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Source link: http://archive.mises.org/18291/cnbc-on-gold/

CNBC on gold

September 1, 2011 by


{ 9 comments }

Professional Writer September 2, 2011 at 1:10 am

Yes, great job on the production team on stealing straight from investopedia without any nod or reference.

Ross Edwards September 2, 2011 at 2:05 am

Not bad for CNBC. Surprising, even. Jim Grant immediately sets them straight about phony gold standards and dubious ability for the common man to redeem his paper. Methinks this is the early stages of damage control by the establishment: see 4:50 in the video where the crawler reads “The FED was created as a gold standard central bank.”…flattering!…anybody who’s only perused Rothbard’s Case Against the Fed would know this was at best a massive leveraging upon one grain of gold, if anything.

geoih September 2, 2011 at 5:47 am

But how will the state deficit spend? How will we stimulate the economy? A bunch of Keynesians trying to cover their nakedness. Intellectual midgets.

Ned Netterville September 2, 2011 at 9:37 am

Gold is reasserting itself as the people’s money of choice, and the emperor is finally exposed in all of his glorious nakedness. His quiver is empty of any arrows to combat the inexorable reestablishment of gold as the currency of contracts and transacts. The next step is up to entrepreneurs to preempt governments from reluctantly establishing their own pseudo gold standard designed to forestall the inevitable and retain control of your money, which gold is irrevocably robbing them of.

Mitchell Powell September 2, 2011 at 2:35 pm

These are amazing times we’re living in, and this segment on CNBC is illustrative of the way that the establishment is able to change colors like a chameleon the moment a fringe idea takes hold of a large enough number of customers (viewers). One day the gold standard is not worthy of discussion; the next moment a respectable-looking commentators says with a perfectly straight face that he is “more in the middle” on it.

I am reminded of Rushdoony’s statement that “intellectual respectability in the eyes of the liberals or anyone else is an irrelevant matter in the discussion of any question. We must leave the dead to bury the dead.” Once again, ideas pushed around in the outer reaches of supposed lunacy by such folks as the Mises Institute, Lew Rockwell, and especially Ron Paul have overcome the conventional wisdom.

The Mises Institute will continue to succeed and be one of our nation’s most important vehicles for change so long as it does not let the pursuit of mainstream acceptance water down its message.

Leo September 2, 2011 at 4:20 pm

Too bad he didn’t set that lady straight about the early boom-bust cycle being the result of paper money and fractional reserve banking under an imperfect gold standard. Also, the economic volatility was confined to smaller geographic regions, unlike the nationwide boom-busts experienced after the creation of the Fed and rejection of the gold standard. Furthermore, the periods of deflation in the 19th century were a result of magnificent economic growth and an increase in the amount of goods and services available compared to the money supply.

Esuric September 2, 2011 at 7:05 pm

He forgot to mention the major virtue of a true, international gold standard, namely the organic re-adjustment mechanism which prevents continuous price alterations in either direction (either inflation or deflation), and which equilibrates the demand for goods and services at an international level.

In our current monetary system, an expansion in the supply of money leads to a devaluation of that currency, relative to all other currencies, which makes the products produced in that nation cheaper in the international market (relative to nations which are not inflating). This increases exports and yields the “favorable balance of trade” (current account surplus) that Keynesians so desire. At the same time, though, expanding the supply of money necessarily means lowering interest rates (in the short-run) which leads to capital flight (out of the nation inflating towards other nations). This also devalues the national currency.

Thus, this current system is defined by perpetual currency devaluation and lacks any natural mechanism to counter-balance/negate this process. The only way to stop it is to have the central banker come in and engage in a contractionary monetary policy, which almost never occurs, and for obvious reasons (politically unpopular).

And finally, this means that national exchange rates and interest rates are in continuous flux, due to the various monetary interventions, which leads to arbitrary capital flight at an international level, yielding major structural imbalances throughout the entire world (like a world-wide housing bubble, for example). The gold standard, on the other hand, aims at an international and uniform interest rate, expressing time preferences at a global level (a single global market economy).

GFKjunior September 2, 2011 at 7:17 pm

Big banks will not let us return to the gold standard. We’re in it till a fiat collapse.

Anders September 4, 2011 at 7:53 pm

These people are still clueless about basic economics. “Do you mean this paper with numbers on it won’t work in the future?”

For god’s sakes. That piece of paper has lost 98% of it’s purchasing power since 1971. What more proof do these people need?

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