To argue with Ambrose Evans-Pritchard is risky. He is well-informed, he has travelled much, writes well and has a sharp intellect. Yet, I must affirm that he is mistaken in some of the opinions expressed in his recent article at “The Telegraph” www.telegraph.co.uk “A new Gold Standard is being born” January 17, 2013.
In the article he refers to the “(old) Gold Standard dynamic at work with all its destructive power, and the risk of sudden ruptures always present.”
I take it that he refers to the pre-WW I Gold Standard, and the financial chaos that broke out in 1930, to which he refers as “the destructive power” of the Gold Standard. That chaos should not be attributed to the Gold Standard as it existed, but to the previous expansion of credit in violation of the rules of the Gold Standard. The pain of the 1930’s was the correction which the Gold Standard imposed upon the financial diddling with credit expansion which the Powers had adopted; what was “destructive” was their policy of credit expansion beyond savings. If you stick your finger in the fire, don’t blame fire for its “destructive power”; just refrain from doing that.