Iraqi Central Bank: Reasons why to increase gold reserves

Finansial reasons to increase Gold reserves
--Central bank as well as investors have lost their faith in currency markets after the turmoil in the USA in 2008 and Europe in 2011. The USA and some of the European countries have a huge trade deficit and are bound to grow at a very slow rate. The USA has a debt of nearly $15 trillion and a current account deficit of over $110 billion. Near zero interest rates have so far been ineffective. Even flooding the markets with free money by the Federal Reserve, the Bank of England and the European central bank has failed. The Federal Reserve has said in 2011 it will protect large US corporations from failing in the future. In 2008 they conceptualized the concept of “too big to fail” for USA banks and financial corporations. Europe, USA and the UK, all the champions of capitalism and capitalism based democracy, are resorting to protectionism in some form or the other.

--When any concern (banks or anyone) knows that it will be rescued by their government in the event it nears bankruptcy, their managers, CEO, CFO and other executives working there, will take unlimited risk fearlessly. This is the message sent by the Federal Reserve as well as European central banks (among other nations) to entrepreneurs of their nations. Take as much risk as you can if you can succeed in higher short term growth and employment, as in case of a bust we are there to protect you. This has not gone down well with emerging markets and other countries where there is a call to open their economy while protectionism is being followed by the callers.