dazu passend

verfasst von Günter, 30.08.2001, 13:02

Thirty years ago President Richard Nixon put gold to rest: he closed the US"gold window", whereby foreign central banks could sell dollars for gold at a fixed rate. For some, it was the single most sensible thing he did. For others, it was the key step in opening the doors to the great inflation. Indeed, on the eve of gold's being fully phased out, Alan Greenspan, now chairman of the Federal Reserve, then an unmellowed libertarian, pronounced:"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the 'hidden' confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."

Surely the inflation and deficits during the 1970s fully justified his angst. But today gold is redundant; the bond market has replaced it as the ultimate restraint on central banks' temptation to use monetary expansion as a short cut to prosperity. And, increasingly, inflation targets and institutions such as independent central banks create lastingly stable money. There are few certainties in international finance. But here is one: gold as part of the international monetary system is dead.

The 19th century was a period of gold-based stable money and economic progress. No surprise that after the first world war gold returned, though not for long. With the onset of the Great Depression, inter- national reflation policy was missing and gold-based monetary systems left too little scope for national policy. Britain went off gold and soon much of the world joined; and those who left gold, historical research now documents, fared a lot better than those who hung on. Britain's leaving gold was for all purposes the end of gold; the rest is just rounding out.

Even though the US had gone off gold in 1933, it did not do so for foreign official holders. For them, the US maintained convertibility of the dollar into gold at $35 an ounce. That became the great issue of the 1960s, as official attempts to keep the free market price of gold down to $35 meant increasing sales from reserves.

That strained co-operation with the foreign official holders as the US dollar became overvalued and dollar shortage became dollar glut. Why hold dollars rather than gold when the free market price of gold rose above $35 an ounce? US gold losses to foreign governments increased; gold reserves were running off; crisis was around the corner. In typical French fashion, General Charles de Gaulle railed against the"exorbitant privilege" of the US financing itself by printing dollars while others had to accumulate them.

It was not long before the US became fed up with the moaning. In 1971, Nixon simply declared an end to all gold sales and devalued the dollar in the process. The remaining gold sits in Fort Knox to accumulate dust and no capital gains.

But, of course, gold has more lives than a cat and there was one more to account for. In 1980, in an obscure International Monetary Fund-quota appropriations bill, Jesse Helms, the Republican senator, slipped in a provision that called for appointment of a gold commission to explore the return to agold-based monetary system. President Ronald Reagan liberalised private gold holdings and appointed the committee. Gold prices reached $700 and beyond. And from there it was soon downhill: the gold bugs had their brief moment on the stage and bungled their lines - and the commission's 1982 report was an unceremonious funeral for any gold ideas.

Gold crashed in the free market and today its price is below $300. Soon inflation disappeared, flexible exchange rates became accepted as the best of all unsatisfactory arrangements and the topic disappeared from conversation, conferences and, ultimately, even from textbooks. The lone voice in support of gold is Robert Mundell, the Nobel prize-winning economist, who on occasion has it at the centre of his world money scheme.

In 1980 the idea of a gold standard was not altogether absurd because managed money - the claim that paper money could be even more stable than gold and dispense with the resource cost to boot - had failed. The US, and the world, had shifted into a massive inflation; expectations lost their anchor; bond prices exploded. Preaching sound money was becoming an industry, monetarists were coming out of the woodwork and stable anchors were in high demand.

An aggressive disinflation strategy did away with all that, at the cost of the deepest world recession since the 1930s, making credibility the new catchword. Two decades later, central banks have fully established their anti-inflation credentials and the bond markets hold them accountable by the hour just in case there is a temptation to lapse. No more need for gold - inflation targeting is the new answer and it has proved itself in the past decade.

The other reason gold has moved to the sidelines has to do with exchange rates. Neither the US nor Europe believes that a fixed exchange-rate system is convenient. Neither is willing to subsume domestic monetary and fiscal policy to the needs of maintaining a fixed rate.

True, large and persistent swings carry their costs - but going lockstep in growth with the rest of the world puts just one more constraint on policymaking, which is already overburdened. Neither Congress, nor the public, nor central bankers sees much use for fixed rates in future and they see even less for gold as part of any arrangement.

The role of gold in the past was to constrain policies to ensure price stability. What are the institutions today that prevent a recurrence of the 1970s? Even though we have sound money today, the US lacks institutions to ensure that this will last. Unlike in other countries, including the UK and Europe, US monetary policy is what the Federal Reserve deems wise that day. There is no explicit inflation target - chiefly because the chairman does not want one.

But now, with rumours of Mr Greenspan leaving by the end of this year, it is essential to put in place an explicit inflation target of, say, 1-2.5 per cent. That would help bond markets to have more confidence in US economic stability, regardless of who is at the top.

The writer is professor of economics and international management at Massachusetts Institute of Technology





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gesamter Thread:

• The Golden Age of Paper - Sehr interessant! - JÃœKÃœ, 30.08.2001, 12:03
  • dazu passend - Günter, 30.08.2001, 13:02
    • Link - Günter, 30.08.2001, 13:05