Steve Forbes of Forbes magazine argued that thate Excessive monetary stimulus, a by-product of an “undisciplined” fiat money system, will create problems for our economy as well as financial distortions.
Not that it hasn’t already but Forbes is convinced that worst is yet to come.
He thinks that the long-term solution is a monetary “reset.” This entails economies moving away from this system and re-adopt a gold standard.
Jan Nieuwenhuijs, gold analyst at The Gold Observer, an independent gold research organization, agrees with Forbes.
He said that a potential gold standard could take several forms.
There is the classical gold standard, but you also have a gold price targeting by central bank. If you get gold price targeting, the only thing the central banks would do is target the price of gold and that would be their monetary policy.
A gold price targeting mechanism differs from a classical form of gold standard which would allow a direct conversion of fiat notes to gold.
Currently, countries around the world are on a race to the bottom with devaluing their currencies, and Nieuwenhuijs said that this is an attempt to raise inflation rates, and indirectly reduce the value of debt still in the economy.
“Devaluing against other nations can be beneficial sometimes, but what they actually want in the U.S. and in Europe, but also in Japan, is consumer price inflation, and preferably with interest rates at or below zero, deeply negative real interest rates, [this would] wash away and lower the debt burden,” he said.
I personally find that interesting but I don’t think it will fly because Federal Reserve Chairman Jerome Powell doesn’t think it’s a good idea.
He said that the Fed has two direct, real economy objectives: maximum employment, stable prices. He said that stabilizing the dollar price of gold could be done though, monetary policies. But the other things would fluctuate.
I personally think it’s well and good because we really don’t have enough gold to supply current demand of different industries, imagine what will happen if governments start competing for gold.
Gold is now being used in cars, electronics, dentistry, and jewelries. Experiments are being done to use cold to cure cancer, produce oxygen on Mars and others.
And it’s not like Earth can produce more gold. It takes a literal astronomical event for us to get more gold.
So, if you are to invest in something, invest in gold.