Inb 205
Hum 205 - All That Glitters is Not Gold - Foreign Exchanges, yes, an outdated phrase but it provides a starting point to understanding the complexities of our subject today. Let us open with the gold standard. At one time, as stated by the renowned Ben Bernanke (Bernanke, 2004 ),
Hum 205 - United States and the great majority of other nations were on the
gold standard, a system in which the value of each currency is
expressed in terms of ounces of gold. Under the gold standard,
central banks stood ready to maintain the fixed values of
their currencies by offering to trade gold for money at the legally
determined rate of exchange.
Inb205 - In the United States the gold reserve was primarily at Fort Knox, Kentucky, however at this time there is speculation that since going off the gold standard in 1971, the amount of gold bullion as reported to be 147.3 million ounces (that is approximately $168 billion at current prices – plus or minus) may not exist and “In a $13.8 trillion GDP economy, 147.3 million troy ounces of gold barely registers” (Gustke, 2010). At this point in time the gold standard as we have come to know it is more of a posturing and symbolic measure of security. “It may lend some confidence to investors that we have large gold reserves,” says Mark Zandi, chief economist at Moody’s Economy.com. “But it’s more symbolic than substantive” (Mark Zandi). However, with that said it certainly does not hurt to have this gold as a back-up, as a just in case strategy. As Alan Greenspan once stated, ““You hold onto it because it’s the ultimate in money” (Gustke, 2010). Inb 205
Inb 205
Hum 205 - United States and the great majority of other nations were on the
gold standard, a system in which the value of each currency is
expressed in terms of ounces of gold. Under the gold standard,
central banks stood ready to maintain the fixed values of
their currencies by offering to trade gold for money at the legally
determined rate of exchange.
Inb205 - In the United States the gold reserve was primarily at Fort Knox, Kentucky, however at this time there is speculation that since going off the gold standard in 1971, the amount of gold bullion as reported to be 147.3 million ounces (that is approximately $168 billion at current prices – plus or minus) may not exist and “In a $13.8 trillion GDP economy, 147.3 million troy ounces of gold barely registers” (Gustke, 2010). At this point in time the gold standard as we have come to know it is more of a posturing and symbolic measure of security. “It may lend some confidence to investors that we have large gold reserves,” says Mark Zandi, chief economist at Moody’s Economy.com. “But it’s more symbolic than substantive” (Mark Zandi). However, with that said it certainly does not hurt to have this gold as a back-up, as a just in case strategy. As Alan Greenspan once stated, ““You hold onto it because it’s the ultimate in money” (Gustke, 2010). Inb 205
Inb 205