In the first presidential debate, both candidates portrayed themselves as innovative problem-solvers pursuing creative avenues to “grow” the American economy. Interestingly, GOP nominee Mitt Romney did not mention his party’s most creative idea, laid out at the Republican National Convention in Tampa, Fla.,: creating a national monetary commission “to investigate possible ways to set a fixed value for the dollar” — an unmistakable nod toward the gold standard and gold-based monetary policy.
Many policymakers and experts on the economy in the United States and abroad have recently highlighted the benefits of gold-based monetary policy, and governments have increased their own gold holdings in recent years. China has pursued gold more aggressively than any other country. Chinese economists, financial executives and government officials have encouraged citizens to invest in gold and, it would appear, have done much to increase China’s gold reserves. Perhaps the United States should follow China’s example.
In an interview with China 2011 Economy, Zhou Qiren, Dean of Peking University’s National School of Development, said that a global system in which the values of currencies were pegged to gold would make “an excellent monetary system.” He said “if the currency of each major country is bound to gold, financial headaches would of course be reduced ... it would be impossible for [U.S. Federal Reserve Chairman Ben] Bernanke to print 600 billion USD to purchase long-term debt ... (and) the gold standard would effectively prevent each country’s government from recklessly levying ‘inflation taxes’ domestically and passing troubles to others by manipulating currency exchange internationally.”
In December 2011, Zhang Jianhua, research director of the People’s Bank of China, reportedly observed that “no asset is safe now. The only choice to hedge risks is to hold hard currency — gold.”
As financier Christopher Potter points out in a column for the Lehrman Institute’s TheGoldStandardNow.org, “China is preparing for a world beyond the inconvertible paper dollar, a world in which the renminbi, buttressed by gold, becomes the dominant reserve currency.” Potter’s article, “China’s Preparing for the End Game — Are We Paying Attention?,” points out that the Chinese government is expected to own more gold than the U.S. government in five years.
In a Business Insider report, Mamta Badkar ranks China as having the world’s fifth largest gold reserve at 1,054 tons of gold. To increase its gold reserves, China has increased gold production and imports. Potter notes that China now produces more gold than the United States. In an August article for Wealth Wire, Brittany Stepniak points out that between May 2010 and April 2011, China imported around 66 tons of gold. Potter claims in his article that China’s gold imports are increasing, with 750 tons of gold — over a quarter of the world’s total gold output —imported between September 2011 and September 2012.
Does China understand something about the value of gold in the global economy that we in the United States do not?
Last month, Deutsche Bundesbank President Jens Weidmann and researchers at the London office of Deutsche Bank characterized gold as a valuable means of exchange that would stabilize monetary systems throughout the world.
Rep. Elijah Cummings, D-Md., right, hugs Harold Schaitberger, General President of the International Association of Fire Fighters, after the Congressman spoke at the IAFF's Legislative Conference General Session at the Hyatt Regency on Capitol Hill, March 9, 2015. The day featured addresses by members of Congress and Vice President Joe Biden.