Posted by WARREN MOSLER on May 28th, 2009
> Hi Warren. I heard James Grant speak yesterday. He was funny, entertaining, articulate
> and full of historical knowledge, but I found his monetary analysis appalling. He wants
> the U.S. (and the rest of the world) to be on a strict gold standard.
> It seems to me that the consequent reduction in flexibility and efficiency could be a
> death sentence for hundreds of millions of people around the world. What do you think ?
The gold standad wasn’t abandoned because it worked so well!
The gold standard panic of 1907 was so bad they created the Fed in 1913 to keep it from ever happening again.
It happened again and even worse in 1929 to the point gold was dropped domestically in 1934.
No depressions since as the supply side constraints on ‘money’ were eliminated and counter cyclical fiscal policy became viable.
They kept the Fed open anyway and gave it other things to do.
Send this along to Jim, thanks!