Publisher's Synopsis
What would happen if Gold Flooded the World Markets? Explore the answer in 6,000 TONS OF GOLD by H. R. Chamberlain. An imbalance is bound to either cause consumer prices to rise or create price bubbles in stock, loan, or real estate markets. When they finally burst, they are likely to inflict many personal losses and force businesses to repair and readjust. Government planners and central bankers are losing efficiency and productivity. In a free economy, interest rates play a role similar to those played by prices and wages. They all spring from the people's choices and value judgments, giving rise to "demand and supply" and guiding producers in their decisions. The market rate of interest is a gross rate usually consisting of three distinctive components: the pure rate, the depreciation rate, and the debtor's risk premium. The pure rate is the very core stemming from man's very nature which forces him to view economic phenomena in the passage of time. He ascribes a lower value to future goods and conditions than to present provisions; the difference is the pure rate. The depreciation component appears whenever government or its central bank inflates, thereby depreciating the currency; the rate of currency depreciation determines the size of the component. The debtor's risk premium, finally, reflects the reliability and trustworthiness of the debtor. Their policies are guided by popular doctrines calling for stimulation of national employment and income. They seem to be unaware that all rates other than market rates give false signals to producers and consumers alike; they cause maladjustments. Rates that are lower than market rates promptly increase the demand.
