GREENSPAN: The US cannot afford to spend on infrastructure like it wants to because it’s not on the gold standard

The US cannot afford to spend on infrastructure like it wants to because it’s not on the gold standard, by Alan Greenspan, former Chairman of the US Federal Reserve, in a recent interview (emphasis added).

I view gold as the primary global currency.

Today, going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today we would not have reached the situation in which we now find ourselves. We cannot afford to spend on infrastructure in the way that we should. The US sorely needs it, and it would pay for itself eventually in the form of a better economic environment (infrastructure). But few of such benefits would be reflected in private cash flow to repay debt.

Much such infrastructure would have to be funded with government debt. We are already in danger of seeing the ratio of federal debt to GDP edging toward triple digits. We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line.

Yep. However, much of the bubble in money manufacture from 1982 to 2007 took place on Greenspan’s watch (1987 to 2006).

A gold standard limits the amount of debt that governments can issue, because money is tied to gold and there’s only a finite amount of gold that’s been mined.

David Evans, money supply