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

[Richard Tanner]

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

[theseus51]

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. =)

[tolbiny]

[ 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.

[PLOlover]

[ 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.

[vulturesrow]

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.

[PLOlover]

[ 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.

[Taso]

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.

[Low Key]

[ 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!

[Felz]

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

[/ QUOTE ]

This is of course incorrect.

[lehighguy]

How so