Monday, March 26, 2012

A Return to the Gold Standard?

With central banks around the world printing money to pump into their financial systems to prevent them from seizing up, the argument for a return to the gold standard has become popular again.

The gold standard was a commitment by participating countries to fix the prices of their domestic currencies in terms of a specified amount of gold.

The idea, in theory at least, was that you could convert your currency into gold at the fixed price.

The view from investment banker Jim Rickards is that something is needed to stop governments from printing money in order to deal with their debt - that hurts savers by making money worth less.

"The worst case scenario is hyperinflation, which hurts everyone. Sticking to gold makes such a policy impossible, and therefore stops governments and central banks from abusing their power," he says.

- Read the full story at BBC News here: