Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

  • About Us
    • Contributors
    • Archives
    • Dick Young’s Safe America
    • The Final Richard C. Young’s Intelligence Report
    • You’ve Read The Last Issue of Intelligence Report, Now What?
    • Dick Young’s Research Key: Anecdotal Evidence Gathering
    • Crisis at Vanguard
  • Investment Analysis
    • Bonds
    • Currencies and Gold
    • Dividend Investing
    • ETFs & Funds
    • Investment Strategy
    • Retirement Investing
    • Stocks
    • The Efficient Frontier
  • Investment Counsel
  • Dynamic Maximizers®
  • Retirement Compounders®
  • Free Email Signup

My Pick for the Next Federal Reserve Chief: A Gold Standard

November 19, 2019 By E.J. Smith

Image used under license from Shutterstock.com

If the decision were up to me to choose between current Federal Reserve governor Jerome Powell or Stanford University economics professor John Taylor as the next Federal Reserve Chief, I would choose Taylor. At least, of the two, Taylor has a rule named after him.

According to the “Taylor Rule,” the Federal Funds rate would be a much higher 3.5% today, not a measly 1%.  But the rule isn’t exactly cut and dried. “Its components include the gap between inflation and its target, between economic output and its target, and the ‘neutral’ real (inflation-adjusted) interest rate, which keeps the economy at full employment and inflation stable,” writes Greg Ip in the WSJ. That’s a mouthful. One can only imagine how the rule could be misinterpreted by the high priests working in government.

A better approach would be to focus on sound money, pure and simple, by tying the value of a dollar to an ounce of gold. Today an ounce of gold costs $1,275. That’s it. No rules to interpret just like there’s no need to interpret time throughout your day. There’s 60 seconds in a minute, and 60 minutes in an hour, that’s it. With a gold standard, you know the value of your dollars every second of the day.

I’ve always liked Steve Forbes’ thinking on this subject as he explains in his book review of Gold: The Final Standard, by Nathan Lewis:

Unstable currencies are like viruses in your computer–they corrupt those “bits” of information. Destructive bubbles result, such as the housing frenzy preceding the 2008-2009 crisis. In 2001, a barrel of oil cost little more than $20. Then the U.S. Treasury Department and the Federal Reserve deliberately began weakening the dollar in the mistaken belief that this would stimulate more exports and economic growth. Petroleum rocketed to more than $100 a barrel. Other commodities behaved in similar fashion. These surges didn’t come about because of natural demand but because of a declining dollar. Nevertheless, most people took to heart the message that the rising prices seemed to convey: All these things were becoming dearer. The misinformation conveyed by prices resulted in hundreds of billions of dollars being misinvested, particularly in the building of houses.

Everyone understands the basic need for fixed weights and measures in daily life: the amount of liquid in a gallon, the number of ounces in a pound, the number of minutes in an hour. None of these amounts fluctuate; they are unchanging.

Just as we use a scale to measure something’s weight, we use money to measure the value of products and services. If the measuring rod itself becomes unstable, the smooth functioning of an economy is disrupted, just as our lives would be if the number of minutes in an hour constantly fluctuated.

What’s the best way to achieve a stable currency? By linking the currency to gold. Obviously, with gold we’re not going to get a precise measurement, but as Lewis demonstrates in his concise and deeply learned history, gold has maintained its intrinsic monetary value better than anything else for 5,000 years. Silver did the same until the mid-1800s, but for several reasons it then drifted decisively away from paralleling the value of gold, which is why most of the major countries of the world moved solely to a gold standard.

The fluctuating price of gold today doesn’t reflect the real value of the yellow metal but, rather, the fluctuating value of various currencies.

Steve Forbes: Only A New Gold Standard Will Save The U.S. Dollar

Share this:

  • Email
  • Twitter
  • Facebook

You Might Also Like:

  • The Quiet Gold Rally
  • Gold Begins to Shine
  • Gold Strong on Dollar Fears
  • Author
  • Recent Posts
E.J. Smith
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@youngresearch.com
Latest posts by E.J. Smith (see all)
  • RURAL RENAISSANCE: America Finds the Country Again - June 29, 2022
  • Why Work When Taxes Take It All? - June 28, 2022
  • Your Survival Guy in Paris: Awakened from His Slumber, “Dad, I’m Going to London” - June 27, 2022

Search Young Research

Most Popular

  • Here’s Why You Need a 15-Year Retirement Investment Plan
  • Why Work When Taxes Take It All?
  • The Power of a Compound Interest Table
  • Is the Great Job Boom Over?
  • Are Google, Amazon, and Microsoft About to Crash This Specialized Real Estate Market?
  • What Happens to Your Passwords When You Die?
  • Regulators' Bungled Attempts to Cut Emissions Drove Oil Prices Higher
  • Your Survival Guy: Clearing the Decks, Buying a Boat, Seeing the World and More
  • Vanguard Wellesley (VWINX) vs. Wellington (VWELX): Which Fund is Best?
  • RURAL RENAISSANCE: America Finds the Country Again

Don’t Miss

Default Risk Among the Many Concerns with Annuities

Risk and Reward: An Efficient Frontier

How to be a Billionaire: Proven Strategies from the Titans of Wealth

Could this Be the Vanguard GNMA Winning Edge?

Cryptocosm and Life After Google

Warning: Avoid Mutual Fund Year End Distributions

Is Gold a Good Long-term Investment?

How to Invest in Gold

Vanguard Wellington (VWELX): The Original Balanced Fund

What is the Best Gold ETF for Investing and Trading?

Procter & Gamble (PG) Stock: The Only True Dividend King

The Dividend King of the North

You’ll Love This if You’re Dreaming of an Active Retirement Life

RSS The Latest at Richardcyoung.com

  • An Assault on America’s Central Core
  • Hillary Clinton Claws at Relevance by Publicly Insulting Clarence Thomas
  • RURAL RENAISSANCE: America Finds the Country Again
  • The Best Investment Strategy is Simple, Like Analog Music
  • RED WAVE COMING? Americans Fear the Future of Biden’s Economy
  • Biden’s Approval Lower Now than Trump’s Was after January 6, 2021
  • With a Nod from Turkey, Finland and Sweden Speed Toward NATO Membership
  • 10th AMENDMENT: Dobbs Decision a Win for States’ Rights
  • What Just Happened? Fixing Its Historic Mistake
  • Why Work When Taxes Take It All?

About Us

  • About Young Research
  • Archives
  • Contributors

Our Partners

  • Richard C. Young & Co.
  • Richardcyoung.com

Copyright © 2022 | Terms & Conditions

 

Loading Comments...
 

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.