Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | UraniumSeek.com 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Hyperinflation in Zimbabwe Its back, but maybe not for long
By: JP Koning

Gold Versus Bitcoin: The Pro-Gold Argument Takes Shape
By: John Rubino

Gold's Interesting Day
By: Rick Ackerman

Asian Metals Market Update: November-20-2017
By: Chintan Karnani, Insignia Consultants

GoldSeek.com Radio: John Williams and Louis Navellier, and your host Chris Waltzek
By: radio.GoldSeek.com

Gold Market Update
By: Clive Maund

Technical Scoop - Weekend Update Nov 19
By: David Chapman

Zero Hedge invites Financial Times to heed GATA's urging on gold suppression
By: Chris Powell

The Great Retirement Con
By: Adam Taggart

Perspective on the Gold/Oil Ratio, Macro Fundamentals and a Gold Sector Bottom
By: Gary Tanashian

 
Search

GoldSeek Web

 
Bank of England's former deputy governor misleads about gold and credit creation

By: Chris Powell, Secretary/Treasurer, GATA

 -- Published: Monday, 8 December 2014 | Print  | Disqus 

Dear Friend of GATA and Gold:

In an interview today with Russia Today's Sophie Shevardnadze, Sir Howard Davis, former deputy governor of the Bank of England and former director of the London School of Economics, makes the most elementary mistake in his objection to restoration of a gold standard for currencies. That is, Davis says a gold standard "would radically reduce the amount of credit and would cause a worldwide depression that would make the 1920s look like a holiday."

But of course the amount of credit supported by a gold standard would depend entirely on the price established for currency convertibility into gold, a price that could be revised from time to time. While Britain's return to a gold standard for the pound in 1925 is now widely regarded as a deflationary mistake, it is because the pound's value in gold was set too high, at the parity in force prior to the First World War and the inflation caused by the war. If the gold price for convertibility was set high enough, a gold standard could support infinite money and infinite credit.

That was established by the famous trillion-dollar platinum coin idea in the United States a few years ago:

http://en.wikipedia.org/wiki/Trillion_dollar_coin

Of course gold revaluation allowing an increase in money creation and credit would be instantly recognized as currency devaluation, while, at present, central banks can create infinite money and credit and, with surreptitious intervention in the gold and commodity markets to suppress prices and thereby destroy markets, can prevent most people from figuring out how their money is being devalued. Is that really why a gold standard is so objectionable to Davis -- that it would make central banking a lot more transparent?

At least Davis acknowledges the occasional flaws of central banking and fiat money in regard to credit creation. "At times," he sais, "given the paper money basis of our economy, maybe we allow credit to expand too rapidly, and essentially the story of the last financial crisis was that. We allowed credit to grow too quickly. But there are ways of dealing with that, through interest rates, bank capital ratios, etc., which can constrain credit growth, and you don't need the really freezing shower of a gold standard to do that, which would destroy much of the world's economy."

But can central banks be relied upon to undertake in time the cautionary measures Davis cites, and to do it consistently?

Well, maybe someday, in a more virtuous era, they will, and allowing the money supply to be determined by the amount of a particular metal or two that can be dug out of the ground does seem awfully primitive.

But were the ancients so primitive in establishing such a metallic money system because they realized that anything more sophisticated requires perfectly mechanical virtue in administration and that, administered by mere mortals, a sophisticated system inevitably goes haywire as a result of human corruptibility?

And if today's central bankers have achieved the supreme expertise and disinterestedness required to administer a sophisticated system, why do they do nearly everything in secret, and why is the world's wealth constantly being siphoned upward away from the many and into the accounts of the very few?

Maybe Russia Today could interview Davis again and put such questions to him. In the meantime his interview is posted here:

http://rt.com/shows/sophieco/212343-great-depression-global-economy/

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Join GATA here:

Vancouver Resource Investment Conference
Vancouver Convention Centre West
1055 Canada Place, Vancouver, British Columbia, Cananda
Sunday-Monday, January 18-19,2015

http://cambridgehouse.com/event/33/vancouver-resource-investment-confere...

* * *

Support GATA by purchasing recordings of the proceedings of the 2014 New Orleans Investment Conference:

https://jeffersoncompanies.com/landing/2014-av-powell

Or by purchasing DVDs of GATA's London conference in August 2011 or GATA's Dawson City conference in August 2006:

http://www.goldrush21.com/order.html

Support GATA by purchasing recordings of the proceedings of the 2014 New Orleans Investment Conference:

https://jeffersoncompanies.com/landing/2014-av-powell

Or by purchasing a colorful GATA T-shirt:

http://gata.org/tshirts

Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:

http://gata.org/node/wallstreetjournal

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

http://www.gata.org

To contribute to GATA, please visit:

http://www.gata.org/node/16


| Digg This Article
 -- Published: Monday, 8 December 2014 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2017



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer

The views contained here may not represent the views of GoldSeek.com, its affiliates or advertisers. GoldSeek.com makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, is strictly prohibited. In no event shall GoldSeek.com or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.