NEW YORK (Commodity Online): Goldbugs who call for a return to the gold standard as a means to solve the financial crisis are lunatics, global economist Nouriel Roubini said.
"One of the major causes of the Great Depression was the existence of the gold standard”, Roubini argues. "They restrained the ability of Central Banks to provide lender-of-last-resort support to their banks, created tight money — it created bank runs, and lead eventually to the Great Depression”, he said in a Yahoo interview.
Limiting the amount of money supply will render the authorities powerless to act as a lender of last resort when the situation so demands. A return to the gold standard will be a “total nonsense” and those who support t are a "bunch of lunatics and hacks”
An earlier report by Roubini had suggested that the world is heading for a double dip recession as economic uncertainty, unemployment and social and political tensions in the West will cause the governments to fall.
Roubini came into world attention after he forecasted that the 2008 housing crisis will spiral into a worldwide economic meltdown and has been re-chosen as Foreign Policy’s Top 100 Global Thinkers 2011.
