Zeev's Turnips Patch-No Politics (ZEEV)

[Elroy Jetson]

The idea that Gold cannot be used to back currencies "because there is a shortage of gold" is a prime example of specious reasoning.

Charles Rist, Governor of the Bank of France, pointed out that this "shortage" simply meant that gold was not priced correctly - similar to a shortage of any good with arbitrary price controls set too low. There is not a shortage of gold - there is too much paper money.

His exposition of this problem was laid out in his 1946 book, "The History of Doctrines relative to Money and Credit:: Since John Law until the Current Day." Due to it's timeliness, this book was just re-published in French April 2003 and was previously published in English in 1961 as "The Triumph of Gold."

http://www.amazon.fr/exec/obidos/ASIN/2247050727/qid%3D1061848428/br%3D1-7/ref%3Dbr%5Flf%5Fb%5F6/402....

http://www.amazon.com/exec/obidos/tg/detail/-/0837122961/qid=1064093269/sr=1-2/ref=sr_1_2/002-978788....

He also points out the dangers of a Central Bank adjusting monetary aggregates to target "price stability" at least forty years before Alan Greenspan attempted this policy with predicable disasterous results.

A policy aiming at monetary stability will secure a relative stability of prices, but the economic history of the 1920's teaches us that a policy whose goal is stabilization of prices may result in inflation of money and credit, and very unsound speculation.