Burkina Faso plans to withdraw some mining permits, junta leader says
Gold is the main export of the West African country.
Matthew Yglesias says that the Obama administration may start looking at some unusual tools to reflate the dollar and kickstart the economy, and using two trillion of platinum coins may not be so far fetched.
Yglesias reads between the lines within Christina Romer’s published works, a former economic advisor to the Obama administration. Romer believes that monetary expansion is a under-rated aspect of FDR’s attempt to end the great depression in the 1930s. Early in his presidency FDR signed executive order 6102, which forbade the hoarding of gold. Roosevelt believed hoarding was stalling economic growth. Under his order, every gold ounce was to be delivered to the Federal Reserve to be exchanged for $20.67.
Romer discusses the impact of this policy in her book What Ended The Great Depression.
The increase in the money supply was primarily due to a gold inflow, which was in turn due to devaluation in 1933 and to capital flight from Europe because of political instability after 1934. My estimates of the ex ante real interest rate suggest that, coincident with this gold inflow, real interest rates fell precipitously in 1933 and remained low or negative throughout most of the second half of the 1930s.
Right now, congress is just focusing on debt reduction. There will be no stimulus programs coming out of the legislative branch until the next election, and maybe beyond. So with the legislative avenue closed, the Obama administration may need to look at the tools it has on hand to help the economy. FDR’s executive order 6102 was possible because of a wartime statute that had not been repealed—it was a loophole.
Yglesias summarizes:
What’s more, it appears to be the case that a weird loophole in the controlling coinage statute does in fact allow Secretary Geithner to conduct rogue monetary policy by minting large denomination platinum coins. That would be a strange thing to do. But confiscating the nation’s supply of monetary gold based on a WWI-era Trading With The Enemy Act was also a strange thing to do.
Comments
Military Vet
Look to see nationalization of the U.S. precious metal mines. This probably won’t be done overtly, but through taxes, tarifss, etc. There was a recently passed bill regarding strategic minerals which included comments regarding “financial security”.