The "world has changed," Fed Chairman Ben Bernanke recently told George Washington University undergraduates. He was putting down the gold standard, as is the former Princeton professor’s habit.
The gold standard, he apparently feels, is not worth the effort. Professor Bernanke may have been a bit young to have seen the original 1953 version of "A Wonderful Town," but he certainly might have seen the 2003 Broadway revival. In it, one of the transplanted girls from Ohio sings of the New York dreams and experience of many fellow of her transplants to the Big Apple:
What a waste,
What a waste
What a waste of money and time!
Apparently, that is Bernanke's attitude toward the mining of gold. Bernanke said the GWU students: "To have a gold standard, you have to go to South Africa or someplace and dig up tons of gold and move it to New York and put it in the basement of the Federal Reserve Bank of New York and that's a lot of effort and work."
Well, the Fed Chairman needs to update his data on world gold production. China, not South Africa, has been the leading producer for several years – with 345 tons mined in 2010. Australia was second with 255 tons. Even the United States produces more gold than South Africa. And these days, gold exploration and production has been springing up around the world.
And apparently, the production of gold needs little incentive from Washington – or perhaps it gets a lot of incentive – since world production has hovered around 2500 tons for more than the past decade.
The world may have changed, but perhaps the world may need to change again. Because the price of gold in recent years suggests that people aren’t happy with the changes that central bankers like Bernanke have been making.