Utah Gold Standard, Part II

``"Whenever Great Britain faced a balance-of-payments deficit [i.e. trade deficit] and the Bank of England saw its gold reserves declining [as the Pound fell in value and so cash-owners swapped paper for metal], it raised 'bank rate'," explains Bordo. "[This] led to a reduction in overall domestic spending an a fall in the [consumer] price level. At the same time, the rise in bank rate would stem any short-term capital outflow and attract short-term funds [i.e. gold bullion] from abroad." Which is the very simplest reason why there isn't a prayer for any kind of "Gold Standard" any time soon. Because backing money with gold isn't the problem for the legion of policy-makers and economists running the official monetary system. Raising interest rates is.''