Thursday, March 22, 2012
FRBB - PANEL - MILTON GILBERT
"...a basic factor in the losses of gold reserves’ over the entire period has been the shortage of new gold available to the monetary system. In effect, the demand for gold by foreign monetary authorities in a surplus position was larger than could be supplied by new gold availabilities. The tendency was for the shortage to be made up by net purchases from the United States. It seems to be more correct in these circumstances to say that gold and the system were in fundamental disequilibrium, rather than that the dollar itself was in fundamental disequilibrium. In any case, the remedy available to the United States was to negotiate a change in the gold parity of the dollar with the IMF. This seems to me to be the adjustment process called for in the Bretton Woods system. But, for what I believe to be political considerations, the United States has not chosen this course..."