Pretty interesting interview with Greenspan. Worth downloading and reading. http://www.zerohedge.com/news/2017-0...-gold-standard
Q.Do you think that fiscal policy should be adjusted to aid monetary policy decisions?
A. I think the reverse is true. Fiscal policy is much more fundamental policy. Monetary policy does not have thesame potency. And if fiscal policy is sound, then monetary policy becomes reasonably easy to implement. The veryworst situation for a central banker is an unstable fiscal system, such as we are experiencing today.
The central issue is that the degree of government expenditure growth, largely entitlements, is destabilising the financial system. The retirement age of 65 has changed only slightly since President Roosevelt introduced it in 1935, even though longevity has increased substantially since then. So, the first thing we have to do is raise the retirement age. That could cut expenditure appreciably.I also believe that regulatory capital requirements for banks and financial intermediaries need to be much higher than they are currently. Looking back, every crisis of recent generations has been a monetary crisis. The non-financia lpart of the US economy was in good shape before 2008,for example. It was the collapse of the financial system that brought down the non-financial part of the economy. If you build up enough capital in the financial system, the chances of serial, contagious default are much decreased.If we raised capital requirements for commercial banks,for example, from the current average rate of around 11% to 20% or 30% of assets, bankers would argue
Q.Against a background of ultra-low and negative interest rates, many reserve managers have been large buyers of gold. In your view,what role does gold play as areserve asset?
A. When I was Chair of the Federal Reserve I used to testify before US Congressman Ron Paul, who was a very strong advocate of gold. We had some interesting discussions.I told him that US monetary policy tried to follow signals that a gold standard would have created. That is sound monetary policy even with a fiat currency. In that regard,I told him that even if we had gone back to the gold standard, policy would not have changed all that much.
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