QotD: The gold standard v the PhD standard

"Under the classical gold standard, prices and wages were expected to adjust to economic disequilibria. Under the PhD standard, it’s interest rates and exchange rates and asset prices that are expected to do the adjusting......."Well, if Eisenhower-era America scratched its head over the classical gold standard, what will futurity make of the PhD standard [that now runs the monetary world]? Likely, it will be even more baffled than we are. Imagine trying to explain the present-day arrangements to your 20-something grandchild a couple of decades hence—after the crash ... that wiped out the youngster’s inheritance and provoked a central bank response so heavy-handed as to shatter the confidence even of Wall Street in the Federal Reserve’s methods....."I expect you’ll wind up saying something like this: 'My generation gave former tenured economics professors discretionary authority to fabricate money and to fix interest rates. We put the cart of asset prices before the horse of enterprise. We entertained the fantasy that high asset prices made for prosperity, rather than the other way around. We actually worked to foster inflation, which we called ‘price stability’ ... We seem to have miscalculated.”~ Jim Grant, the world's most famous interest rate observer, speaking in Nov. 2014 on 'An Agenda for Monetary Action'

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