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Keynes knew that nothing was as good as gold

Financial Times August 20th, 2021

Your comments on the gold standard (“A 50-year quest for monetary stability”, FT View, August 18) fail to note that gold had, at the time of the termination of US dollar convertibility, two roles.

The first, the gold standard as the accepted mechanism for settling trading imbalances between nations, ended finally with Richard Nixon’s closing of the gold window, though most other countries had wisely forsaken their own pegs earlier.

The second, gold’s historical role as a reliable store of value (and the major financial asset which is not in one way or another someone else’s liability), remains in robust health with the world’s central banks not only holding significant proportions of their assets in gold but in many cases (eg. China, Russia) continuing to add regularly to these holdings.

Besides his “barbarous relic” remark (which was aimed at the foolishness of the gold standard economic straitjacket), the economist John Maynard Keynes is also on record as regarding gold as “an ultimate safeguard, than which no superior medium is available”.