Looking for a good counter arguement when it comes to the gold standard vs fiat

[libertyfan101]

I posted a fiat currency link from Daily Paul on another forum. Basically showing the flaws of the fiat currency. This was the response.


A gold standard would be worse. Do you realize we don't even have enough gold to back the amount of money in our economy?

A Fiat is also more desirable because it doesn't suffer shocks from volatility in the commodity market like gold would.

As for the banks, I think there's work that needs to be done. But we shouldn't throw the baby out with the bathwater.

I admit I don't know enough about the pro and cons of the gold standard vs. fiat. Can someone help me with this.

[acptulsa]

Well, arguing for a gold standard isn't advocating Ron Paul's position. He's for no standard at all, but rather competing currencies.

That said, the law of supply and demand would determine the value of gold, just as it does today. This fact makes the supply elastic enough to cover the demand--and if it fails (perhaps because a one hundredth of an ounce of gold is easy to lose) then silver could help quite a bit.

If fiats don't suffer during shocks to the commodity market, they sure do suffer during shocks to the economy. Which is why the value of the dollar has plummeted in the last few years.

Yes, a lot of work needs to be done where the banks are concerned. But nothing creates accountability in the banks like taking away from them a monopoly in deciding what money is, and leaving that task to the free market.

On a side note that isn't a side note, gold fluctuates, but it goes up and down. In the long term it keeps enough value to be a valid means of saving wealth. This is nice for people who aren't insiders and are trying to make sure they keep a nest egg for their old age. Fiat money only drops in value, because if it didn't the people who print it wouldn't profit from printing it. So, no matter what, if you try to save it it will shrink like wool in a hot dryer.