I know there may be some on here who may not agree with my argument, but it is one of the main ways that Guyana can bring back confidence in its currency. There is only ONE country in the world that can print currency in huge amounts without an advertised gold backing and its currency still does not lose value vs other currencies over the long term and that country is the USA.

I hope that President Granger builds up to a 20% gold reserve, this will be the foundation that puts Guyana on the path to prosperity

"Gold is the money of kings. Silver is the money of gentlemen. Barter is the money of peasants. And debt is the money of slaves."

HOW?

Let's feed the people who are starving first...this will be many moons away if it ever happens.

Let's feed the people who are starving first...this will be many moons away if it ever happens.

I know there may be some on here who may not agree with my argument, but it is one of the main ways that Guyana can bring back confidence in its currency. There is only ONE country in the world that can print currency in huge amounts without an advertised gold backing and its currency still does not lose value vs other currencies over the long term and that country is the USA.

I hope that President Granger builds up to a 20% gold reserve, this will be the foundation that puts Guyana on the path to prosperity

"Gold is the money of kings. Silver is the money of gentlemen. Barter is the money of peasants. And debt is the money of slaves."

Interesting topic. What would be the pros and cons of your suggestions?  You need to give a more expanded version of your suggestion.  Maybe TK can get involved since he seems to be an expert in this area.

Interesting topic. What would be the pros and cons of your suggestions?  You need to give a more expanded version of your suggestion.  Maybe TK can get involved since he seems to be an expert in this area.

TK, Would like to hear your opinion on this topic.  Don't tell me go buy your book   Actually, does your book cover this type of things?

Poli had a thread like this a few years ago. We talked about this. It was noted there that Guyana already has about 10 to 20% of foreign reserves in gold. Almost every country does that. But I feel Poli has something more radical in mind like backing the G$ with gold. It will have more harm than good.

I am not ignoring you guys...just very busy this week and next with travels and seminars.

Understood.  We are all busy man.  I got cross examination in a rate case to prepare for.  Plus I gat some serious yard work to do.

Man...those trees grow like crazy this time of year.

TK, Would like to hear your opinion on this topic.  Don't tell me go buy your book   Actually, does your book cover this type of things?

That's exactly what the book is about. It looks at the stabilization problem of pinning down inflation and exchange rate, while still preserving growth. The book had to be written for academics first, because that's how guys like me make a living. The next one will be for popular press. I actually explained some of these for the general public in Stabroek News.

Okay...I'll wait for the next one (autographed copy ).  Don't worry I'll pay   I am always interested in the role gold plays in the strength of an economy/currency when the damn thing sits in a vault.

It's not about backing money with gold. It's about pinning down the value of money through expectations.

I used to be strict on the official 20% gold backing of the currency.  However, I do realize that countries need some elasticity in their money supply so I have reduced it to 10 to 20% to accommodate that elasticity. I think it should be official, however, it is very difficult to get consensus on that from the industrialized countries. But anything less than a 10% backing results in too much inflation.

Even though Guyana does not need to declare an official policy it should not allow itself to fall below 10% of its money supply and stay in the 10-20% range. It can revalue its currency down or up when it goes out of that range.

This will help to alleviate over leveraging which is the downfall of many countries, or individuals. Politicians like to make too many promises to win votes and having a gold backing policy will reduce excess currency creation (or debt) and will be a very good way to avoid runaway inflation.

I am not an economist but I do know that many industrialized countries and business schools make many arguments against a gold backing. Some of the arguments are, it just sits in a vault and earns nothing, it is a barbarous relic etc. However, without a gold backing we have had high inflation, never mind the official numbers – check the CPI from 1971 to today. 5000 years ago an ounce of gold would buy a decent toga today an ounce of gold will buy you a decent suit, ten years ago 10 ounces of gold would buy you an economy car and today it will do the same and that is how gold works – it preserves wealth. Currency does not do that.  

Inflation is a thief of money from the middle class and poor to the rich. This is what has happened in a massive way from 1971, when Nixon removed the gold backing,  to present day. The reluctance to go back to a gold backing, I believe, is that many Central banks do not have the actual gold they say they have. There is currently not enough solid gold to back the amount of paper gold being traded on the markets. All hell would break loose if people were allowed to convert 20% of their cash to solid gold as was allowed under the official gold backing

I have been a gold buyer for many years and I can tell you that the banks have made it very difficult for individuals to buy solid gold because they want to sell paper gold. They say “oh we have made it easy for you, just buy the gold certificate and pay us a SMALL fee for storage”. You get screwed in many ways with them; you have to pay the banks a huge commission, a currency conversion fee, a storage fee and a premium over other precious metals dealers – all for what is probably hugely over leveraged gold supply based on actual gold supply versus paper gold being traded that may not even be there when you need it.

But back to Guyana they should officially or unofficially back their currency with something, preferably gold. If the backing goes below 10% then devalue the currency if it goes over 20% then increase the value of the currency. If the Guyana government does not follow this type of policy 20, 30, 50 years from now the poor and middle class in Guyana will be worse off than they are today, no matter which party is in power.