Newsletter Reviews

How the Gold Standard could actually work in today’s economy: Deutsche Bank

SOURCE: [Business Insider] - A recent proposal by Republicans in the U.S. to examine the feasibility of a return to the gold standard – wherein the amount of dollars to be printed would be restricted by the supply of gold on hand – has sparked a furious debate among economists and the media.

Ben Bernanke had a big takedown of the gold standard in a lecture back in March. UBS economist Paul Donovan also explained in a recent note to clients why the gold standard wouldn’t work in a modern economy.

Even Republicans themselves seemed to think a return to the gold standard wouldn’t work when they looked into it 30 years ago.

But Deutsche Bank analysts Daniel Brebner and Xiao Fu argue that, on the contrary, a gold standard is perfectly compatible with the workings of the modern global economy. In a new report, they explain why critics of the gold standard have it wrong.

Furthermore, the analysts suggest that perhaps it's not such a bad idea, because "it would dramatically change the way that governments manage their economies – which some would say is a good thing given the results of their management skills thus far."

Full Article