The use of silver and gold in fractional amounts in coinage is ok, until the cost of production alters, therefore making the coins more/less expensive to mint. This was the problem with the 1966 50, to take an example. I can't see any problem with issuing coins made from cheap alloys as they currently do, and using notes as long as they are backed and are tradeable bills of exchange in place of gold. This way you don't need a bimetallic standard (both Ag and Au) and the associated problems it brings. Just stick with gold as money.
Here's a video I just watched: "This Is What Going to the Gold Standard Looks Like " from Bloomberg. http://www.bloomberg.com/video/this...andard-looks-like-RBpZnJY1SHyf4_6lmKhEig.html They give 2 options. 1) deflate the currency (not likely) and 2) buy more gold (with what?). They fail to mention option 3, revalue the dollar relative to gold. Using the figures supplied in the video, if they chose option 3 then we would see a gold price of $9695.35 per ounce. In 1933 they chose option 3.
Bad money drives out good money. That's what is happening. Fiat currency , government enforce currency drive gold away. Fiat currency is much easier to obtain. It makes Government easier to borrow and it can be expanded infinitely at will. That is why we have too much debt today. Thats how asset price like house and food getting expensive. People have the perception that they won't fall. We are inflating a burst bubble today. Going back to gold standard means stop inflating the deflated bubble. It discourages government spending recklessly and limit the inflation. But will induce instant chaos. Many promises cannot be made. Medicare, retirement fund, social security, education, they cannot delivered them without going deeper into debt. If we continue with fiat currency, we are saving the current generation at the expense of killing future ones. If we rJeturn back to gold standard, we will face an instant depression, but future generation will have hope.
That video shows how impossible it is for the US dollar to be backed by gold because of the trillions of dollars out there. Just wondering if there is any currency in the world which could go to a gold standard?
So what is stopping them from raising the price of gold so that it does cover the amount of fiat thats in circulation Then they won't have to buy any
The way I see it is that being pegged to gold would stifle flexibilty to adjust to global markets and other events (war, famine, flood, drought etc). Other major countries would have to be on a gold standard or have a stable financial system too and that will never happen. The world has become too populated and complex. It would be like the Greeks who are pegged to the Euro but unable to print it to get out of trouble! If they still had the drachma they could devalue it and make their exports more competitive. I agree though, something has to change.
As promised please see http://forums.silverstackers.com/message-396711.html#p396711 for discussion on return to sound money.
