restrained under a real gold standard. The Fed money printing has always been the problem. 


  1. "It’s costly and environmentally damaging to mine."

    The fact that it's costly to mine is exactly the point of favoring a commodity money. The creators of the currency -- miners -- will have to weigh up the costs and rewards before creating more, unlike with the near costless production of fiat currency. If the resources needed to mine gold are required elsewhere in the economy to satisfy other, more urgent needs of consumers, then these resources will be bid away from the miners who will therefore curtail gold production.

    As to environmental impact, every use of resources to satisfy human wants has an environmental impact. If non-impact is to be our standard, then we're valuing the environment over human welfare and existence. If centralized assessment and control (by the state) of impact is to be our standard, then we're elevating some human or humans to deity status, since no individual can possibly know of all consumer preferences and trade-offs.

    1. Plus don't low interest rates encourage development and use of resources faster than they probably would occur? To me, the Fed destroys the environment.

    2. Good point. Artificially low interest rates certainly cause malinvestment in, among other things, the higher-order stages of production, which includes resource extraction activities.

  2. "It doesn’t guarantee financial or economic stability."

    what does?

  3. The mental gymnastics Keynesians will jump through in order to defend their bullshit policies is staggering.

  4. Robert, why did you not add some comments to the Fed’s page? I was surprised there were none. Either no one reads their dribble or nobody cares. Their children’s book fantasy and use of sophistry incensed the friggin shit out of me. I am just finishing Rothbard’s “A History of Money and Banking in fthe United States” and should drive any sane and reasoning person to anarchy.....NOW! End the fed? BURN the goddam leviathan down!