Archive | April, 2013

The story of a welfare state…

2 Apr

Source

The welfare state starts with a few people on the wagon of government support. As time passes, more and more people clamor for government support and hop onto the wagon. It ends when the falling number of people pulling the wagon (i.e. people paying taxes) are unable to pull anymore (i.e. taxes are insufficient to meet expenditure).

For evidence, please see the European countries now bust.

Alan Greenspan and the Gold Standard

2 Apr

Alan Greenspan

Alan Greenspan was the longest serving chairman of Federal Reserve, from 1987 to 2006. And when the head of a central bank speaks approvingly of a gold standard, we should listen. Here’s what Alan Greenspan had to say in a January 2011 interview,

We have at this particular stage a fiat money which is essentially money printed by a government and it’s usually a central bank which is authorized to do so. Some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or a currency board, because unless you do that all of history suggest that inflation will take hold with very deleterious effects on economic activity… There are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard.

I read about the above in a Forbes article here and was surprised to know about Greenspan’s views. The gold standard is so antithetical to the existence of a central bank, that when a central banker says we need a “gold standard or a currency board”, you can’t help but think – is the gold standard really a “barbarous relic?”