Financial markets were aflutter in anticipation of a quantitative easing package from the European Central Bank (ECB) Thursday.
But the ECB has it all wrong, according to a
New York Sun editorial. "Instead of borrowing all this money from themselves by having their central bank buys bonds directly from its member governments, why don't the Europeans spend their gold?" Sun editors ask.
The biggest gold-holding nations of the eurozone and the ECB combined have more than 10,000 tons of the precious metal.
"We've grown weary of European lectures about how honest money is a barbarous relic, when all the while they are hanging on to this gold," the editorial states. "It's outright hypocrisy."
The real answer is a return to the gold standard, Sun editors suggest.
"A far better strategy would be to establish sound money on a rules-based system like that which obtained during the years of post-war triumph for a free Europe. Then they would have a reason to keep their gold."
Meanwhile, one of the world's top economists doesn't think quantitative easing by the ECB will work.
"Sovereign bond yields haven't been so low since the 'Black Plague.' How much more bang can you get for your buck?" William White, chairman of the OECD's Review Committee, tells Ambrose Evans-Pritchard, international business editor of
The Daily Telegraph.
Ten-year German government bonds yield 0.52 percent.
White is very concerned about the state of the global financial system. "We are in a world that is dangerously unanchored," he notes. "We're seeing true currency wars, and everybody is doing it. I have no idea where this is going to end."
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