Home / Federal Reserve / Inflation Ahead, Then a Return to a Gold Standard — Dr. Rahn
Print Friendly and PDF

Inflation Ahead, Then a Return to a Gold Standard — Dr. Rahn

Written by Gary North on November 25, 2011

Richard Rahn is a free market economist with the Washington think-tank, Cato Institute. He has drawn attention to the reasons why we should not expect deflation. The Federal Reserve will see to that.

He sees whaere present policies are headed unless governments reverse course. “The major world governments are in the process of destroying the value of the money their citizens hold”

How bad is it? Bad enough to scare senior economists, who usually think there is a solution to everything: “at some price.” But what price? High.

On Nov. 16, the Cato Institute held its annual monetary conference. Speakers included high-ranking officials from the Federal Reserve and monetary experts from the academy, think thanks and financial institutions. There was unanimous agreement that the world monetary system is in deep trouble, which is obvious to anyone who keeps up with the news. It is easier to observe the problem than to come up with a solution.

He understands the problem.

It is apparent that the political classes in Europe, the United States and even China are not yet prepared to cut government spending back to a rate that can be supported by their economies. Thus, the pressure will increase on the central banks to cover more and more of the debt by printing money, which goes by the deceiving euphemism “quantitative easing.” When a central bank creates more money to buy bonds, whether they be Greek or Italian bonds in the European case, or U.S. government bonds in this country, no new wealth is created. Only the real-money value of the existing wealth is reduced (in essence, a hidden wealth tax).

Will this lead to hyperinflation? No. On this, he and I are in agreement.

He thinks there will be a return to a gold standard.

At some point, politically intolerable rates of inflation or economic stagnation will result. This, in turn, will force a massive monetary contraction or a move back to a gold standard or some other real backing for the money. The United States has more than 8,000 tons of gold, with a current market value of almost a half-trillion dollars, which would be enough to move to some form of a gold standard. A gold standard for money is not a panacea, but it is far better than an undisciplined fiat standard.

He and I agree on the ultimate solution: getting the government out of the money-creation business.

The real solution to the money dilemma is for governments to give up their monopolies on the issuance of money and allow free competition to determine who produces the best money. If innovative minds like Thomas Edison and Steve Jobs had been free to develop sound money, I expect many of our money problems would be relics of the past.

I agree. But I do not think this will happen anytime soon.

Continue Reading on www.washingtontimes.com

Print Friendly and PDF

Posting Policy:
We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse. Read more.

4 thoughts on “Inflation Ahead, Then a Return to a Gold Standard — Dr. Rahn

  1. Grant in Carlsbad, C says:

    Won't happen as long as they have a can to kick down the road.

  2. All wealth is based on commodities and/or land. Time we started behaving accordingly. I acknowledge intellectual property as well, but it mostly still depends on doing something with physical stuff.


  3. I couldn't disagree more. A Union requires a stable currency and Government's job is to provide that. Gold can't do that. It would have to be worth millions to back current debt, and it's still growing.

    The solution can be found in the Declaration's Principles derived from Christ's Law, the law of love. Created with equal rights is the real meaning of love and wealth is the best guarantor of Life, Liberty and Happiness, so the threshold of sufficiency is the best anchor for the money supply. When population and or standard of living goes up, so does the supply.

    The mechanics are simple, as soon as one is conceived an account is created. Taxes in products or services used by that individual

    become interest boosting credits proportional to individual assets.

    Income Tax is SLAVERY plain and simple, it needs to be outlawed. It retards people's ability to acquire wealth, locking the poor in poverty and dragging the middle class down.

    FICA is worse, it's regressive slavery, an enforced contribution to the largest Ponzi Scheme ever run.

    The sum of all taxes in products needs to be known. Transactions should be in vectors with tax broken out, so people know what they're really paying for the millions of Government workers running their lives.

    The Proportional Asset Tax would go negative below the poverty line, returned in the form of a transaction tax credit to boost interest on assets.

    The same Proportional tax would apply to Corporations, but rates and thresholds would be set by the political process to prevent monopolies and promote general welfare. No more Government grants, no more Welfare and no more politicians with hands in the pie.

    It is a good idea to tax assets not income so the wealthy class can grow and create jobs for the poor. This is the way to eliminate poverty, something LBJ's war could never do.

    Deflating the value of currency damages contracts, inhibits long term investment and destabilizes the economy. Gold can't fix it, Limited Government is the only way out.

  4. I beloved up to you’ll receive carried out proper here. The cartoon is attractive, your authored subject matter stylish. nevertheless, you command get got an edginess over that you would like be delivering the following. unwell for sure come further formerly once more as precisely the similar nearly a lot incessantly within case you shield this hike.