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Msg  423801 of 450527  at  5/15/2019 11:28:38 PM  by

wabuffo100

The following message was updated on 5/15/2019 11:32:33 PM.

 In response to msg 423799 by  flipper58
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Re: Trump's next Fed nominee

Wow, wouldn’t it take about 30 Fort Knox’s to back in gold what money stock has been created since we went off the gold standard?
 
Do banks maintain $1 in deposits for every dollar in loans?  Of course not.
 
Nobody's talking about restoring full convertibility of the dollar to a set quantity of gold.  I think the idea is to use the price of gold as a price indicator in terms of managing the value of the US dollar.  
 
One could set a rough target of around $1300 per oz and react if gold goes above or below a range, of say, +/- $150 outside that target. 
 
You don't even need to own any gold to do it.  The Fed wouldn't have to buy or sell gold - it could just use its policy levers (interest rates, bank reserve requirements, etc) to accomplish its goal of increasing or reducing the value of the US dollar until gold price moves back into its target band.
 
Its not that hard and is most certainly better than a bunch of pointy-headed academics using whatever it is they use today to figure out what to do.  I think the economics profession is not up to the task and I would argue has made a mess of things.
 
I'm convinced Greenspan did it during his entire tenure as Fed Chairman.  When he became Chairman of the Fed in August 1987, the gold price averaged $455.38 for the first twelve months of his tenure.  When he retired in Jan, 2006, the gold price had averaged $455.31 for the last twelve months of his tenure.  If you plot the standard deviation of gold's price moves during his 220 months as Fed Chair, he has the lowest standard deviation of any Chair before him (after Nixon broke peg in 1971) or after. 
 
I would argue that from a monetary value of the dollar, 1987-2005 wasn't too bad - although there were ups and downs economically.
 
It would work.  I hope Trump and his advisors are serious about it.  It looks like might be - we'll see. 
 
wabuffo
 
 
 


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Replies
Msg # Subject Author Recs Date Posted
423802 Re: Trump's next Fed nominee Longnholding 3 5/16/2019 12:09:57 AM
423805 Re: Trump's next Fed nominee Spekulatius 1 5/16/2019 7:08:31 AM






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