Economist Says Stable Money is Key to Recovery

Economist and writer Judy Shelton has another article in the online Wall Street Journal in which she, addressing French President Sarkozy's statement that we are to "build together the capitalism of the future," poses the question: "Does that mean going back to a gold standard, or gold-based international monetary system?" Which question she then answers, somewhat equivocally, "Perhaps so; it's hard to imagine a more universally accepted standard of value."

How true that is! Gold and silver have both been accepted as standards of value for millennia. Our own Constitution establishes silver, in the form of the Spanish Milled Dollar, as the standard of value for the United States. The problem with the gold standard -- or, for that matter, with any similar "standard" -- is the ease with which it may be abused by those in positions of power. Just such abuse, in the form of creating more "dollars" supposedly redeemable in gold by foreigners than there was gold with which to redeem them, is what forced President Nixon to cancel the redeemability of the dollar for gold in 1971. Likewise, it was just such abuse, in the form of creating more Federal Reserve Notes supposedly redeemable in gold than there was gold with which to redeem them, that led to the banking crisis of the early 1930s as people, reacting to the economic uncertainties of the Great Depression, sought to withdraw their funds from the banks in gold coin, which action prompted President Franklin Roosevelt to unconstitutionally confiscate the people's gold.

To hope that any system of truly sound money will come from the current G-20 meetings is futile, to say the least. For a system of truly sound money would require the bankers to surrender the profits gained from their current ability to create so-called "money" out of thin air. And expecting bankers to give up their profits would be like...well, like expecting bankers to give up their profits.

Judy Shelton's latest article, titled Stable Money Is the Key to Recovery -- How the G-20 can rebuild the 'capitalism of the future.' may be found at the link here.