Money gold & money

Money gold & money Gold: The Once and Future Money (Hardcover) Product Description For most of the last three millennia, the world’s commercial centers have used one or another variant of a gold standard. It should be one of the best understood of human institutions, but it’s not. It’s one of the worst understood, by both its advocates and detractors. Though it has been spurned by governments many times, this has never been due to a fault of gold to serve its duty, but because governments had other plans for their currencies beyond maintaining their stability. And so, says Nathan Lewis, there is no reason to believe that the great monetary successes of the past four centuries, and indeed the past four millennia, could not be recreated in the next four centuries. In Gold, he makes a forceful, well-documented case for a worldwide return to the gold standard. Governments and central bankers around the world today unanimously agree on the desirability of stable money, ever more so after some monetary disaster has reduced yet another economy to smoking ruins. Lewis shows how gold provides the stability needed to foster greater prosperity and productivity throughout the world. He offers an insightful look at money in all its forms, from the seventh century B.C. to the present day, explaining in straightforward layman’s terms the effects of inflation, deflation, and floating currencies along with their effect on prices, wages, taxes, and debt. He explains how the circulation of money is regulated by central banks and, in the process, demystifies the concepts of supply, demand, and the value of currency. And he illustrates how higher taxes diminish productivity, trade, and the stability of money. Lewis also provides an entertaining history of U.S. money and offers a sobering look at recent currency crises around the world, including the Asian monetary crisis of the late 1990s and the devastating currency devaluations in Russia, China, Mexico, and Yugoslavia. Lewis’s ultimate conclusion is simple but powerful: gold has been adopted as money because it works. The gold standard produced decades and even centuries of stable money and economic abundance. If history is a guide, it will be done again. Nathan Lewis was formerly the chief international economist of a firm that provided investment research for institutions. He now works for an asset management company based in New York. Lewis has written for the Financial Times, Asian Wall Street Journal, Japan Times, Pravda, and other publications. He has appeared on financial television in the United States, Japan, and the Middle East. From the Inside Flap In the first years of this new century, the price of gold nearly tripled. Why should today's investors take notice? Because gold is the ultimate competitor to the U.S. dollar. In this age of increasing global competition and military conflict, ignoring the gold market could be devastating for anyone seeking to build wealth over the long run. A vote for gold is a vote against the dollar, against paper money . . . and paper assets. It's a way of saying, "Yes, we know Mr. Bernanke, Mr. Bush, and Goldman Sachs are doing a good job, but it might be a good idea to have some REAL money, just in case." The world's commercial centers have used one or another variant of a gold standard for most of the last three millennia. And for good reason: gold forces governments to be fiscally responsible and it provides a stable environment for rapid economic growth as well as a safe environment for individual investors to grow their own wealth. For the last thirty-five years, the U.S. government has been able to "print" money at will. If history is any guide, this government will do as all governments have in the past: overprint, causing the currency to crash. Inevitably, they will be forced to return to the gold standard, but at great expense and with considerable suffering. Investors who are not prepared will suffer the most. Unfortunately, asserts Nathan Lewis, both advocates and detractors of the gold standard grossly misunderstand the inner workings of this human institution. In making his case for a return to the gold standard, Lewis takes a whirlwind tour of money in all its forms, from the seventh century B.C. to the present day, explaining in straightforward layman's terms the effects of inflation, deflation, and floating currencies along with their effect on prices, wages, taxes, and debt. Lewis also provides an engaging history of U.S. money and offers a sobering look at recent currency crises around the world, including the Asian monetary crisis of the late 1990s and the devastating currency devaluations in Russia, China, Mexico, and Yugoslavia. And, in doing so, explains why making gold a part of your portfolio has never been more important than it is today. The ultimate conclusion of Gold: The Once and Future Money is simple but powerful: the gold standard produced decades, even centuries, of solid money and economic abundance. If history is any guide, we can –and should–abandon this era of easy money and return to the stability of the gold standard. ======================== "Let me start of by saying that it seems the last reviewer didn't even read the book! This book pushes a "type" of psuedo-gold standard, not the original gold standard. That said, the problems laid out by the reviewer don't even make sense under a true gold standard. A true gold standard does not mean that people use gold coins to purchase groceries or even homes. A gold standard, in the classical sense, means that there is no Federal Reserve or Central bank, at least not in its current form, and the dollar is DEFINED as a certain weight in gold. The monetary act of 1792 actually defined the dollar as 1 ounce of silver and then fixed the weights and measures of silver vs gold at 15 to 1. This was their error, so to speak. Even under a true gold standard, where no central bank exists, paper dollars do exist, as do checking accounts, savings accounts, et al. The process would work much like it does today with the exception that a paper dollar would be in the form of a receipt on gold. Private banks would hold your gold (some percentage of it) on reserve at the bank while issing you a deposit or savings account with the right to draw on the account in question. But I'm digressing --i don't have time to outline the true classical gold standard. This book espouses no such thing as the classical gold standard ---it pushes a psuedo gold standard which I describe below: It is a gold peg. Peg the dollar at a certain value of gold --say the current price of $660 per ounce. Currently the FED is responsible for setting interest rates, the discount rate directly and the FED funds rate indirectly through money supply adjustments. The authors of this book want the market to set the rate of interest, and the FED to be replaced with a currency board which has only one directive ---adjust the money supply in order to keep a constant value of dollar/gold ---at our $660 target. Interest rates would then be set by the market and money supply would be set by gold itself ---a much more stable form of money. This would be a pseudo gold standard ----as long as the market is open and free for gold exchange internationally, then there would be an automatical gold convertability for all people. The government would need to hold $0 gold because people could simply go out and convert their dollars into gold on the open market ---if they did on balance, the currency board would then need to decrease the supply of money in circulation in order to keep the peg (assuming all else stayed constant). If the USA went first, then all countries would follow ---this would create a one world currency, gold with dollar/yen/pound/euro simply representing different quantities of the same currency, as pennies, quarters, dimes, dollars, represent different quantities of the same currency now, the US dollar. This would provide automatic adjustment to imbalances of trade ---long discussion here. I recommend this book because of the history aspect and the understanding of gold/monetary issues. These authors understand the classical economist theories very thoroughly --with one great misunderstanding. This is the only downfall in the book ---they don't quite understand how inflation of the money supply creates bubbles or misallocated resources. Thus, they don't understand the boom/bust process as outlined by the Austrian school very well. They correctly understand taxes but do not have the same understanding with government spending. They understand free trade. I would give this book a 5 out of 5 even though there is a big mistake of not understanding other causes of the business cycle --namely the boom bust cycle brought on by monetary inflation and misallocations of capital."