The US has the largest gold reserves in the world but if the gold exchange standard was implemented, the US would need to ensure that it was more attractive to hold dollars than gold. This could be done by raising interest rates. But the latter would risk dragging the US in to recession. However, if like Congressman Paul you are concerned about the amount the US government is spending and borrowing, downward pressure on the country's debt would be welcome.
Meanwhile, the US has run a large balance of payments deficit for years and the mountain of US public debt grows ever higher. Both of these problems would continually put pressure on any fixed link to gold. Foreign governments would look at American debt and worry about the country's ability and willingness to maintain the dollar's link to gold.
Given how opposed most economists are to a return to gold, what is behind the desire to explore the issue?
Total gold holdings, top 10 Country
- USA: 8,133 metric tonnes
- Germany: 3,401 tonnes
- IMF: 2,814 tonnes
- Italy: 2,451.8 tonnes
- France: 2,435.4 tonnes
- China: 1,054.1 tonnes
- Switzerland: 1,040.1 tonnes
- Russia: 824.8 tonnes
- Japan: 765.2 tonnes
- Netherlands: 612.5 tonnes
Source: World Gold CouncilRead More >>>>