Price Vs. Policy: A Tale of Two Markets

Wriston, Walter B.

2007

Introduction

There is one thought I would like to leave you with today. so I will try to make it as pleasant as possible. I ask you to imagine that back in 1950 you owned a large amount of oil: that furthermore you made a deal way back then to sell it for gold. If it was really good oil - Saudi Arabian light crude, for instance--20 barrels of it brought you an ounce of gold on the London market.

Now let us further suppose that after 30 years of collecting gold like King Midas you decided that you'd rather have the oil. So last year you took all the gold you'd accumulated and went into the oil market. What you got for it was about 20 barrels to the ounce- or almost exactly what you sold it for 30 years ago.