Gold Standard Needed Now More Than Ever? - Alan Greenspan Comments
Friday February 17, 2017 11:32
(Kitco News) - It would be best not to be short-sighted when it comes to gold; at least that is what one former Fed chair says.
“[T]he risk of inflation is beginning to rise...Significant increases in inflation will ultimately increase the price of gold,” noted Alan Greenspan, Federal Reserve chairman from 1987 to 2006, in an interview published in the World Gold Council’s Gold Investor February issue.
“Investment in gold now is insurance. It’s not for short-term gain, but for long-term protection.”
However, it is really the idea of returning to a gold standard that Greenspan focused on -- a gold standard that he said would help mitigate risks of an “unstable fiscal system” like the one we have today.
“Today, going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today, we would not have reached the situation in which we now find ourselves,” he said.
“We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line.”
To Greenspan, the reason why the gold standard hasn’t worked in the past actually has nothing to do with the metal itself.
“[T]here is a widespread view that the 19th Century gold standard didn’t work. I think that’s like wearing the wrong size shoes and saying the shoes are uncomfortable!” he said. “It wasn’t the gold standard that failed; it was politics.”