> At the same time, the Fed wants the price of gold to stay steady or decline.
Why? As far as I can tell, the Fed cares about interest rates and foreign exchange rates, and they really don't care about things like money supply numbers or the price of gold.
You are correct that they do not currently care about the money supply. I find this funny because Powell wants to be known as the next Volcker and Volcker really honed in on the money supply problem when he came to be chairman.
As for gold, well JP Morgan said that "Gold is money. Everything else is credit." This means that the Fed's dollars are in competition with gold for use as currency. I know that this might sound weird since you can't take gold to the supermarket and buy produce but savers are able to save their money in dollars or gold. As faith in the fiscal and monetary policies of the Fed and Congress go off the deep end, gold works to maintain purchasing power over long periods of time and savers will flock to it. In a sense, gold is a gauge by which the central bank can judge it's own performance in maintaining monetary sanity.
> At the same time, the Fed wants the price of gold to stay steady or decline.
Why? As far as I can tell, the Fed cares about interest rates and foreign exchange rates, and they really don't care about things like money supply numbers or the price of gold.
You are correct that they do not currently care about the money supply. I find this funny because Powell wants to be known as the next Volcker and Volcker really honed in on the money supply problem when he came to be chairman.
As for gold, well JP Morgan said that "Gold is money. Everything else is credit." This means that the Fed's dollars are in competition with gold for use as currency. I know that this might sound weird since you can't take gold to the supermarket and buy produce but savers are able to save their money in dollars or gold. As faith in the fiscal and monetary policies of the Fed and Congress go off the deep end, gold works to maintain purchasing power over long periods of time and savers will flock to it. In a sense, gold is a gauge by which the central bank can judge it's own performance in maintaining monetary sanity.