Gary North: “A government-guaranteed gold standard is a fool’s gold standard”

[FauxCapitalist]

Source: http://fauxcapitalist.com/2010/12/29...gold-standard/

On December 27, 2010, Gary North set the stage for a face-saving retreat of support for the gold standard that has gained so much support and sway among many alternative economics circles and individuals in the past few years, as its deficiencies continue to be exposed.

“But advocates of “the gold standard” almost always mean “a government-guaranteed gold standard.“

“Over and over, I have returned to this theme: a government-guaranteed gold standard is a fool’s gold standard. I have had great trouble in getting this idea across.“

That’s because the free market standard you advocate isn’t a gold standard, since there’s no standard being set relative to gold itself.

In my opinion, I think you’re trying to save face for the notion that a gold standard is a sound economic alternative to the current system, by co-opting the vast majority of gold standard backers who have advocated the government-guaranteed gold standard you admit is a fool’s gold standard. That way, they can continue to feel secure in advocating a gold standard, so long as it’s the one that you allege is a proper gold standard.

“Conservatives who have never read Mises or Rothbard on money nevertheless regard themselves as free market economists, because they favor a government-guaranteed gold standard. Such a standard has not existed anywhere since 1933, and did not exist anywhere else, 1914-1933.“

Thank you, Gary, for setting the record straight that the gold standard prominently promoted as a return to “honest money” and “sound money,” has barely existed throughout history, and is a proven failure.

[Seraphim]

I feel no need to have a government forced gold standard, because among a basket of other similarly valued/desired commodities--- the market place would WILLINGLY choose gold as a staple of monetary exchange.

[Sola_Fide]

Man, Gary hit the nail on the head with this one:

http://www.lewrockwell.com/north/north924.html

All the Tea Party guys promoting a "gold standard" need to read that article to understand what a true free market in money is.

[heavenlyboy34]

"Thank you, Gary, for setting the record straight that the gold standard prominently promoted as a return to “honest money” and “sound money,” has barely existed throughout history, and is a proven failure."
WTF? That's not even close to what North said, and you're dead wrong that it is a "proven failure". It only "fails" to the extent that it is trusted to governments. Governments inevitably debase currency. Fiat currency always returns to its real value-zero. Read "The Case For Gold" by Ron Paul for a detailed explanation.

[FauxCapitalist]

"Thank you, Gary, for setting the record straight that the gold standard prominently promoted as a return to “honest money” and “sound money,” has barely existed throughout history, and is a proven failure."
WTF? That's not even close to what North said, and you're dead wrong that it is a "proven failure". It only "fails" to the extent that it is trusted to governments. Governments inevitably debase currency. Fiat currency always returns to its real value-zero. Read "The Case For Gold" by Ron Paul for a detailed explanation.

A government-backed gold standard is what I'm referring to when I say "is a proven failure," since that's the one he's taking exception with.

Anyone care to argue, as he does, that his free market standard is a gold standard? I don't see anything in his system that makes gold a standard. Whether gold becomes the primary money in such a system is a separate matter -- that's by free choice, not a standard.

[Sola_Fide]

A government-backed gold standard is what I'm referring to when I say "is a proven failure," since that's the one he's taking exception with.

Anyone care to argue, as he does, that his free market standard is a gold standard? I don't see anything in his system that makes gold a standard. Whether gold becomes the primary money in such a system is a separate matter -- that's by free choice, not a standard.

Meh. I think you are getting caught up in verbiage...

The "chosen market standard" has been gold for thousands of years.

[hugolp]

A government-backed gold standard is what I'm referring to when I say "is a proven failure," since that's the one he's taking exception with.

Anyone care to argue, as he does, that his free market standard is a gold standard? I don't see anything in his system that makes gold a standard. Whether gold becomes the primary money in such a system is a separate matter -- that's by free choice, not a standard.

So if a 99% of a country is using gold as money voluntarely is not a gold standard? As AquaBuda said you are getting caught with semantics.

As a personal note, it seems to me you have a irrational hate for the words "gold standard", why?

[FauxCapitalist]

So if a 99% of a country is using gold as money voluntarely is not a gold standard? As AquaBuda said you are getting caught with semantics.

As a personal note, it seems to me you have a irrational hate for the words "gold standard", why?

From Gary North himself:

"Something close to a free market gold standard existed in California in 1849-54. That is about the only place it has ever existed."

Note how he says "something close" to a free market gold standard, and how it only lasted five years in a single sparsely populated (at the time) state of the U.S.

That is hardly a representative sample to make judgments about gold being adopted as a free market standard in 2010 or beyond.

[low preference guy]

From Gary North himself:

"Something close to a free market gold standard existed in California in 1849-54. That is about the only place it has ever existed."

Note how he says "something close" to a free market gold standard, and how it only lasted five years in a single sparsely populated (at the time) state of the U.S.

That is hardly a representative sample to make judgments about gold being adopted as a free market standard in 2010 or beyond.

You know nothing about the proper methodology of economics. In economics, you don't make judgments based on "representative samples", but based on economic theory.

[FauxCapitalist]

You know nothing about the proper methodology of economics. In economics, you don't make judgments based on "representative samples", but based on economic theory.

Since you claim to know about economics, you'd know that it's considered a social science, and that as such, personal attacks like yours are unscientific because they're fallacious.

There are lots of economic theories, some accepted and some rejected. The theory of perfect competition is rejected by the Austrian School but promoted by the Chicago school, both claiming to promote personal economic freedom.

Try explaining your theory instead of resorting to personal attacks.

[sevin]

All the Tea Party guys promoting a "gold standard" need to read that article to understand what a true free market in money is.

Man, I've been telling this to everybody and they look at me like I'm crazy. "Wouldn't a gold standard fix things?" they say.

NO.

Not a government-controlled gold standard. That would not fix things. But they'll sell it to the right wingers and wanna-be libertarians all the while telling them, "This is what you want."

[hugolp]

From Gary North himself:

"Something close to a free market gold standard existed in California in 1849-54. That is about the only place it has ever existed."

Note how he says "something close" to a free market gold standard, and how it only lasted five years in a single sparsely populated (at the time) state of the U.S.

That is hardly a representative sample to make judgments about gold being adopted as a free market standard in 2010 or beyond.

You did not answer my question.

[FauxCapitalist]

You did not answer my question.

I answered how I did because I didn't find the need to respond to a hypothetical question when I showed from Gary North's own words that the exact system he proposed hasn't existed, so it's dealing in speculation to be talking about what may be adopted as a market standard in it.

He also said there would be a silver standard, so why didn't he call it a free market silver standard? It seems to me that would be equally valid according to his logic, but for some reason he decided to call it a free market gold standard. Later, he specifically says a free market gold coin standard, so now we're up to at least four possible market standards according to him.