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Daniel J. Smith: Judy Shelton's rejection doesn't mean gold standard failed

Section: Daily Dispatches

By Daniel J. Smith, Director
Political Economy Research Institute
Middle Tennessee State University, Murfreesboro
via Nashville Business Journal
Thursday, December 10, 2020

With Judy Shelton's appointment to the board of governors of the Federal Reserve all but shut, primarily due to her past support of the gold standard, it appears that the final nail is being driven into the coffin for the gold standard. Despite its flaws, however, the track record of the gold standard in generating price stability and reducing economic volatility still measures up against the lackluster performance of the Fed.

To be sure, many notable economists do reject the gold standard as an outdated relic. For instance, then-U.S. Federal Reserve Chairman Ben Bernanke spent a good portion of his first lecture in his series of talks at George Washington University critiquing the gold standard.

... Dispatch continues below ...


VanGold Has Cleared the Pinguico Shaft to Adit Level 7
at El Pinguico Silver and Gold Project in Mexico

Company Announcement
Tuesday, December 8, 2020

VANCOUVER, British Columbia, Canada -- VanGold Mining Corp. announces that it has completed clearing the Pinguico shaft to adit Level 7 at its El Pinguico silver and gold project, located 7 kilometers south of Guanajuato, Mexico.

The company has cleared fallen rocks and debris to adit Level 7 to access this area of the El Pinguico mine. This shaft was one of three exterior shafts that were used historically at the mine prior to production, which ended in 1913.

VanGold Director Hernan Dorado Smith said: "The importance of having access to Level 7 from the Pinguico shaft cannot be overstated. This is the first time in decades that this area of the mine -- the highest-grade mine in the Guanajuato region when it was in production -- has been accessible for exploration and development. We are very excited about sampling the bottom of the underground stockpile to improve and verify our understanding of the overall grade of that material. We are equally excited to sample the remaining vein material left in support pillars at this location (including areas of the Colmillo Stope) when mining ceased in 1913." ...

... For the remainder of the announcement:

My recent co-authored research, however, finds that the evidence that monetary experts at the Federal Reserve can outperform the gold standard isn't so clear cut. Many outspoken opponents of the gold standard commit the nirvana fallacy, comparing a realistic solution with an idealized one.

They falsely compare a cockeyed history of the gold standard to the idealized operation of the Federal Reserve. But the Fed, like the historical gold standard, does not operate in an idealized environment.

Rather, the monetary authorities at the Fed face severe knowledge and incentive problems in conducting monetary policy. They are not omniscient seers able to read the tea leaves necessary to generate monetary stability using discretionary central banking. Nor are they immune to the political, special interest, or bureaucratic pressures exerted on them.

Scholarly research, in fact, shows that the Fed has not been able to improve economic stability relative to the gold standard, again and again. ...

... For the remainder of the commentary:

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