Ron Paul and the gold standard, explain his solution please

[mjkidd]

RP wants to eliminate capitol gains type taxes, as well as relax legal tender laws. These two laws (particularly the capitol gains tax) are the main barriers to private, commodity-backed currency. Then, if the markets demanded gold (or pork-belly, or frozen orange juice concentrate) backed currency, banks would be free to provide them.

[Scary_Tiger]

Basically, the dollar is and the Federal Reserve system is a mess and other currencies can't compete due to the laws of our country. He'd simply open currency to the free market, and see whether people would prefer a dollar backed by the threat of U.S. interventionism or another unit of currency backed by real substance or printed by an organization that doesn't inflate the currency at the government's will.

[maxtower]

Removing the capital gains tax on gold would go a long way towards providing a sound currency. People could demand that their savings/checking account be held in gold not unlike an e-gold.com account. Then when you spent it all the conversions would be taken care of electronically by Visa/MC.