A few Gold Standard and FED question.

[UMULAS]

I ask these questions not because I was too lazy to read a few recommended econ books or google them, but because I couldn't find any information on the questions.

1_ How do we print gold certificate notes?

Since we would authorize the gold and silver standard, how would we print certificates? Would it be that we would just have more value of the gold and silver by having more certificates?

2 _And how would we know the number of certificates that are in the cycle?

Since certificates can get old and get worn out (cut, ripped lost..), how would we know when to make the exact same number again? Since I understood of the idea of bullionism during the mercantilism of the colonies, they would always have a shortage on money, but since it was backed by gold, when and how would it be appropriate to print money and giving the "right" value. (Please don't say commodity trading).

3_ Even though there is no gold standard, why do countries fight about gold? I understand that gold = power, but if no country uses it as legal tender, what's the big fight about it?

4_ If FDR banned purchasing of gold, was there no gold standard during Reconstruction and WW2 to allow high inflation to support the wars and construction? (Also, since gold was fixed to $20 and then to $35 in the 1930's, was FDR buying gold in order to make sure there would be no depression by people supporting the legal tender of the US dollar since people after the roaring 20's gave up on the dollar due to high interest rates and other factors?)

5_ If we were to trade internationally with other "gold standard" and non gold standard countries, currencies would be traded by per exchange rate right?

6_ Let's give this account that I was thinking on balanced trading:

Country A and B have gold standards

Country A made a new boom by having a new invention. Country B citizen's buy Country A inventions, gold flow goes to country A. When country A received the gold, it causes inflation, causing higher prices for the country, and in country B, lower prices.

Did A profit by having gold causing them the ability to have purchasing power to buy stuff from Country B, but have inflation? And does Country B have a weaker economy since the have less gold? If there is less gold, then there is lower prices, but more gold is higher prices. So does gold^amount = inflation prices (basically, if countries have less gold, how is that good)? (( I mean, it did cause monetary and non monetary shocks.))

But on the other hand, gold = power = purchasing power = higher GDP

7_ For most countries in the 19th century, they had faster inflow of gold by putting higher interest rates to their bank members to get gold and lowered rates sometimes to prevent gold flow. How would we not use a federal bank in order of having a balance of in and out flow? Would we just allow the banks to play true capitalism and allow them to rise and fall and allow natural flows of gold by the market?

[Acala]

I ask these questions not because I was too lazy to read a few recommended econ books or google them, but because I couldn't find any information on the questions.

1_ How do we print gold certificate notes?

Since we would authorize the gold and silver standard, how would we print certificates? Would it be that we would just have more value of the gold and silver by having more certificates?

2 _And how would we know the number of certificates that are in the cycle?

Since certificates can get old and get worn out (cut, ripped lost..), how would we know when to make the exact same number again? Since I understood of the idea of bullionism during the mercantilism of the colonies, they would always have a shortage on money, but since it was backed by gold, when and how would it be appropriate to print money and giving the "right" value. (Please don't say commodity trading).

3_ Even though there is no gold standard, why do countries fight about gold? I understand that gold = power, but if no country uses it as legal tender, what's the big fight about it?

4_ If FDR banned purchasing of gold, was there no gold standard during Reconstruction and WW2 to allow high inflation to support the wars and construction? (Also, since gold was fixed to $20 and then to $35 in the 1930's, was FDR buying gold in order to make sure there would be no depression by people supporting the legal tender of the US dollar since people after the roaring 20's gave up on the dollar due to high interest rates and other factors?)

5_ If we were to trade internationally with other "gold standard" and non gold standard countries, currencies would be traded by per exchange rate right?

6_ Let's give this account that I was thinking on balanced trading:

Country A and B have gold standards

Country A made a new boom by having a new invention. Country B citizen's buy Country A inventions, gold flow goes to country A. When country A received the gold, it causes inflation, causing higher prices for the country, and in country B, lower prices.

Did A profit by having gold causing them the ability to have purchasing power to buy stuff from Country B, but have inflation? And does Country B have a weaker economy since the have less gold? If there is less gold, then there is lower prices, but more gold is higher prices. So does gold^amount = inflation prices (basically, if countries have less gold, how is that good)? (( I mean, it did cause monetary and non monetary shocks.))

But on the other hand, gold = power = purchasing power = higher GDP

7_ For most countries in the 19th century, they had faster inflow of gold by putting higher interest rates to their bank members to get gold and lowered rates sometimes to prevent gold flow. How would we not use a federal bank in order of having a balance of in and out flow? Would we just allow the banks to play true capitalism and allow them to rise and fall and allow natural flows of gold by the market?

Ron Paul's proposal (which I believe originated with Hayek) is to have freedom to choose your currency, not a forced gold standard. People could use whatever they want to use for currency without legal or tax penalties. With history as a guide, it is likley that many people would choose gold and or silver. Whether or not people would accept certificates supposedly representing some amount of gold or silver would be thier choice. I think once again that history suggests that people would demand the actual coinage.

The market is perfectly capable of regulating the quantity and value of money without government control.

Countries fight about gold because the folks who are really in power know that gold is the ultimate money. Everything else is smoke and mirors. And, by the way, you haven't even begun to see the fighting about gold. Just watch.

FDR banned the holding of gold by private citizens because he needed to force real money out of circulation to make way for unrestricted expansion of fiat currency.

Individual traders would decide what currency they would use in international trade. But an ounce of gold is an ounce of gold the world over for all time. So, what's the problem?

I don't understand question 6.

There is no need to manage the movement of real money in a system of free trade and interest rates set by the market. And banks should be nothing more than warehouses.

[UMULAS]

Thanks for answering the questions.

But for #2, you said the market is capable. But how would we know if we have counterfeiters in the currency(ies) and how would we pay our taxes? Plus, how would we know that we have too much money in the circulation or too less?

[Acala]

Thanks for answering the questions.

But for #2, you said the market is capable. But how would we know if we have counterfeiters in the currency(ies) and how would we pay our taxes? Plus, how would we know that we have too much money in the circulation or too less?

It is MUCH harder to counterfeit gold than paper. But why would you think counterfeiting would be treated any differently with metallic currency?

Why would you not be able to pay taxes in gold or silver? There were taxes LONG before there was paper money.

How do we know if there are too many bed sheets or door knobs or ipads in circulation? The market is SUPERBLY effective at allocating resources through the price mechanism. The exchange value of real money is determined by supply and demand just like everything else. A shortage results in the value going up, a surplus results in the value going down. It is self-regulating.

[UMULAS]

I UNDERSTAND, THANKS!

(Well for the time being, but thanks!)