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Former IMF economist asserts that gold is money as good as government bonds

By: Chris Powell, GATA

 -- Published: Tuesday, 24 May 2016 | Print  | Disqus 

Dear Friend of GATA and Gold:

GoldCore's Mark O'Byrne this week calls attention to commentary written this month by Harvard economics professor Kenneth Rogoff recommending that countries diversify their foreign exchange holdings away from the government bonds of developed countries and into gold.

Rogoff's argument seems to be that with interest rates already effectively at zero or below, there's nothing to be gained through the purchase of such bonds, while gold is a "low-risk asset" that offers the possibility of capital appreciation.

But then Rogoff makes what from anyone else would be considered the rookie mistake of asserting that "gold does not pay interest," as if gold isn't leased for interest by Western governments every day in huge amounts and as if gold leasing isn't a primary mechanism of gold price suppression by those governments, the governments whose bonds Rogoff acknowledges are becoming less attractive as investments.

This rookie mistake is a little surprising since Rogoff's biography identifies him as having been the chief economist for the International Monetary Fund from 2001 to 2003, a period beginning just two years after the agency's staff reported secretly to the agency's board that major IMF member governments were concealing their gold leases and swaps to facilitate their surreptitious interventions in the gold and currency markets:

Rogoff's biography also identifies him as the 2011 recipient of the Deutsche Bank Prize for Financial Economics. It does not say whether he returned the prize since then upon any of the bank's admissions of market rigging and other misconduct.

But then maybe Rogoff can be forgiven that stuff because he concludes his commentary with an observation as politically incorrect as anything ever likely to be offered by someone associated with Harvard, the IMF, and Deutsche Bank: "There has never been a compelling reason for emerging markets to buy into the rich-country case for completely demonetizing gold. And there isn't one now."

If only he could have said as much publicly while serving at the IMF.

Rogoff's commentary is headlined "Emerging Markets Should Go for the Gold" and it's posted at Project Syndicate's Internet site here:

O'Byrne's commentary arguing that Rogoff's commentary is important is posted here:

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

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 -- Published: Tuesday, 24 May 2016 | E-Mail  | Print  | Source:

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