Gold: worth its weight?
By GCRU Gold News on Friday, November 21 2014, 23:25 - Permalink
These days the retired Greenspan speaks so clearly that some of his words are still ricocheting around the blogosphere. For what he revealed on the CFR platform was that he harbours considerable doubts about whether recent western monetary policy experiments have actually helped economic growth. He also fears that such experiments have been so wild that it will be very hard to exit from these policies in the future – in the US or anywhere else – without sparking huge market volatility. Indeed, Greenspan is so worried about future turbulence that he apparently sympathises with investors (and central banks) who are currently stocking up on gold.
As Greenspan himself points out, the sheer scale of recent monetary policy experiments has raised concerns about a future outbreak of inflation (which typically raises the relative value of gold). Politics is also important: the right wing in America (and, to a lesser extent, Europe) is so vehemently distrustful of government that they want to break any bureaucratic control over currency.
But there is a third, more subtle psychological issue as well. Most ordinary people have no idea what central banks are really doing, with their trillion-dollar experiments. They are unnerved about how money works in a bottomless cyber space. But the beauty of gold is that it seems tangible, clear and finite. It also seems timeless, creating an impression of permanent, intrinsic value.