Gold Standard... WTF?

[xcalybur]

I am honestly trying to figure out what is the problem with all these people that say that the gold standard is a bunch of crap. The hear gold standard and say WTF? I know a decent amount about how the gold standard would and does work and it just makes logical sense. Are people scared of gold?

What are the detractors to a gold backed currency? I know there are some, but they seem relatively small compared to fiat currencies.

To me:

Gold Standard = strong stable money
Fiat Currency = counterfeiting

Why don't people see this?

[Fyretrohl]

Gold Standard = Finite Cash Supply

[ronpaulfan]

Show them this YouTube video

http://www.youtube.com/watch?v=abV9tgbG-bA

[ronpaulfan]

Gold Standard = Finite Cash Supply

Which forcibly restricts government spending. That's why it's built into the constitution.

[Scott Wilson]

Easy credit allows the economy to grow easily.

[agaiziunas]

Uneducated, and not willng to spend an hour or so learning more about the topic before dismissing it as crazy. Easier to just believe the soundbyte on CNN or Murdoch's media "Paul wants us carrying gold nuggets around in our pockets"

Kinda the same as the entire election process, really.... Lazy sheep. Baaaaaah.

[Truth Warrior]

http://www.usagold.com/gildedopinion/greenspan.html

[ronpaulfan]

Easy credit allows the economy to grow easily.

Very true.....that is, until it crashes :p

[ARealConservative]

a fiat system with 2-3% inflation will out perform a gold standard economy in terms of measurably GDP.

A couple of points however -

how does a lay man know that inflation is staying within acceptable ranges?

Why do we worship at the tit of GDP in the first place?


But in the end - this type of info is not what is on the mind of the average voter anyway and trying to explain sound money in a short time frame is hopeless.

[Shink]

I am honestly trying to figure out what is the problem with all these people that say that the gold standard is a bunch of crap. The hear gold standard and say WTF? I know a decent amount about how the gold standard would and does work and it just makes logical sense. Are people scared of gold?

What are the detractors to a gold backed currency? I know there are some, but they seem relatively small compared to fiat currencies.

To me:

Gold Standard = strong stable money
Fiat Currency = counterfeiting

Why don't people see this?

NWO PR hard at work is the explanation to your questions. That's what they do--smear the truth as 'crazy' for as long as it takes to be thought of as true by sheep.

[sgrooms]

most people that i've talked to don't understand what the gold standard means. most people get the impression from MSM that we would be only using gold and silver to buy things, that the paper representing the gold would disappear. now of course, after hearing the truth about it, they almost ALWAYS agree that we should go back to the gold standard.

the only problem is getting them to understand the concept.

[xcalybur]

I understand that easy credit allows the economy to grow easily, but it is a false growth. The bane of our existence is credit. The problem with the federal reserve system is not necessarily that it is fiat, but that it can never be payed off. They want it this way.

[break4me]

This is one part of his message I don't fully understand. I don't mind our government printing money to lend to banks to help spur business/home loans, this supports the growth of our economy. However, I also know our government doesn't have the ability to be responsible with any power you give it.

Anyways, it seems like a free-market banking system would be able to handle this better than the US gov't. I guess its hard to picture a system where the government can't print money, at will. It's been that way all my life. I wish some respected financial experts in the industry would talk about the pros/cons of an asset-backed currency more.

[MJfromCT]

The gold standard creates a system of restrictions, which those that have the current monetary control through fiat form currently are not subject to. Average folks with limited knowledge of gold standard vs. fiat have heard and therefore learned over the course of their life that the gold standard would be a colossal failure. When you are told something over and over again and do not take the time to study it for yourself you will just believe what everyone else is saying.
Of course there are issues as to how do you securitize the gold and see to it being properly accounted for and how to transition things from worthless paper to something tangible and so on. But, it is the best scenario as it allows the free markets to determine real value.

[Lucid American]

You know what's crazy to me??? The fact that if all our debt was paid off, we would have no money supply!

[mokkan88]

Gold Standard = Finite Cash Supply

There's an odd disparity between the term 'cash' and 'value'. Even without money backed up with gold, the 'value' of money is finite.

[goldstandard]

I am honestly trying to figure out what is the problem with all these people that say that the gold standard is a bunch of crap. The hear gold standard and say WTF? I know a decent amount about how the gold standard would and does work and it just makes logical sense. Are people scared of gold?

What are the detractors to a gold backed currency? I know there are some, but they seem relatively small compared to fiat currencies.

To me:

Gold Standard = strong stable money
Fiat Currency = counterfeiting

Why don't people see this?

I can assure you I'm not a bunch of crap and yes I make sense. I don't know why people are scared of me.:confused:

[xcalybur]

Hmm, I guess I know to much about the gold standard to see if from the layman's perspective. I don't think the gold standard requires that we carry around nuggets of gold and silver. It can be paper based, just backed 100% by gold and silver.

I know that out of the 100 or so people that I have asked "Is our money backed by gold?" About 70% of them say yes and the other 30% say no, but they know about the real FED and inflation and such. I have never come across someone who says no and likes it that way. The vast majority of the people who say yes that I tell them it isn't, they either say that they don't believe me or they are pissed off.

[Shink]

I can assure you I'm not a bunch of crap and yes I make sense. I don't know why people are scared of me.:confused:

Maybe it's your hairdo, goldstandard.

[slamhead]

a fiat system with 2-3% inflation will out perform a gold standard economy in terms of measurably GDP.

A couple of points however -

how does a lay man know that inflation is staying within acceptable ranges?

Why do we worship at the tit of GDP in the first place?


But in the end - this type of info is not what is on the mind of the average voter anyway and trying to explain sound money in a short time frame is hopeless.

Well you have to also consider the redefinition of inflation we are under today. The CPI today no longer resembles what it used to. Now you are expected to lower your living standard. Example, the CPI used to compare the same goods from one period to the next. Now they have determined in times of inflation you are expected to by hamburger instead of steak. If a new car has more options than last periods model than you are expected to absorb that "hedonistic" gain for your money. True inflation is much more than what is stated.

[RPinUptownChi]

i believe what is needed is an arrangement like what you have with fedex and the usps...people should have the choice to use gold-based currency or federal reserve notes...having both available will create an arbitrage system where the gold currency would probably be stronger but more illiquid and there would be a spread between the more liquid federal reserve currency which is controlled by the fed...

the reason the big head people are against a finite money supply is b/c they don't want the dow and the market to correct 20% in one day...u saw what happened this morning, the market opened way low and was gonna go lower, but then they print more dough essentially by slashing the FF rate and the DJIA 'losses' from this morning suddenly go away, since the money it represents is now worth less...they will take the 20% out of the equity markets but the big banks want to do it slowly so they can pawn their inventories to smaller investors with the 'long-term hold' line...

in the end the reason people are against it is because they don't understand it and they choose not to consider the extreme situations in society that such a monetary arrangement can help prevent...its sad, really...

[specsaregood]

We had a nice little discussionon this subject the other day:
http://www.ronpaulforums.com/showthread.php?t=95595

[S3eker]

I think you all are missing the point. If RP gets elected it doesn't mean we are going back to the gold standard. In fact, it's debatable whether we could ever go back to the gold standard again. It may not be humanly possible and we might be locked in to the Fed.

With that said, RP is saying that there should be a competing currency in the US based on gold. This way people can save money using this standard and not get an inflationary tax. You need to focus on what RP is saying and do more research.

You're scaring everyone away by saying we're going back to the gold standard. NOT TRUE!!!!

Competing currencies !!! = YES

[AEMsupra]

I think you all are missing the point. If RP gets elected it doesn't mean we are going back to the gold standard. In fact, it's debatable whether we could ever go back to the gold standard again. It may not be humanly possible and we might be locked in to the Fed.

With that said, RP is saying that there should be a competing currency in the US based on gold. This way people can save money using this standard and not get an inflationary tax. You need to focus on what RP is saying and do more research.

You're scaring everyone away by saying we're going back to the gold standard. NOT TRUE!!!!

Competing currencies !!! = YES

QFT

[dude58677]

This is one part of his message I don't fully understand. I don't mind our government printing money to lend to banks to help spur business/home loans, this supports the growth of our economy. However, I also know our government doesn't have the ability to be responsible with any power you give it.

Anyways, it seems like a free-market banking system would be able to handle this better than the US gov't. I guess its hard to picture a system where the government can't print money, at will. It's been that way all my life. I wish some respected financial experts in the industry would talk about the pros/cons of an asset-backed currency more.

There are 4 things to the Federal Reserve System-

1) When the government prints money out of thin air, the value of a dollar goes down and prices go up. This is why everything from gas, health care, college tuition, etc is so expensive these days.

2) When the FED creates interest rates society is always going to be in debt because not only does society have to repay the money to the FED but they owe interest which means they have more additonal money that is owed. They can't pay this extra money back because they are not authorized to print money.

3) Congress borrow's money from the FED and is charged interest. This is why we have a 9 trillion dollar debt.

4) A Gold Standard forces Congress to keep the spending under control because the money supply is limited.

[MJfromCT]

I think you all are missing the point. If RP gets elected it doesn't mean we are going back to the gold standard. In fact, it's debatable whether we could ever go back to the gold standard again. It may not be humanly possible and we might be locked in to the Fed.

With that said, RP is saying that there should be a competing currency in the US based on gold. This way people can save money using this standard and not get an inflationary tax. You need to focus on what RP is saying and do more research.

You're scaring everyone away by saying we're going back to the gold standard. NOT TRUE!!!!

Competing currencies !!! = YES

I agree with what you are saying as far as making a competing currency backed by gold/precious metals. Now the follow up question is how do you maintain a real value for the federal reserve currency, when you offer a competing gold standard currency? (I have given this a lot of thought but would like to hear some ideas.)

[dshields]

The argument against the fiat currency versus gold standard does not fully encapsulate the problems. I personally like a gold backed currency but can see the benefits of a government regulated fiat currency if done properly.

Prior to the Revolution, Colonial Scripts were used quite successfully as a fiat currency that held it's value. The big difference between our dollar and the colonial script was that we have the Federal Reserve and it's fractional reserve lending practices today. Fractional reserve lending creates money every time a loan is funded, thus inflating the supply. If the money supply was only created by the government printing more dollars then this wouldn't be so bad and actually is potentially necessary in order to maintain enough money supply for trade with a growing GDP.

HOWEVER, a fiat currency system relies on HONEST people to run it which in the end is it's greatest weakness. This is why gold or commodity backed currencies are the most stable since their values are tangible.

Unfortunately, unlike the Colonial times when you had people like Benjamin Franklin and Thomas Jefferson at the helm controlling the money supply of the Colonial Script fiat our dollar is controlled both by PRIVATE and GOVERNMENT interests. Who's interests typically are not of the public.

Dave

[Joe3113]

Easy credit allows the economy to grow easily.

Also steals people's money with the inflation tax. The people who use the money first are the ones who benefit, not the poor people.

[xcalybur]

You know what's crazy to me??? The fact that if all our debt was paid off, we would have no money supply!

You've hit on something Lucid American. The fact is that a fiat money system is worthless, it has no backing of any kind and the proof of that is that the deficit is approximately the same as our total money supply. The cancel each other out, proving that the entire system is based off of debt. The US ecomomy is one gigantic credit card that was given to a homeless person.

[Winston]

Most people simply dont understand what the Gold standard is, or why it is important. In fear of looking ignorant, foolish, or siply to avoid the "work" of having to understand it, they go along with what the perceived "majority opinion" is, which is of course given to all of us through the MSM. The MSM in the hands of a few people who benefit from the Fiat currency then perpetuate the idea that the gold standard is some sort of lunacy.

What they really hate to hear is that we had the gold standard until 1971. It isnt some "ancient relic" of an old economy. It was the standard that ushered in the most prosperous time of our history (50s and 60s). What happened after we converted away from the gold standard?.... the friggin 70s. Yeah.... that was a good idea. :(

[DirtMcGirt]

there should be a percent of gold in reserve to the money that is printed.... that's all you have to explain to them...

[RPinUptownChi]

Its important to note that if the Federal Reserve actually acted in a responsible manner and did not continually bail out big banks that they certainly have the tools to fix the problems they have created...My parents' first mortgage was at like 18% in 1980...there was a time when the federal reserve limited credit b/c that was the right thing to do...but then u had nasty recessions like the one from 68-80 and the s&l crisis...those situations are not politically popular...

bill clinton made the decision at the end of the 90s to juice the economy and fund the first tech bubble and it corrupted the true purpose of the fed...the fed was able to get away with their foolishness for a few years only because of the multi-decade low prices in food and energy commodities at that time...then over the next ten years the establishment has punched in a TON of inflation through 'NON-CORE' (lmfao) inflation...it is the doubling of food prices, metals and run up in energy that has made the 'end-run' around the fed's plan of just printing more money, and there really isn't anything that can be done about it now...its like closing the barn door after the horse has run out...

That's why Ron Paul says 'we have lived beyond our means for some time and now we are going to have to live below our means for a period of time to make it right'...sucks but its true, folks are in denial right now...

[S3eker]

I agree with what you are saying as far as making a competing currency backed by gold/precious metals. Now the follow up question is how do you maintain a real value for the federal reserve currency? (I have given this a lot of thought but would like to hear some ideas.)

The main point of the competing currency theory is for it to be popular over time. Understand that the general populous doesn't know anything about economics, but will learn to appreciate the new money as it is worth more (savings). It would be a gradual change over time (years) as people start wanting the new currency over the old. With that said, there still is a place for fiat money since precious metals are commodities and finite. So where Fiat money is superior, it will prosper (home loans).

Right now, fiat money is the only choice by law. The bad thing is that it doesn't work well in certain circumstances (savings).

[2young2vote]

I don't say he wants to return to the gold standard. I say he wants to allow gold as a form of currency again to help stabilize the dollar.

[JAlli41]

Why do we worship at the tit of GDP in the first place?

as a pol sci student I wonder this all the time... wouldnt it be better if we didnt have as high a gdp but better wealth distribution? who cares how high the GDP is if its all in and out of 3 guys pockets? eventually I would figure we are going to have get away from the tertiary sector of the economy and actually start producing things again at some point

[niall]

I don't advocate the gold standard, and invariably, when people bring up that it "can't work" (not true), I counter with the following:

"Ron is not necessarily in favor of the 'Gold Standard,' he's for competition in currency. He believes that instead of being forced to use a currency that loses 5-10% of its value every year, you should have the choice to use another currency that's a better store of value."

To instantiate the fact that GDP is not growing nearly as fast as the government indicates, below is a chart showing the GDP as prices in ounces of gold. In gold terms, GDP has dropped 50% in the last 6 or 7 years. I'd call that a recession.

http://pricedingold.com/charts/gdp-1947.png

[JohnnyWrath]

Ron Paul simply wants to introduce a competing currency just as JFK did....of course, who is going to want to deal with worthless federal reserve paper if silver/gold certificates come back?

[Broadlighter]

Like the Constitution, the gold standard is inconvenient for those who want to do whatever the hell they want and don't care how it hurts people.

[Seanmc30]

They reject it for the same reason I did at first. Because their history teacher said the gold standard was the "old way to do it". Lew Rockwell writes intensively about it. Coincidentally, most people believe that monopolies in a free market were the soul cause of the depression...no seriously.

The truth is that people reject it because they don't understand it, and the state rejects it because, quite simply, controlling the economy gives them the ability to provide a bull market while they are in office so they may be re-elected.

The gold standard simply provides a currency which cannot be tampered with for political gain....the way it should be. Step 2 is getting the state out of the "free" market. If our politicians don't start leaving the market to fluctuate normally, we are going to have a crash on our hands that rivals the destruction of the Holy Roman Empire.

[Santana28]

because most people are idiots, and the first thing they assume when you say "gold standard" is that he means to abolish all paper bills and credit cards and return us to using gold coins. i kid you not - you dont know how many times i have had to waste more time explaining that moronic idea away, rather than talking about the benefits. people really are dumb.

[ItsJustJosh]

there should be a percent of gold in reserve to the money that is printed.... that's all you have to explain to them...

This IS fractional reserve banking.... the reserve is a fraction of the money in circulation.

[Broadlighter]

The reason colonial scrip worked as well as it did was that it was locally controlled within the colonies. Back then the colonies were not so unified. The face value of the scrip was tied to production levels, so there was a more honest check on inflation.

If we do slide into a deep recession or depression, I think locally controlled scrip might be a good way to get us through the hard times, but for a more lasting recovery, we need to move toward competing currencies and abolish legal tender laws. Legal tender laws, although intended to protect consumers and suppliers, coerce the market into accepting unsound money as an exchange medium.

Competing currencies should give us a limited, yet adequate supply of money. A single standard like Gold may be too limiting and inflexible for the average person.
As history has shown, gold can be controlled by an elite and inflated by mixing it with other metals of lesser value. That's why I support competing currencies. Competition serves as a check and balance against debasing what should function as sound money.