Tags: Grant | Gold | Standard | US | Debt

Grant: Gold Standard Would Curb US Debts

Friday, 02 Sep 2011 07:49 AM

The United States needs to return a gold standard in order to force the government into living within its means and lower its debts, says Jim Grant, editor of Grant's Interest Rate Observer.

The gold standard, abandoned in the United States in the early 1970s, attaches the value of the dollar to gold.

"What can be said for the gold standard is that it is time tested. It has monetary properties. It worked imperfectly but consistently for 100 years until it was interrupted," Grant tells CNBC.

"Under a proper gold standard the government would have to fund itself and the open market would not do it."

Gold has become a popular commodity lately, as loose monetary policies have flooded economies with paper currencies, making the yellow metal more attractive.

"What we want is a monetary system that is objective, that we can understand, that has at its bottom as its root — something that we can recognize as money. Gold is recognized as money," Grant says.

Other high-level figures see the U.S. returning to the gold standard.

"We will return to a gold standard. It will be a modernized version of it but in essence, it'll be the basic principle that the dollar will remain constant with gold," publisher and former Republican presidential hopeful Steve Forbes tells Newsmax.TV.

Five years ago, gold was trading less than $500 an ounce, well below current levels of over $1,800 an ounce and demand from investors of all sizes is hot.

"Everyone wants a ticket to the show," says Adam Klopfenstein, senior market strategist with MF Global, according to CNNMoney.

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The United States needs to return a gold standard in order to force the government into living within its means and lower its debts, says Jim Grant, editor of Grant's Interest Rate Observer. The gold standard, abandoned in the United States in the early 1970s, attaches the...
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