by David Stockman
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It took 200 years to build and perfect the classic gold standard system; then it was destroyed in about seven weeks when the Guns of August 1914 thundered across Europe; and now I am allotted seven minutes to resurrect it. Fortunately, Churchill’s defense of democracy also applies to the daunting task at hand: To wit, the classic gold standard is the worst possible monetary system – except for all of the alternative inflation-generating, savings-destroying, debt-breeding, bubble-emitting and boom and bust-prone systems which have been tried in the 100 years since its demise. Hence, we offer six present day monetary vices which are curable by gold:
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Comment: The problem with the gold standard is exactly what happened to it in 1914. Being under the authority of the state, the gold standard could be removed easily and quickly when it stood in the way of the interest of government. A new gold standard wold probably suffer the same fate. There is no way back. We must find something new. One condition for the new system to work seems to be that the new monetary order must have its anchor outside of government. Additionally, we must find a system which is supported by forces outside of government. Strong private economic interests should be linked to the new system with their interest of maintaing it. Systems for review could be a private gold standard, free banking, or combinations among these elements. In order to find out we should markets let experiment with different systems yet everywhere in the financial world the monetary system is tightly controlled and under governmental authority. The fact that we have national fiat monies in existence leaves quasi no room for state-free, market-based monetary experiments.
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