Explain to an idiot the benefits of going back to the Gold standard
 

Well, the subject line basically has it all. I keep hearing Ron Paul say we need to go back to the gold standard, and I really like him, and don't put a lot of trust in the Fed, but can anyone break it down; how would it benefit us, or hurt us, as a nation and individually?

This would also be a good time for people who disagree with this to stand up and say why. Copernicus? lol (Slightly joking, but you seem to disagree with a lot of what Ron Paul says)

Re: Explain to an idiot the benefits of going back to the Gold standar
 

Using gold as money prevents government from spending too much. And it also prevents the loss of purchasing power over time. In the United States, Constitutionally, we are supposed to only have gold and silver as currency, because it's tangible. The founding fathers knew the dangers of paper money, and tried their best to help out future generations, but I guess we didn't listen to them. =(

With paper, you can always print more money out of thin air, which weakens the currency. In ancient times, and even today, wars or government overspending weaken a country's currency. How? Back then, they would have to clip coins, or physically chop off a part, thereby weakening their currency. If the country's normal tax is 100,000 coins, and normal spending is 100,000 coins, it works out. But when you have a war (especially a long one), you take in less money, with less people working, cause they are at war. Also you are spending a LOT more. You might take in 80,000 coins and spend 300,000 coins. Same idea for government overspending, and you have to make up the difference somehow.

How to make up the difference? Cut spending, or raise taxes, but those are politically unpopular, so maybe chop off a part of the coins in circulation to mint new coins. But doing that, you devalue the currency.

With paper money, it's much easier. You just print more money out of thin air. That also devalues the existing money. And that's what politicians do today, when they have shortfalls, rather than cut spending or raising taxes, they print money to make up the short fall.

With gold, the government can't just print more of it. That prevents overspending, because the books have to balance. Government is forced to raise taxes, cut spending, or clip coins, which are all very obvious to the people, who will revolt if it causes too much of a burdeon. With paper, and printing of money, it is much more devious, as the people don't know their money is losing value. This is also known as the "inflation tax", by printing money out of thin air.

Another benefit of gold is that it doesn't lose value, but paper does. If you kept $5,000 in paper money under your bed for years, it would lose value, and lose purchasing power. If you have like 10 ounces of gold, that gold is still going to be worth the same amount in 5 years or 500 years. It has real value, so it won't lose value over time.

If gold was our currency, you could invest your gold in stocks or put it in the bank and get back more gold later, that way you can grow your money. But if you don't want to take any risks and would rather just hold onto it, it won't LOSE value year after year, like paper will. Paper loses value year after year, because the government keeps printing more of it to make up budget shortfalls.

This is just my understanding of it. I'm not an expert, so if it sounded like I was rambling, I apologize. Anyway, I'll let Dr. Ron Paul explain it to you himself. =)

http://www.youtube.com/watch?v=5hMeNnbSqkk
http://www.youtube.com/watch?v=TzLidmu_UpY

Re: Explain to an idiot the benefits of going back to the Gold standard
 

Re: Explain to an idiot the benefits of going back to the Gold standard
 

The USA can't unilaterally "return" to the Gold Standard and Europe doesn't have any incentive nor need to do so.

Re: Explain to an idiot the benefits of going back to the Gold standard
 

[ QUOTE ]
Well, the subject line basically has it all. I keep hearing Ron Paul say we need to go back to the gold standard, and I really like him, and don't put a lot of trust in the Fed, but can anyone break it down; how would it benefit us, or hurt us, as a nation and individually?

This would also be a good time for people who disagree with this to stand up and say why. Copernicus? lol (Slightly joking, but you seem to disagree with a lot of what Ron Paul says)

[/ QUOTE ]

I don't think we need to go back to the gold standard the way it was implemented. However, there's a very obvious virtue in adopting what basically the ACist's want in a gold standard i.e. a full reserve system where the value of the currency is derived from gold. The obvious virtue is that power over the currency is taken out of the governments hands more or less. Societies have been wrecked by government policies that destroyed the value of the currency. Granting governmental control of the currency is an incredibly huge power that governments have mismanged time after time. We had a big thread about the Federal Reserve (actually several) awhile back that was good. Don't know if you took the time to read it.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
The USA can't unilaterally "return" to the Gold Standard

[/ QUOTE ]

Why not?

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and Europe doesn't have any incentive nor need to do so.

[/ QUOTE ]

Define "europe"

Obviously, the current governments in the US and Europe have no incentive to return to gold. The US Government can't return to gold AND keep it's current monetary policies. But that's not what the question was asking.

Re: Explain to an idiot the benefits of going back to the Gold standard
 

http://www.federalreserve.gov/releases/h6/

M2

2007 Aug. p 7333.8
2006 Aug. p 6874.4
2005 Aug. p 6573.9
2004 Aug. p 6317.1
2003 Aug. p 6104.6
2002 Aug. p 5656
2001 Aug. p 5262
2000 Aug. p 4834.4
1999 Aug. p 4557.5
1998 Aug. p 4243

2007-1998 72.84%
Annualized 6.27%

M3

2006 Jan 10238.6
2005 Jan 9487.2
2004 Jan 8942.5
2003 Jan 8589.2
2002 Jan 8032.7
2001 Jan 7196.1
2000 Jan 6573
1999 Jan 6026.2
1998 Jan 5450.7

2006-1998 87.84%
Annualized 8.20% (your money loses this much value a year)

I would continue with M3, but they refuse to publish that now.

Looking at the individual years can be fun (in a sadistic way), including the whopping 9.8% M3 annualized from 1998-2000.

Re: Explain to an idiot the benefits of going back to the Gold standard
 

Here is a pretty good link summarizing the downside of a gold standard.

There's gold in them thar standards!

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
There's a strong correlation, for example, between how long a country hewed to the gold standard, and how badly it suffered from the Great Depression.

[/ QUOTE ]

I think this sums it up by this mischaracterization. there's fiscal policy (how much governments borrow/spend/tax), and monetary policy (how much governments inflate money/give credit.)

I think it's widely acknowldged that the great depression was created/deepened by the fed's tightening of credit (monetary policy).

it seems to me that you really can't have fractional reserve banking without a fiat money system.

I mean, what does a run on the bank meant in 1930's when US was on gold standard? basically the banks lent out money they didn't have, and so people lost faith that the banks would pay them back.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

Ron Paul wrote a book, "The case for gold" which I heard was quite good.

Here's also an essay by some obscure economist in 1966, stating the case for gold.

http://www.321gold.com/fed/greenspan/1966.html

Re: Explain to an idiot the benefits of going back to the Gold standar
 

Side question on this same topic. Is it possible to base our currency off another commodity (or several). Is this a viable option or does it become too close to Fiat money if we use too many items.

Cody

Re: Explain to an idiot the benefits of going back to the Gold standar
 

You can base it on diamonds or toothpaste if you want. Those things have real value too. If you have paper money, tied to a hard asset, then that's ok. A few decades ago, I think it was US$35 per ounce of gold, and you could trade the paper around, but if you ever wanted to, you could redeem that paper for real gold from the government.

But once we went off the gold standard, you couldn't get gold anymore. All you had was paper, and you have to "trust in god" that the paper is going to have value.

You could easily use other items though. And you can use a lot of them. Maybe gold is $700 an ounce, but silver is $14 an ounce and toothpaste is .35 an ounce. As long as you can convert back and forth, between paper and hard assets, any number of things can be used, as long as those hard assets have actual value.

Obv you wouldn't use toothpaste since the intrinsic value is so low, and the space needed to have a reserve storage would be huge (plus it's perishable), but you get my point. =)

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]

You can base it on diamonds or toothpaste if you want. Those things have real value too. If you have paper money, tied to a hard asset, then that's ok. A few decades ago, I think it was US$35 per ounce of gold, and you could trade the paper around, but if you ever wanted to, you could redeem that paper for real gold from the government.


[/ QUOTE ]

Only a very limited number of organizations (I believe central banks and foreign governments) could actually redeem dollars for gold @ 35$ per ounce from the US gov.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
Only a very limited number of organizations (I believe central banks and foreign governments) could actually redeem dollars for gold @ 35$ per ounce from the US gov.

[/ QUOTE ]

anybody could until 1933 or so then foreign corps and gov could until nixon closed gold window around 1970.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

PLO,

I was an econ major and those days are long behind me. [img]/images/graemlins/smile.gif[/img] I didnt really want to enter into the debate, as Im a bit of a fence sitter myself on the gold standard. I think you hit on a good point though, that of having a fractional reserve system. I think that what a lot of the AC crowd are actually arguing is that the government be out of the "money game" completely. As long as the government is involved, you still have the attendant problems of faith in government, no matter what type of currency you use.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
As long as the government is involved, you still have the attendant problems of faith in government, no matter what type of currency you use.

[/ QUOTE ]

yeah the US was against a national bank for most of the 18th/19th century, president andrew jackson was totally anti-banker, in the sense of central banks.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

By the way: I'm not participating here at all because I'm clueless. I am reading everything you guys are writing though and learning, and I will re-read after I've had some sleep.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
A few decades ago, I think it was US$35 per ounce of gold, and you could trade the paper around, but if you ever wanted to, you could redeem that paper for real gold from the government.

[/ QUOTE ]

Man, you ever try to buy a cheeseburger at McDonald's with a few flakes of gold dust? They look at you like you're a looney!

Re: Explain to an idiot the benefits of going back to the Gold standard
 

[ QUOTE ]
Annualized 8.20% (your money loses this much value a year)

[/ QUOTE ]

This is of course incorrect.

Re: Explain to an idiot the benefits of going back to the Gold standard
 

How so

Re: Explain to an idiot the benefits of going back to the Gold standard
 

[ QUOTE ]
Here is a pretty good link summarizing the downside of a gold standard.

There's gold in them thar standards!

[/ QUOTE ]

I particularly like this quote from the article

[ QUOTE ]
In short, you don't get anything out of a gold standard that you didn't bring with you. If your government is a credible steward of the money supply, you don't need it; and if it isn't, it won't be able to stay on it long anyway.

[/ QUOTE ]

I think the hard money arguement is more for the privatization of the money supply. Its just that most libertarians tend to believe that a free market money system will eventually end up as a gold standard.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
How so

[/ QUOTE ]

M * v = Y * p

thus

^M + ^v = ^Y + ^p

thus

^p = ^M + ^v - ^Y

thus

^p = ^M only if ^v = ^Y

quantity theory of money

Re: Explain to an idiot the benefits of going back to the Gold standar
 

Do we know how much gold the US GOVT currently has? What would happen if we just switched tomorrow and for arguments sake we had 100 Trillion in paper money but only 1 Trillion in gold.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
Do we know how much gold the US GOVT currently has? What would happen if we just switched tomorrow and for arguments sake we had 100 Trillion in paper money but only 1 Trillion in gold.

[/ QUOTE ]

Per the usmint.gov website:
Amount of present gold holdings: 147.3 million ounces.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
Do we know how much gold the US GOVT currently has? What would happen if we just switched tomorrow and for arguments sake we had 100 Trillion in paper money but only 1 Trillion in gold.

[/ QUOTE ]

On this question, without a gold standard gold is just an investment. The quantity that can be sold it is constrained by treaty though. As noted above you cant unilaterally move to a gold standard.

Re the equation above, you dont really need to go the log version of the equations. It should be obvious from p=M*v/Y that for a constant velocity of money, price increases only when M/Y increases, thus if the money supply grows in concert with productivity there is no upward pressure on price. Note also that Y=M*v/p. If M is relatively fixed (as under a gold standard), and v is relatively fixed, then if Y grows, price has to decline..ie deflation. There are other threads on the risks that deflation carries.

Re the comment that "toothpaste" could be used as backing for currency, this is incorrect. It is essential for any commodity based currency that the commodity be scarce (if anyone can produce toothpaste from baking soda and a few other non-scarce chemicals then the exchange rate is impossible to maintain as governments or individuals can flood the market with toothpaste), difficult to increase in supply (same as above), and consumed in relatively small proportions to the total supply (if the large amounts of the commodity are consumed it reduces the supply which carries the deflation risk).

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
[ QUOTE ]
There's a strong correlation, for example, between how long a country hewed to the gold standard, and how badly it suffered from the Great Depression.

[/ QUOTE ]

I think this sums it up by this mischaracterization.

[/ QUOTE ]

it isn't a mischaracterization. it is some of the best research i've seen on an economic theory in a while ( interms of academic papers).

those countries who stayed on gold for longer exacerbated the negative impact of the great depression.

i challange you to disprove that statement and have your theory hold up to the facts.

Barron

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
it isn't a mischaracterization. it is some of the best research i've seen on an economic theory in a while ( interms of academic papers).

those countries who stayed on gold for longer exacerbated the negative impact of the great depression.

i challange you to disprove that statement and have your theory hold up to the facts.

Barron

[/ QUOTE ]

well the thing is the US wasn't really on the gold standard. twenty years earlier the US got a central bank, and they increased/decreased the money supply independently of gold. basically there was a fiat money supply and a gold money supply and obviously the gold got squeezed out pretty quickyly (20 years).

obviously if I have a choice of paying you in gold or in fiat and I choose to pay you in gold, then I am an idiot.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
There's a strong correlation, for example, between how long a country hewed to the gold standard, and how badly it suffered from the Great Depression.

[/ QUOTE ]

I think this sums it up by this mischaracterization.

[/ QUOTE ]

it isn't a mischaracterization. it is some of the best research i've seen on an economic theory in a while ( interms of academic papers).

those countries who stayed on gold for longer exacerbated the negative impact of the great depression.

i challange you to disprove that statement and have your theory hold up to the facts.

Barron

[/ QUOTE ]

There are huge impediments to having this discussion. Basically you have to agree on so many underlying themes to begin with
1. What constitutes a gold standard
2. When did the depression begin/end for each country in question
3. How do you normalize for other interference in the economy?

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
There's a strong correlation, for example, between how long a country hewed to the gold standard, and how badly it suffered from the Great Depression.

[/ QUOTE ]

I think this sums it up by this mischaracterization.

[/ QUOTE ]

it isn't a mischaracterization. it is some of the best research i've seen on an economic theory in a while ( interms of academic papers).

those countries who stayed on gold for longer exacerbated the negative impact of the great depression.

i challange you to disprove that statement and have your theory hold up to the facts.

Barron

[/ QUOTE ]

1) flip the burden of proof
2) bait and switch

The parties making this claim need to prove causation exists where we observe the corellation. And define what constitutes a "gold standard" while you're at it, since I'm pretty sure what you're talking about isn't what proponents of it are talking about.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
There's a strong correlation, for example, between how long a country hewed to the gold standard, and how badly it suffered from the Great Depression.

[/ QUOTE ]

I think this sums it up by this mischaracterization.

[/ QUOTE ]

it isn't a mischaracterization. it is some of the best research i've seen on an economic theory in a while ( interms of academic papers).

those countries who stayed on gold for longer exacerbated the negative impact of the great depression.

i challange you to disprove that statement and have your theory hold up to the facts.

Barron

[/ QUOTE ]

1) flip the burden of proof
2) bait and switch

The parties making this claim need to prove causation exists where we observe the corellation. And define what constitutes a "gold standard" while you're at it, since I'm pretty sure what you're talking about isn't what proponents of it are talking about.

[/ QUOTE ]
i guess then the real issue is defining what is meant by the "gold standard."

if by "gold standard" you mean a literal and unchanging 1:X ratio of gold to your currency, then nobody stayed on the gold standard at all since the US and other countries devauled that ratio.

the point that i (aka, me speaking for the researchers) made that i feel is strongly proven (though nothing is absolute) is that keeping the currency tied to gold at a price exacerbated the problems caused by higher rates when they shoudl have been lower and exacerbated the problems caused by the banking panic to the marcro economy of those countries that stayed on a currency tied to gold.

Barron

EDIT: since i knew this in advance due to my own reading / research, it is obviously seen by you as a "bait and switch" whereas to me it is a "this has been proven to a very strong degree and, barring the definition of gold standard, i require you to prove to me that it isn't hte case."

Re: Explain to an idiot the benefits of going back to the Gold standar
 

Are any of these papers available online (for free)?

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
i guess then the real issue is defining what is meant by the "gold standard."


[/ QUOTE ]

Wasnt the value of gold basically decided by governments?
I dont think its really a question of gold standard or not but how much government intervention in the money supply. So what you call a gold standard isnt what we call a gold standard. Its kind of hard to have an arguement when we have different definitions of what we are argueing about.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
Are any of these papers available online (for free)?

[/ QUOTE ]

the main auther of about 60% of them are bernanke. the book where those major ones by him are collected and presented is called "essays on the great depression"

the others may or may not be free and i haven't cited them yet b/c i woul dthen (and will if you want) go back to the book and simply find the cites to the other papers.

an overview of why i like bernanke's (and the simple buying of the book) is because his includes a very good macro economic study of countries moving through time both monthly and annually from 1928 to 1945. mostly he concentrates on the period from 1929-1937 (or the last date when the last country left eh gold bloc- france and belgium held on the longest). the other papers before him concentralted solely on the USA rather than collecting more sample points to do a far more comprehensive study as the result of more robust regressions. those papers do a great job on the study of the USA, but not so good on the transmission of monetary policy throughout the world.

here is a quote from a britannica article that i'll cite after the quote. it basically discusses the major drivers (without proving as bernanke did via numerical studies and regressions of all kinds on many different variables of economic health) of the recovery and how fiscal policy played a small relative role compared to monetary expansion:

[ QUOTE ]
Devaluation, however, did not increase output directly. Rather, it allowed countries to expand their money supplies without concern about gold movements and exchange rates. Countries that took greater advantage of this freedom saw greater recovery. The monetary expansion that began in the United States in early 1933 was particularly dramatic. The American money supply increased nearly 42 percent between 1933 and 1937. This monetary expansion stemmed largely from a substantial gold inflow to the United States, caused in part by the rising political tensions in Europe that eventually led to World War II. Monetary expansion stimulated spending by lowering interest rates and making credit more widely available. It also created expectations of inflation, rather than deflation, thereby giving potential borrowers greater confidence that their wages and profits would be sufficient to cover their loan payments if they chose to borrow. One sign that monetary expansion stimulated recovery in the United States by encouraging borrowing was that consumer and business spending on interest-sensitive items such as cars, trucks, and machinery rose well before consumer spending on services.
.
Fiscal policy played a relatively small role in stimulating recovery in the United States. Indeed, the Revenue Act of 1932 increased American tax rates greatly in an attempt to balance the federal budget, and by doing so it dealt another contractionary blow to the economy by further discouraging spending. Franklin D. Roosevelt's New Deal, initiated in early 1933, did include a number of new federal programs aimed at generating recovery. For example, the Works Progress Administration (WPA) hired the unemployed to work on government building projects, and the Tennessee Valley Authority (TVA) constructed dams and power plants in a particularly depressed area. However, the actual increases in government spending and the government budget deficit were small relative to the size of the economy.

[/ QUOTE ]

Britanica Article on the Great Depression. Page 1 of 23 (i.e. the very beginning)

Britanica Article on the Great Depression. Page 6 of 23 (i.e. where the discussion about the role of the fed in tightening money to save the gold standard and how monetary expansion helped move us out of it begins)

to very shortly sum the mises (i.e. counter fed) argument (borodog correct me if i stray here or am incorrect in any way please. and also forgive the tilt of the statements. you can correct me if i've strayed from the facts though [img]/images/graemlins/tongue.gif[/img]): after 50 years of some kind of pushing, a cabal of bankers (i.e. the few) got together and convinced the legislature to draft and the president to sign a bill, after the banking panic of 1907 provided a precipitating cause, to create the federal reserve system (and its member banks) and allow it to control monetary policy of the US (ie. the many) to the benefit of the few who created it. In terms of the depression, the fed helped create the depression in 2 ways. indirectly by existing and preferring monetary expansion at every turn (by creating the business cycle and causing people to prefer to consume now rather than later, causing dislocations in the economy), and then directly by tightening to save the gold standard in late 1931. this tightening was a choice between the saving of the gold standard (and the currency peg to gold/foreign currencies) or providing liquidity to the banks that were clamoring for it.

hope this helps,
Barron

Re: Explain to an idiot the benefits of going back to the Gold standar
 

I think you might be misunderstanding Austrian Business Cycle theory a bit. Austrians believe that artificially lower interest distort the capital market by simultaneously decreasing the supply of savings while increasing the demand for investment. Austrians primarily focus on the investment side of this distortion. They believe that businessman will unwittingly take on debt to develop unprofitable capital projects during the boom phase. This "malinvestment" is what causes the bust phase which occurs during the time period when these projects are found to be unprofitable and then liquidated.

The argument in favor of the gold standard is that it limits the governments ability to meddle in the economy, assuming you find this preferable of course. I think that history shows that, unfortunately, the gold standard doesn't work well as a constraint and governments will meddle anyway. I am not familiar with Bernanke's book but I'd be very surprised if the governments who tried to maintain the gold standard weren't messing with the economy prior to the depression. Just because one government intervention, after it already created a problem, proves to be better than another at solving the problem, doesn't mean that government intervention is a good thing. I'd prefer it if governments didn't mess things up to begin with.

Free Banking >>>>>>>>>>>>&g t;>>>>> Gold Standard > The fed in my opinion.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]
I think you might be misunderstanding Austrian Business Cycle theory a bit. Austrians believe that artificially lower interest distort the capital market by simultaneously decreasing the supply of savings while increasing the demand for investment. Austrians primarily focus on the investment side of this distortion. They believe that businessman will unwittingly take on debt to develop unprofitable capital projects during the boom phase. This "malinvestment" is what causes the bust phase which occurs during the time period when these projects are found to be unprofitable and then liquidated.

[/ QUOTE ]

i wasn't so clear about it, but this is what i meant by "dislocations"

Barron

Re: Explain to an idiot the benefits of going back to the Gold standar
 

The "gold standard" was abandoned because the gold supply does not grow at a fast enough pace to keep up with the growth of the economy. It is therefore inherently deflationary, and economically unsustainable.

It is also an article of near-religious faith among the far-right-wing, so expect the usual firestorm of spam and pre-cooked talking points.


q/q

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]

The "gold standard" was abandoned because the gold supply does not grow at a fast enough pace to keep up with the growth of the economy. It is therefore inherently deflationary, and economically unsustainable.

It is also an article of near-religious faith among the far-right-wing, so expect the usual firestorm of spam and pre-cooked talking points.


q/q

[/ QUOTE ]

Yeah exactly. Cause historically, before 1913, there was like no economic growth. Once we started printing that money out of thin air though, there was no stopping the economic growth, no stopping the inflation, and no stopping the slow road to eventual collapse of our currency due to the worthlessness of the dollar.

Money is just a way to facilitate a transaction. It's just hard to think of having converting all the money we have, into gold. I can't blame them, because the federal reserve prints out hundreds of billions of dollars out of thin air, so yeah, that'd be hard to imagine.

If you're a saver, you have to save and earn like 3-5% a year, just to break even, since your dollars are getting more and more worthless. If someone really wanted gold, they could offer a higher return on investment, but if they can't, why should your money and savings lose 3-5% value a year, every year? By printing money out of thin air to "stimulate the economy", you hurt a lot of people, savers, fixed income people and retirees.

And as far as I know, no country or society has lasted long under a system of paper money, created out of thin air, with nothing to back it. But there are a lot of places that lasted under sound money, backed by hard assets.

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]

The "gold standard" was abandoned because the gold supply does not grow at a fast enough pace to keep up with the growth of the economy. It is therefore inherently deflationary, and economically unsustainable.

q/q

[/ QUOTE ]

At this point I think I'd probably rather see deflation than inflation for a while. Why is deflation more evil than inflation?

Re: Explain to an idiot the benefits of going back to the Gold standar
 

[ QUOTE ]

The "gold standard" was abandoned because the gold supply does not grow at a fast enough pace to keep up with the growth of the economy. It is therefore inherently deflationary, and economically unsustainable.

It is also an article of near-religious faith among the far-right-wing, so expect the usual firestorm of spam and pre-cooked talking points.


q/q

[/ QUOTE ]

Pragmatic and correct. The gold standard, or rather its re-introduction is silly and impossible.

To the OP I would say, think twice! Maybe Ron Paul isn't as intelligent as "some" on 2+2 think he is! [img]/images/graemlins/smile.gif[/img]

Re: Explain to an idiot the benefits of going back to the Gold standar
 

Can you tell me why gold has value?