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Thread: The government hasn’t used the gold standard in 1971. Should it be brought back?

  1. #1

    Default The government hasn’t used the gold standard in 1971. Should it be brought back?

    https://govtrackinsider.com/the-gove...ck-79febb057cd

    Apr 27

    Context
    Since the earliest days of America until 1971, the country had used the “gold standard” for money. Under this system, U.S. currency was backed by physical gold, much of which kept in a heavily guarded location in Fort Knox, Kentucky. This was intended to keep the price of money relatively standard and prevent runaway inflation, i.e. one dollar equals x grams of gold.

    With a few exceptions, proponents say the system generally worked. Although the value of a U.S. dollar fluctuated a bit — since preventing that entirely would have been impossible — for the most part those fluctuations were far less than they would be after 1971, when the U.S. fully abandoned the gold standard. (They had partially abandoned it for domestic transactions in 1933, and abandoned the other part — for international transactions — in 1971.)

    In other words, inflation was generally much less. Gold standard supporters note that the two decades in the past century with the highest inflation were the 1910s (when the Federal Reserve was created and started exerting control over the money supply) and the 1970s (when the gold standard ended).

    What the bill does
    H.R. 5404 is a bill introduced by Rep. Alex Mooney (R-WV2) that would bring the U.S. back to the gold standard once and for all. It would take effect exactly 30 months after the bill was passed, to allow an adjustment period in the American economy.

    Interestingly for a Republican-introduced bill, if the bill was enacted any time after July 2018, that 30-month window would come under the administration of the 2020 election winner — possibly a Democrat.

    Mooney claims it’s the first bill introduced in Congress to return to the gold standard since 1984.

    A search of GovTrack’s legislative database provides no evidence to the contrary. Previous House members such as two-time presidential candidate Ron Paul have advocated a gold standard, although it does not appear that Paul ever actually introduced any legislation to that effect after 1984.

    What supporters say
    Supporters argue that many of America’s existing economic problems, such as the sharp decline in manufacturing employment, can be traced to the lack of a gold standard.

    “President Trump has rightly blamed bad trade deals, particularly those with Mexico and China, for contributing to this [American manufacturing] meltdown. But the Federal Reserve deserves a share of the blame, too, since its inflationary policies priced out U.S. manufacturers from global trade,” Mooney wrote in a Wall Street Journal op-ed.

    “Since 2000, their prices have risen nearly 50%, compared with about 25% for German competitors — mirroring the domestic inflation rates in each country.” (The exact U.S. inflation number since 2000 has been 45 percent.) “As a result, manufacturers fled the U.S., much the way American families have fled high-tax states.”

    “The solution is to take control of the money supply away from the Fed and give it back to the American people — in other words, to return to the gold standard.”

    What opponents say
    Opponents argue we abandoned the gold standard decades ago for a good reason, and it would be foolish to return.

    When the Great Depression hit, “People hoarded gold instead of depositing it in banks, which created an international gold shortage,” Federal Reserve vice president and deputy director of research David Wheelock said. “Countries around the world basically ran out of supply and were forced off the gold standard.”

    “The U.S. mines a lot of gold, but we’re not the biggest producer,” Wheelock continued. “The bigger suppliers of gold would have more control over our monetary policy, and there’s no reason to have it because we can get the advantages of the gold standard and avoid the disadvantages without being on a gold standard.”

    Research suggests also that the sharp decrease in domestic manufacturing employment in recent decades is primarily due to other factors, such as automation.

    Odds of passage
    The bill has attracted no cosponsors as of yet — although there are at least a few other Republican Congress members who have previously indicated support for returning to the gold standard, such as Ted Cruz.

    It awaits a possible vote in the House Financial Services Committee.

    This article was written by GovTrack Insider staff writer Jesse Rifkin.

    H.R.5404 - To define the dollar as a fixed weight of gold. - https://www.congress.gov/bill/115th-...ouse-bill/5404
    What is the punishment for the attempted murder of freedom on earth? 👁👁



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  3. #2

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    I think the opposition has some valid points and the Gold Standard seems vulnerable to Panic events or being over-extended as it was internationally.

    Moving forward, it might be simpler to just keep the current system and those with distrust of the Fed can try diversifying with Cryptocurrencies.

  4. #3

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    Quote Originally Posted by VIDEODROME View Post
    I think the opposition has some valid points and the Gold Standard seems vulnerable to Panic events or being over-extended as it was internationally.
    That isn't a problem if you have enough gold to back all your paper/computer entries.

    Quote Originally Posted by VIDEODROME View Post
    Moving forward, it might be simpler to just keep the current system and those with distrust of the Fed can try diversifying with Cryptocurrencies.
    Not without major reforms, cryptos have big problems because they only exist on computer and the Fed's fiat has no controls on its printing.
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  5. #4

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    Ron Paul's competing currencies bill would be a better (ie. more practical) solution to achieve the same ends (sound money monetary constraints). We don't necessarily need a dollar defined as a fixed weight of gold. Just remove the FRN's legal tender monopoly and allow gold/silver to compete on an even playing field in the marketplace.
    I compiled a "brief" history of events since October 2008 that are defining the global currency war and the role that gold is playing:

    Tin Foil Hats, Economic Reality and the Total Perspective Vortex

    Also, have you contacted your Congressional Rep and asked them co-sponsor Ron Paul's Rep. Paul Broun Jr.'s HR 1098 77: Free Competition in Currencies Act?

  6. #5

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    I support Ron Pauls ideas of competing currencies . I already currently practice Bi metalism . I accept silver and gold .

  7. #6

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    Quote Originally Posted by oyarde View Post
    I support Ron Pauls ideas of competing currencies . I already currently practice Bi metalism . I accept silver and gold .
    I will accept any gold or silver coins at their stated face value.
    Quote Originally Posted by NorthCarolinaLiberty View Post

    Half the crap I write here is just to entertain myself.
    I am Zippy and I approve of this post. But you don't have to.

  8. #7

    Default

    Among the several problems with the OP, there's this:

    When the Great Depression hit, “People hoarded gold instead of depositing it in banks, which created an international gold shortage,” Federal Reserve vice president and deputy director of research David Wheelock said. “Countries around the world basically ran out of supply and were forced off the gold standard.”
    There was only a "gold shortage" during the depression in the sense that governments wanted to print money to "reflate" (i.e. artificially prop up through various kinds of subsidies) the otherwise unsustainable production structure which had been built-up during the pre-depression boom (itself caused by the inflationary monetary policy of the "roaring" 20s [thanks NY Fed! ...and Gilt-holders (like J.P. Morgan) thank you!]). Since, under the gold standard, money printing was limited by the quantity of national gold reserves, print-happy government complained of a "gold shortage" - i.e. they didn't have enough gold to allow them to print the money they wanted to print without bleeding gold reserves. Ultimately, many went off gold (defaulted on their obligation to redeem their notes for gold) to facilitate more printing. This was, of course, stupid and destructive and one of the main reasons the depression was so "great."

    Also, the system existing after the Great War was not the classical gold standard. It was something called the gold exchange standard, which was a sort of half measure, somewhere between the true gold standard that had existed before the war and the pure fiat system we enjoy today. The monetary problems of the inter-war period largely revolve around Great Britain's astoundingly stupid monetary policies, which actually brought about a depression in Britain before the rest of the world felt it.

    It's a complex history.

    See Rothbard's History of Money and Banking in the United States (it also covers the international system)
    https://mises.org/library/history-mo...a-world-war-ii

    Anyway, the goal in monetary policy should be to eliminate any role for the government. A denationalized gold standard is the best option. This would mean that the government would release its current gold reserves (assuming it really has any at this point) to dollar-holders at a certain rate (certain weight of gold per dollar) and then be done with it. Any further issuance of demand notes would be by private banks. This system existed briefly in the US during the first half of the 19th century, after the abolition of the second Bank of the United States and before Lincoln's National Banking System (proto-Fed).
    Last edited by r3volution 3.0; 05-02-2018 at 01:35 PM.

  9. #8

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    Quote Originally Posted by Zippyjuan View Post
    I will accept any gold or silver coins at their stated face value.
    I am a little more generous , at this mornings spot price I accept dimes at .97 cents , quarters at 2.43 and halves at 4.85 and pre 1936 undamaged dollars at 14.85 and up depending on condition , yr and mint .
    Do something Danke

  10. #9

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    Our FRNs should be backed by something.


    Don't need a weather man to know which way the wind blows

  11. #10

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    Quote Originally Posted by shakey1 View Post
    Our FRNs should be backed by something.

    I agree . Does not even have to be gold . Pick a metal .
    Do something Danke

  12. #11

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    Quote Originally Posted by oyarde View Post
    I agree . Does not even have to be gold . Pick a metal .

    Beads?
    Do something donnay


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  13. #12

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    Quote Originally Posted by Danke View Post
    Beads?
    One pound of copper beads would be 3.06 at yesterdays close , one ounce of silver beads at today's close 16.50 or 3.06 and 16.50 more than the zero the worthless paper is backed by .
    Do something Danke

  14. #13

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    Quote Originally Posted by Danke View Post
    Beads?
    One pound of copper beads would be 3.06 at yesterdays close , one ounce of silver beads at today's close 16.50 or 3.06 and 16.50 more than the zero the worthless paper is backed by . Palladium up 6.00 today , Platinum up 8.00 , Dow up 300 still off 1800 probably from yearly high with no sign it will reach it again and inflated P/E ratios .
    Do something Danke






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