Re: X-Post: Greenspan supports Gold Standard on Fox Business
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A transcript, by the way:
Host: So then why do we need a central bank?
AG: Well, the question is a very interesting one. We have at this particular stage a fiat money which is essentially money printed by a government and it's usually the central bank which is authorized to do so. Some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or currency board or something of that nature, because unless you do that all of history suggests that inflation will take hold with very delterious effects on economic activity.
Later, after some yakking about Ayn Rand:
AG: . . . there are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard.
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Nice quote! Greenspan is now working for Bill Gross who has a number of commodity indexed funds he had been promoting. I think a bet on inflation is a good one. There will never be a gold standard and a monetary policy board will always sucuumb to the pressures created by credit squeezes. Milton Friedman had it right, monetary growth should be stable, low and predictable without any attempts to fine tune the economy. He is considered old fashioned. Do you see why?
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