From: Michael Williams (michaelj.williams@TISCALI.CO.UK)
Date: Wed Jun 23 2004 - 14:57:23 EDT
Allin >>He's trying to maintain a CPI inflation rate of around 2 percent. Who >>cares what happens to the price of gold? Gold is not in the CPI and >>the dollar is not convertible into gold (any more or less than it's >>convertible into cheese). >Not sure that he is in fact focused on the CPI as such. The Monetary Policy Committee of the Bank of England is legally obliged to target the CPI - albeit as a target - both a maximum or minimum in setting the base rate every month. michael ------------------------------------ Michael Williams Harrow Business School (E3.09) Watford Road Harrow Middlesex HA1 3TP tel: 020 7911 5000 #4563 fax: 020 7911 5931 Home tel: 023 80768641 Home Fax: 0871 242 5819 michaelj.williams@tiscali.co.uk M.J.Williams02@wmin.ac.uk mobile: 07906 172655 http://www.wmin.ac.uk/mwilliams > -----Original Message----- > From: OPE-L [mailto:OPE-L@SUS.CSUCHICO.EDU] On Behalf Of > Rakesh Bhandari > Sent: Wednesday, June 23, 2004 4:52 PM > To: OPE-L@SUS.CSUCHICO.EDU > Subject: Re: (OPE-L) Re: on money substance and abstract labor > > > At 9:57 PM -0400 6/21/04, Allin Cottrell wrote: > >On Mon, 21 Jun 2004, Rakesh Bhandari responded to: > > > >>>The role of gold in present-day monetary systems seems nugatory, a > >>>mere historical hold-over. > > > >with: > > > >>Yes but if the former gold bug Fed chief does try to > maintain over the > >>long term the dollar constant in terms of a basket of gold, oil, > >>wheat, then is he not running a modified gold standard? > > > >He's trying to maintain a CPI inflation rate of around 2 > percent. Who > >cares what happens to the price of gold? Gold is not in the CPI and > >the dollar is not convertible into gold (any more or less than it's > >convertible into cheese). > > Not sure that he is in fact focused on the CPI as such. > > > >Given that CPI inflation (or possibly GDP deflator inflation) is the > >relevant target, it would make sense to focus on some other > price index > >(gold + oil + wheat, say) only to the extent that the latter > serves as > >a "leading indicator" of the former. > > yes. > > > > > The price of oil might > >have a predictive role. I'm not aware of econometric > evidence that the > >price of gold has such a role. > > OK. I don't know what is in the basket of commodities on > which Greenspan may or may not focus. > > > > > >>And if Greenspan does not do this, what are the consequences on the > >>role of the dollar as international currency, the closest thing we > >>have to world money? > > > >What are the consequences if G'span omits to do what, > exactly? If he > >omits to consider the price of gold as such, nothing. > > Well the argument is about whether the commodity basis of > money has been transcended. My point is that non convertible > money or even irrelevance of gold does not prove that said > basis has in fact been abolished. > > > > If he's willing > >to let inflation rip in the U.S. (say, monetizing Bush's deficits) > >there may be consequences. > > Well he seems to have accomodated federal spending. > > > >Allin. >
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