Mark O'Byrne

Gold in USD

 Jim Grant, astute monetary economist and respected author of the Interest
Rate Observer said in a Bloomberg interview overnight that the dollar
would crash and a new Gold Standard would be the end result of the U.S.
Federal Reserve’s irresponsibilities.
Although the interviewer
said that Grant’s remarks were inflammatory Grant said that it is
important to examine our monetary affairs over the sweep of time.
“Over
100 years ago the U.S. Fed was founded and in 1944 at Bretton Woods
they decided there would be no more Gold Standard but rather a U.S.
dollar that was backed by gold. If you fast forward to the present we
now have a full blown PhD standard where the former heads of Economic
Departments are running federal institutions. Central Banks across the
world are waging an all out struggle against the price mechanism which
is going against Adam Smith’s invisible hand.”
A guest host said
that no one in academia is calling for a Gold Standard and suggested it
would result in a deflationary period for the U.S.
Grant
disagreed and said that the Gold Standard is the only answer as it was
monetary system good practice for the 100 years ending in 1914, whereas
everything else since has been a “try out”.
Grant says that he
expects more quantitative easing from the U. S. Fed, and likens their
single mindedness to a doctor prescribing to a patient that is clearly
overmedicated.
He notes, credit in the world is an infinite sum
of numerous simultaneous equations. He notes that if humans knew how to
allocate credit than the USSR would have been a success. Socialists
unions over manipulating credit don’t work.
Therefore, just as
central banks are continually try to print their way out of our current
global debt crisis their manipulation is not working.