Poll
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Gold Standard
Some say to bring back the GS, others say it is stupid.
Should the US and the EU move to a GS? If so, why?
Should the US and the EU stay as is? If so, why?
I am undecided. I can see both sides and generally understand both sides.
Note: Using a "gold standard" to back money does not mean to use "gold" exclusively (that's called a gold specie standard). I am using it more of a blanket term used to standardize money's value through precious metals and minerals which includes gold.
I do recall Ron Paul once being challenged that even if you backed the dollar with silver, gold, platinum, and pretty much every other precious metal combined you still wouldn't have enough to back all the dollars in circulation, and he responded that we could back the dollar with other commodities like wheat ermm
Originally posted by Omega Vision
I do recall Ron Paul once being challenged that even if you backed the dollar with silver, gold, platinum, and pretty much every other precious metal combined you still wouldn't have enough to back all the dollars in circulation, and he responded that we could back the dollar with other commodities like wheat ermm
I'd think there are enough precious metals to back all the money in circulation right now. There's supposedly enough gold to back the whole US economy. One of my issues with backing money on a massive scale like that is taking all that material out of the economy, we use gold and platinum for practical purposes.
Wouldn't use those resources destroy part of the money supply? (I'm really not sure how that works)
Originally posted by jinXed by JaNx
Gold is actually worth something though
No, gold is only ever worth what people are willing to give you for it, exactly like currency. The fact that the real value of gold dropped by half between 1981 and 1982 is a good demonstration of how little inherent value it has. Now it is true that what effects the value are market forces (which may be what you mean by "actually worth something"😉 but similar forces effect the value of other currency and the market for gold is no less difficult to manipulate.
This is why Ron Paul and other people who call for a resource backed currency want to use various things, that way a sudden spike or dip in price (or China refusing to export) doesn't massively alter the value of currency.
My 1-cent worth: basing an economy on future credit is childish, wishful thinking. It's a way of enabling greed (especially of the financial elite), rather than scaling it back to realistic levels. Don't spend beyond your means. Plain and simple.
On the other hand, basing on economy on something geological is doomed because there is only so much resource material to go around.
The answer: people have to change -- not some standard -- starting with curtailing population growth, so that it "matches" our valued, physical resources. But this, I know, is as far a reach (currently, anyway) as a fiat economy.
Originally posted by ADarksideJedi
As much as the fact that it would be neat. It would be a brother to have to carry gold around in your pocket or wallet. Bills are easy and nice and light.
A gold standard doesn't mean carrying gold around with you it means that any time you ask the government will give you as much gold as you have money.
Originally posted by Mindship
My 1-cent worth: basing an economy on future credit is childish, wishful thinking. It's a way of enabling greed (especially of the financial elite), rather than scaling it back to realistic levels. Don't spend beyond your means. Plain and simple.On the other hand, basing on economy on something geological is doomed because there is only so much resource material to go around.
Both of these are somewhat unfair.
Fiat currency is valuable in that it gives governments an ability to respond to economic crisis and spread out the damage over time, a resource backed currency severely curtails that even as it prevents abuses. The supposed moral hazard of RBC strikes me as needlessly risky, we assume the government will be more responsible because of the increased risk to itself but if things go wrong we're screwed.
Running out of precious metals isn't a realistic issue unless you're planning a civilization on a thousand year time scale.
I do wonder where gold standard advocates plan to get the necessary resources for the plan. Ron Paul and Libertarian supporters of the concept aren't going to allow the government to seize privately held materials but I have a hard time imagining anyone being happy with a money supply suddenly contracting down to what the government has on hand.
This makes me think you might be able to make a partially backed currency? Like the government must keep at least 10% of the value of its money in physical resources.
Originally posted by Symmetric ChaosOffhand, doesn't sound like a bad idea. Why has this not surfaced among any of the so-called experts?
This makes me think you might be able to make a partially backed currency? Like the government must keep at least 10% of the value of its money in physical resources.
It would be nice to have our money actually mean something, but America is pretty stable compared to countries where the currency suddenly becomes useless, and people who have millions of whatevers suddenly only have one whatever's worth. Like what happened in the Congo when their pink Congolese bills from under Patrice Lumumba was suddenly being used as toilet paper when he was assassinated.
I think that it's a problem, but it's not at the top of "the list."
Originally posted by Mindship
Offhand, doesn't sound like a bad idea. Why has this not surfaced among any of the so-called experts?
Actually, this thread has made it worse. I feel I am less certain about either side, now, more than before.
The "third" option seems to be most realistic, thus far. The hybrid, if you will. I just don't see an option that is stable. I don't find a solution other than XYZ's suggestion: no more money. That's not feasible, right now so we have to live with what we have.