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Go for Gold


Tags Money and BanksGold StandardMoney and Banking

Why, after years of the market's neglect of gold, is the paper money price of gold now on the rise? Would it be too far-fetched to assume that it could reflect market agents' growing concern about a forthcoming great inflation of government controlled paper money? Tensions in credit markets might indeed provoke fears that central banks could, by way of lowering interest rates, pump even more credit and money into the economies, in an attempt to fend off a credit crisis and potential losses in output and employment. Mainstream economists may be relaxed about such a policy provided "inflation" — typically defined as a change in the consumer price index — remains "low." Austrians, in contrast, not only consider an increase in credit and money supply inflationary; they would also point out that the very process of a relentless increase in government-sponsored credit and money supply is a recipe for disaster, that it will ultimately end in the destruction of the currency. FULL ARTICLE

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