USA Needs to go back to the Gold Standard

[Accountable]

Im reading Ron Paul's new book End the Fed, in which he explains that our current economic and political shithole can be traced to our federal reserve system and the direct and indirect results of abandoning the gold standard.

I highly recommend reading it.

In it, he quotes Alan Greenspan in an article he read before he became corrupt. I found the article online HERE.

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In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
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This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.​

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[nova]

Gold standard always worries me due to the threat of deflationary events.

 

[superstring99]

It'll never happen, especially with the continued inter-connected-ness of the global economy. Better to just start over in 20 years with a new currency; one, undoubtedly, markedly more international.

~String

 

[Accountable]

Gold standard always worries me due to the threat of deflationary events.

What do you mean? We have tremendous inflationary and deflationary events now. Gold value is stable, it's the greenback that's been so volatile lately.

 

[MoonOwl]

Ron Rocks!!!:usa::usa::usa:

 

[Minor Axis]

Why is gold so valuable as a currency? It's just a soft yellow metal popular for jewelry. I wonder how many world currencies today are based on a metal standard?

 

[nova]

What do you mean? We have tremendous inflationary and deflationary events now. Gold value is stable, it's the greenback that's been so volatile lately.

Where you run into trouble is that the supply of gold or any other commodity pretty close to fixed. If the value of your $ is based on gold or whatever, then you're money supply is fixed.

That fixed money supply programs in a deflationary bias to a gold standard system as opposed to the inflationary bias of the current credit backed system. Neither is good but its easier to maintain moderate inflation which is less detrimental than deflation.

There's also the issue that we would be in effect surrendering all control of inflation/deflation. We only marginally influence it now, but under a gold standard, you're inflation/deflation rate is governed by the interaction of economic growth and the rate of gold mining.

I'm not saying a gold standard is bad. It does cover a lot of issues with the credit backed money. I'm just not sure it doesn't create more problems than its solves...

 

[Accountable]

I'm still a novice at this, but the part that resonates with me is that right now our economy rises & falls, bubbles and bursts, on the whim of politicians and secretive Fed officials who make backroom deals with private business. The gold standard puts the market forces in play. I'm still studying on all the ramifications of that, but my outlook is very positive.

Assuming you're right, why is a deflationary bias bad? Wouldn't lower prices mean a stronger dollar and more buying power??

 

[Accountable]

I wonder how many world currencies today are based on a metal standard?

Very few. I don't think any developed nations still do. That certainly doesn't mean it's a bad idea. In fact, it's a great reason to look further into it.

 

[Dana]

Me and my dad were talking about this over the summer. he did most of the talking. He'd agree with you. Gold actually gave our paper money a value without the gold to back it what exactly is it leaning on?

 

[Accountable]

Me and my dad were talking about this over the summer. he did most of the talking. He'd agree with you. Gold actually gave our paper money a value without the gold to back it what exactly is it leaning on?

Our good word. (I think I just threw up a little). It's true, though. If other nations decided to dump our dollars, which they are doing, and stop accepting them as valid currency, which some are openly considering. We're left with tons of rough green toilet paper.

 

[nova]

Assuming you're right, why is a deflationary bias bad? Wouldn't lower prices mean a stronger dollar and more buying power??

Well, one definition of inflation I've seen is "Too much money chasing too few goods." Deflation would be the opposite of that ie "Too little money chasing too many goods."

In simpler terms, somebody who needs money for some purpose, has to do without because there simply isn't enough for our economic needs.

It also has serious ramifications for economic development through its effects on capital and the lending thereof.

If the value of money is going up with time, then there's a strong incentive to simply hoard money rather than to spend it, on investments, consumer goods or otherwise. As a business, in that situation are you going to invest in capital goods that depreciate or hold on to your money which will appreciate?

The lending of capital which is very important for economic growth has to do with difficulty in repaying. Inflation makes it easier for debtors to repay as time goes on as the value of the debt decreases with its base currency while deflation makes it harder.

 

[Accountable]

It's gonna take me some time to digest this. I read about the importance of having an elastic currency, increasing and decreasing the money supply as needed, but that's what got us into this shithole we're in. We grew too fast, too recklessly. I'm constantly hearing the guys on CNBC talk about Japan as if they're in a bad situation, yet their economy is very strong - far stronger than ours at the moment. The problem the American pundits have with it is that it's not growing, or at least not very fast.

When it comes to the economy, I'd rather be strong than fast. There's a happy medium in here somewhere.

 

[nova]

I've been meaning to read this but haven't had the time. Maybe you can read it and tell me whats interesting in it

http://mises.org/books/tmc.pdf


Mises refused a bank job back in I think 1928 because his theories predicted a collapse was coming. Thats what peaked my interest about it...

 

[Accountable]

I'll check it out. Ron Paul mentions Mises all through his book.

 

[Accountable]

Just got this column from George Will:

washingtonpost.com

Americans could suddenly begin saving substantially more, but this would deepen and prolong the recession. Alternatively, America could reflate the value of its assets by printing money. Lindsey says it is already doing that -- printing bonds promiscuously and lending money to banks at negligible rates, money that banks can use to buy the bonds. This sharply increases the money supply, which sets the stage either for inflation -- too much money chasing too few goods -- or for recovery-snuffing higher interest rates to try to prevent inflation. Or for something like Japan's lost decade -- banks pouring money into government bonds rather than the real economy.

America, says Lindsey, will not be Weimar Germany, where hyperinflation caused people to rush to stores with satchels of rapidly depreciating currency. But, he adds, no country has successfully behaved the way the United States is behaving.

[...]

It is, however, hubris -- something abundant in Washington -- to think inflation can be precisely controlled, like an oven's temperature. It is hubris cubed to think inflation can be unleashed just short of provoking a flight from the dollar.

Perhaps Federal Reserve Chairman Ben Bernanke knows how to sop up the trillions of new dollars before inflation ignites. But will he? He knows about "the recession within the Depression" that occurred in 1937, perhaps as a result of premature confidence in a recovery.

 

[Goat Whisperer]

The chances of Ron Paul writing that book are probably about as high as Obama of writing his

 

[Accountable]

The chances of Ron Paul writing that book are probably about as high as Obama of writing his

Wrongo, Lttle Goat Whisperer. Mr Paul is a bona fide economist. Little nerd studies this crap all the time. A good portion of his book is transcripts of himself questioning Bernanke or Greenspan during congressional hearings.

YouTube - Ron Paul 0wnz the Federal Reserve

 

[MoonOwl]

Wrongo, Lttle Goat Whisperer. Mr Paul is a bona fide economist. Little nerd studies this crap all the time. A good portion of his book is transcripts of himself questioning Bernanke or Greenspan during congressional hearings.

YouTube - Ron Paul 0wnz the Federal Reserve

I figured I'd let you tell her the facts :thumbup

Gee, if only all our politicians had WeThePeople as their first, second, third et al Priority................

 

[dt3]

I think we need to just get back to having standards, period...