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Gold's place in a new reserve currency

Well, it's a holiday-shortened trading week, but we can still engage our minds with some of the big picture issues taking shape on the world's economic stage.

With that in mind, here's a think piece from the FT's Gillian Tett on the gold standard and recent calls for a new reserve currency to take us into the weekend.

Excerpt from Tett's article, "In uncertain times, all that glisters is a gold standard":

"...since the world abandoned the gold standard on August 15, 1971 credit creation has spiralled completely out of control.

But this four-decade long experiment with fiat currency is not just something of a historical aberration, it argues - but potentially very fragile too. After all, the only thing that ever underpins a fiat currency is a belief that governments are credible. In the past 18 months that belief has been tested to its limits. In coming years it could be shattered, particularly if the current wave of extraordinary policy measures unleashes a wild bout of inflation.

Hence that chatter about a gold standard. Indeed, as the debate bubbles up, some financiers are now even e-mailing each other an extraordinary little essay that Alan Greenspan himself wrote in support of a gold standard back in the 1960s, called "Gold and Economic Freedom".

Be sure to check out the full article for more insight into the rapidly-changing economic order. You'll also find a handy link to the now-famous 1966 Greenspan essay, "Gold and Economic Freedom", mentioned above.

Have a great weekend, and a Happy Easter and Passover to all those celebrating.

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