http://www.thenewamerican.com/econo...bes-return-to-gold-standard-within-five-years If this were to occur then those that have a stack of gold will be happy as Larry. Hi, my name is Larry (Leisure suit Larry for those that aren't old skool gamers) Source: http://jaybot7.com
problem with the gold standard is that you cannot live beyond your means. Well this actually is the good thing, but will mean the same thing as austerity. If it was going to happen i'm sure we'd see them using thier large army to pillage gold from a few of the weaker countries who have decent stacks of it. Sounds very barbarack and uncilvilised, civilization really is a coat of paint thin.
but, some commentators argue a gold standard reduces the occurrence of wars. you can't have a perpetual war as the US has had say in the middle east if it costs you a tonne of gold a day. "Now, when an army of one hundred thousand is raised and dispatched on a distant campaign, the expenses borne by the people together with disbursements of the treasury will amount to a thousand pieces of gold daily. In addition, there will be continuous commotion both at home and abroad, people will be exhausted by the corvee of transport, and the farm work of seven hundred thousand households will be disrupted." Sun Tzu Source: http://georgewashington2.blogspot.com/2010/11/military-strategists-have-known-for.html
I can't help but think this is problem-reaction-solution. Interest rates did not need to be so low to cause the US housing bubble. The excess printing did not need to be so bad that the US$ is crashing. The debt did not need to be so high. I doubt we would go to a gold standard because the problems with that are well known. The only thing left is the Freegold idea. Sounds like the plan all along.
This is exactly right! Nixon dropped the gold standard in 1971 because he wanted to be able to spend money the US never had for the Vietnam war. Throughout history this same pattern has emerged where governments use inflation to pay for war ... which basically comes down to the fact that a new and insidious tax - called inflation - is specially engineered by governments in order to steal money from its citizens and then this stolen money can then be used to wage war as well as any other hairbrained schemes the government sees fit. This is the very reason that i'm a libertarian and hate big government! They're a cancer ...
A gold standard will not change things in itself. So much goes into how it is structured, with what % backing, ending the Fractional reserve system of banking etc. Letting it circulate as gold, or just bank notes 'backed by gold' Because in a way the us dollar is currently backed by gold as the dollar is backed by the assets of the nation which include some 8000+ tonne of gold. (maybe??). The key thing that I think everyone refers to when they say a gold standard is actually 'redeemable'. In that the dollar is redeemable for gold at a set price. I am pro Redeemable currency and pro ending fractional reserve banking. Let us not confuse this important distinction, because in the coming years as the idea of a gold standard picks up pace and debate intensifies, the sheeple will have to be educated and you can rest assured that the Mainstream will spread disinformation, it will be up to those wiser among us to share the knowledge and try and steer the discussion to what is good for society, not what is convenient for the Gubbermint.
Zimbabwe Says Days Of The US Dollar Are Numbered, Pushes For Gold-Backed Local Currency - Zero Hedge :lol:
The key to redeemability is ensuring that there is enough faith in the currency that people won't feel compelled to redeem notes for specie. This allows a fractional reserve system so that gold doesn't need to be valued at $55,000 an ounce etc - a gold standard could be introduced with gold at $1500/oz with the correct monetary policies that ensured the integrity of the currency would not be undermined by egregious "printing". So the USD could go on the gold standard, backed by only $360 billion in gold at today's value, if there were the correct mechanisms in place. I need to do some more reading on how a gold standard could impact M3.
Exactly GP. So it would need to be set at a level that gives people confidence in the dollar. I suppose in a perfect world you would have 100% backing with redeemability. i.e. For every dollar created there would be gold in a vault somewhere to be 'redeemed'. Let us know what you find on how it would affect M3. I think it is a very complex issue that could not be resolved in a few paragraphs.
The problem with a redeemable standard is that what we now see as price volatility, turns into a redeemanbility volatility. So when confidence in the political/financial/etc.. system drops, rather than a price increase, we have a reedemabililty increases, and vice versa. And what is the get out of trouble card for a govvie lacking a printing press? Confiscation... At least in the fiat system, there is less incentive for the govvie to confiscate gold, as they can inflate the money supply to get out of trouble, without the political fallout..
That, and the fact the France was attempting to redeem their dollar holdings in gold...even a devalued gold...but it was gold the US didn't have...that was the catalyst for going off the Gold standard!
