"Under a gold standard, if people think the paper money printed by government is losing value, they have the right to switch to gold. Fiat money -- i.e., currency with no intrinsic worth that government has decreed legal tender -- loses its value when government creates more than can be absorbed by the productive real economy."
Judy Shelton Says Let's Abolish Legal Tender Laws and Go Back to the Gold Standard - WSJ.com
Digg - WallStreetJournal - Gold Standard Needed - RP was right!
"The individual is handicapped by coming face to face with a conspiracy so monstrous he cannot believe it exists.'' ~ J. Edgar Hoover
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Great find Rhonda! Getting that article into the WSJ is pretty amazing.
Consider it dugg
Tu Ne Cede Malis Sed Contra Audentior Ito
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That's a great article Rhonda, cheers.
I've enjoyed reading about this topic - while I did economics in Leaving Cert that was almost ten years ago. Thanks guys for an enlightening discussion - if there was a Discussion of the Month award I'd definately nominate this topic. I've learnt many things from the debate, which can't be said about other threads (no offense guys).
From what I've read, I do think that there could very well be a future in a new gold standard. I think perhaps that with banks and governments alike suffering from crises of confidence, you need some commodity which is real, tangible and limited in supply to act as a store of value and which does not depend on confidence in regulation.
I wouldn't necessarily agree with using gold itself as a currency but certainly would approve of a currency which is 100% backed by commodities like gold or silver, as even if they fall in value, as I understand it, it is impossible for gold or silver to become totally worthless, unlike, say, the Zimbabwean Dollar, and a currency backed by commodities would also hold some value.
"The fact that some posters here are better informed than a lot of our political reps, on economic matters, scares the bejesus out of them." limericklady
Where is 20,000 Miles these days? A very top drawer quality poster.Originally Posted by 20000miles
For you Mr. Deregulation:
Here are the common objections:
1. There's not enough gold in the world
The overall quantity of money doesn't matter, prices will simply adjust to fit the new money supply.
2. If the economy grows at 3% (for instance) while the money supply grows at only 1-2% then the overall price level will fall.
Falling prices for goods are a good thing! Are you crazy!
3. But doesn't that mean an end to economic growth, since entrepreneurs will prefer to put their money under a matress rather than take the risk of investing?
No. While it is certainly "risk-free" to keep your money under the bed, it comes with a very real opportunity cost. Investors have a peculiar trait: they prefer goods in the future to goods in the present. In other words they forego consumption today and prefer a larger return later.
So a deflationary economy a nominal return (i.e., $1) becomes $1.10 when repaid compounds the real return (i.e., the purchasing power of $1.10 is now $1.21)
The desire for future goods may increase the desire for investment.
4. Can you show me a period of time where a gold standard and deflation have led to prosperity?
Why thank you for asking. The period between 1870 and 1896 in the United States and Germany were deflationary. Annualised prices fell 1.6% in the US, while output rose 3.6% per annum. Investment was wide-spread - this was the era of huge advances in manufacturing, railroads and chemistry.
Here are the measuringwoth.com figures for the period:
5. Are you a member of the tinfoil hat brigade?
No, I just want a sound monetary policy
6. Will this mean the end of the boom-bust cycle?
No, you will have to tackle the expansion of bank credit as well, ie. fractional reserve banking.
So that's it!
"No one rules if no one obeys" - Tao
Ya, you know, that's the probelm. It's a big problem. it's the probelm between a theory (like this) and reality - the real world.The overall quantity of money doesn't matter, prices will simply adjust to fit the new money supply.
Falling prices for goods are a good thing! Are you crazy!
Hmm. Oh crap, what happens if i have to, you know, .... work?
"...Money exists not by nature but by law." Aristotle (Ethics, 1133)
I guess he could not deal with the halfwits. Maybe the most well read here with a current poster close behind. All theory though and not a market watcher as such
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This timely film explains the characteristics necessary for honest money and defines inflation -- its cause and cure.
[ame=http://www.youtube.com/watch?v=mF16p89rneg]YouTube - Dollars and Sense[/ame]
The continuous destructive boom-bust cycle, and inflation and deflation are means by which the bankers by stealth succeed over time in sucking the life blood out of the global economy -- this system is aided of course by the use of fiat currency - a reason the bankers love it so much, and the reason the bankers HATE gold.
"The individual is handicapped by coming face to face with a conspiracy so monstrous he cannot believe it exists.'' ~ J. Edgar Hoover
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Forbes Predicts U.S. Gold Standard Within 5 Years
Forbes Predicts U.S. Gold Standard Within 5 Years - HUMAN EVENTSA return to the gold standard by the United States within the next five years now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills, Steve Forbes predicted during an exclusive interview this week with HUMAN EVENTS.
“What seems astonishing today could become conventional wisdom in a short period of time,” Forbes said.
Such a move would help to stabilize the value of the dollar, restore confidence among foreign investors in U.S. government bonds, and discourage reckless federal spending, the media mogul and former presidential candidate said. The United States used gold as the basis for valuing the U.S. dollar successfully for roughly 180 years before President Richard Nixon embarked upon an experiment to end the practice in the 1970s that has contributed to a number of woes that the country is suffering from now, Forbes added.
I wonder what a return to the gold standard would do to the price of gold?
"The individual is handicapped by coming face to face with a conspiracy so monstrous he cannot believe it exists.'' ~ J. Edgar Hoover
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Of course we should return to the gold standard.
Nixons fiat currency is bringing us to the brink and beyond. Inflation is caused by the Fed who have complete and utter control over the quantity of money that is not by law, required to be backed by gold. What is to stop them from printing more and more? The answer is nothing. And they do. The banking system is a mess. Banks keep reserves at a certain number to service those who may go and make a withdrawal i.e - me and you. The rest is loaned out immediately. The Fed go into the market and buy items that they can check off as invisible money which they will print in the future - therefore lowering the value of your property.
Giving a government total control over the currency or means of exchange is a recipe for disaster and they have managed to grasp it from our hands while we slept. End the Euro is a priority. Private currency should be legal tender. If not you trap people in an economic prison. In the 1800's, private currency was in circulation - there was double the amount of money in circulation yet inflation dropped 11%.
Get rid of the government controlled monies. Anyone who has a certain amount of gold should be able to print their own private currency and use it as a means of exchange. And yet, not sure how libertarians or anarchists are linked with this policy - yes, it is a goal of them but it is just sound economic sense I'm sure anyone will be able to see if investigated.
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