Is it time to return to the gold standard?

[Nowhere Man]

So, a few years ago I started going back to college. I took a Macro Econ. course and my Professor predicted the depression we are in. He said that the solutions that the government will come up with will only work temperarilly. He was a big suporter of Mises and not Keynes. He showed us a video that I found very interesting. I have been looking for this video for quite a while and I finally found it. It is about 45 minutes long and is from around the mid 90s, but still relevant.

Here is the video:

http://www.youtube.com/watch?v=m2pxW7D1Vao&feature=fvsr

I don't agree with the notion that The New Deal did noithing to help the economy and I don't agree that there should be no regulation, but I do think there should be a return to the gold standard and I do believe we can find a better balance between regulation and the free market. I believe having a gold standard would force the government to raise taxes to pay for things like war. This would mean that they could not go to war constantly because they would not want want to raise taxes.

I know I am going to take heat for my opinions and expect that most of you may not agree. So the question is, can we find a better balance and do we need to return to the gold standard?

 

[Alidar Jarok]

Returning to the gold standard dramatically limits our ability to produce wealth and still does very little to address currency fluctuations. Instead of a free market for currency, our value will rise and fall with the free market price of gold. Fiat currency and trade deficits, in a fair fight, offset due to the free market.

In other words, going to a gold standard will probably be counterproductive. What needs to be done is preventing currency manipulation by countries who withhold it from the free market.

 

[Trekker4747]

Doing such a thing would benefit Glenn Beck. I can think of no better reason to NOT go back to the "gold standard."

 

[Nowhere Man]

Returning to the gold standard dramatically limits our ability to produce wealth and still does very little to address currency fluctuations. Instead of a free market for currency, our value will rise and fall with the free market price of gold. Fiat currency and trade deficits, in a fair fight, offset due to the free market.

In other words, going to a gold standard will probably be counterproductive. What needs to be done is preventing currency manipulation by countries who withhold it from the free market.

So, instead we have our money backed by nothing other than our "faith" in the currency? We then just borrow money to no end and allow the banks to continuously rape us time after time. Meanwhile, the Fed has full control over our monetary system driving up inflation by printing money. The government can wage as much war as it wants without being truly held responsible. We've been off the gold standard since Nixon and look what it's gotten us. Another depression and a declining dollar.

 

[Alidar Jarok]

Our money is backed by the international market. Our currency's value is more important related to other currencies, not value relative to chunks of metal.

Don't try to argue that the gold standard prevents depression, since it didn't prevent the last one (also, although I'm not positive about the distinction, we're not in a depression right now and we're technically out of the recession).

 

[Nowhere Man]

Our money is worthless, it is only paper backed by the faith we have in the United States and the belief our bonds will be paid back. China buys our bonds in the belif that the United States will continue to be productive. When they buy it cheap, they expect to sell it later and get their money back plus interest. Our dollar is declining because people are losing faith in the United States.

We are never going to pay that money back and soon China will catch on. They will stop loaning us money and more and more countries will lose faith in our dollar. The dollar will fail and we will be in deeper shit than we are now. Our dollar bieng backed by nothing but faith, doesn't work. The government will continue to print more money, causing inflation and so the cycle never ends.

Having money backed by gold limits the government on what they can and can't do. It also limits banks. They have to have 100% of the amount of gold in thier vaults. The depression came when a man walked into the bank and asked for his money and they didn't have enough in gold to give him. He then went and spread the word. More and more people went to get thier money out and the banks couldn't give people their money because they weren't bieng required to have 100% of holding backed in gold. Gold has been a sucessful use of curency for thousands of years, it's only till the twentieth century that it changed.

We are in a depression, not a recession. They just don't call it that because it would cause panic. The population is bigger, so the country can handle it better, but it is a depression. If you think it's over, you obviously haven't heard that there is 10% unemployment now. It's only going to get worse. If the recession is over, it sure doesen't seem like it.

 

[Alidar Jarok]

We aren't in a recession, look up its definition. You can argue whether or not we're in a depression, since I'm not sure the definition, but we were in a recession and now we are not.

Once again, if our currency drops too low, we can respond due to market pressures. We have incentives to pay back debt and not print money to an excessive degree. We have people in charge of managing these things who know what they're doing.

The Great Depression was a bit more complicated than a run on some bank with insufficient gold reserves. These days, FDIC addresses the issue of insufficient capital on hand anyway. I think switching to a gold reserve would lead to more harm than good, especially since gold isn't a non-fluctuating standard either.

 

[Nowhere Man]

You are right we are not in a Recession. As I said, we are in a Depression. I did look it up in my old Economics text book, circa 2006. Recent enough. Economics: A Contemperay Introduction, by, William A. Mceachern.2006.

Recession: A decline in an economy's total output lasting at least two consecutive quarters.

Depression: A sharp reduction in an economy's total output accompanied by high unempoyment lasting more than one year; a severeeconomic contractioin.

We have been in a depression the whole time.

Gold Standard: An arrangement whereby the currencies of most countries are convertable into gold at a fixed rate.

 

[Robert Maxwell]

Our money is worthless, it is only paper backed by the faith we have in the United States and the belief our bonds will be paid back. China buys our bonds in the belif that the United States will continue to be productive. When they buy it cheap, they expect to sell it later and get their money back plus interest. Our dollar is declining because people are losing faith in the United States.

We are never going to pay that money back and soon China will catch on. They will stop loaning us money and more and more countries will lose faith in our dollar. The dollar will fail and we will be in deeper shit than we are now. Our dollar bieng backed by nothing but faith, doesn't work. The government will continue to print more money, causing inflation and so the cycle never ends.

Having money backed by gold limits the government on what they can and can't do. It also limits banks. They have to have 100% of the amount of gold in thier vaults. The depression came when a man walked into the bank and asked for his money and they didn't have enough in gold to give him. He then went and spread the word. More and more people went to get thier money out and the banks couldn't give people their money because they weren't bieng required to have 100% of holding backed in gold. Gold has been a sucessful use of curency for thousands of years, it's only till the twentieth century that it changed.

We are in a depression, not a recession. They just don't call it that because it would cause panic. The population is bigger, so the country can handle it better, but it is a depression. If you think it's over, you obviously haven't heard that there is 10% unemployment now. It's only going to get worse. If the recession is over, it sure doesen't seem like it.

All of this is a paranoid conspiracy theory and that's as much as I'm going to say about it.

 

[Nowhere Man]

Our money is worthless, it is only paper backed by the faith we have in the United States and the belief our bonds will be paid back. China buys our bonds in the belif that the United States will continue to be productive. When they buy it cheap, they expect to sell it later and get their money back plus interest. Our dollar is declining because people are losing faith in the United States.

We are never going to pay that money back and soon China will catch on. They will stop loaning us money and more and more countries will lose faith in our dollar. The dollar will fail and we will be in deeper shit than we are now. Our dollar bieng backed by nothing but faith, doesn't work. The government will continue to print more money, causing inflation and so the cycle never ends.

Having money backed by gold limits the government on what they can and can't do. It also limits banks. They have to have 100% of the amount of gold in thier vaults. The depression came when a man walked into the bank and asked for his money and they didn't have enough in gold to give him. He then went and spread the word. More and more people went to get thier money out and the banks couldn't give people their money because they weren't bieng required to have 100% of holding backed in gold. Gold has been a sucessful use of curency for thousands of years, it's only till the twentieth century that it changed.

We are in a depression, not a recession. They just don't call it that because it would cause panic. The population is bigger, so the country can handle it better, but it is a depression. If you think it's over, you obviously haven't heard that there is 10% unemployment now. It's only going to get worse. If the recession is over, it sure doesen't seem like it.

All of this is a paranoid conspiracy theory and that's as much as I'm going to say about it.

These are facts, not theory. And how it a conspiracy, i'm conspiring with anyone?

 

[Alidar Jarok]

Gold Standard: An arrangement whereby the currencies of most countries are convertable into gold at a fixed rate.

So we would need most countries in the world to return to the standard, not just us?

Also, gold standard would hurt unemployment, for what it's worth. It would restrict flow of wealth and make it harder for more people to gain disposable income. That would reduce amounts people can spend, which will limit business growth who will then freeze hiring new employees.

 

[Robert Maxwell]

Our money is worthless, it is only paper backed by the faith we have in the United States and the belief our bonds will be paid back. China buys our bonds in the belif that the United States will continue to be productive. When they buy it cheap, they expect to sell it later and get their money back plus interest. Our dollar is declining because people are losing faith in the United States.

We are never going to pay that money back and soon China will catch on. They will stop loaning us money and more and more countries will lose faith in our dollar. The dollar will fail and we will be in deeper shit than we are now. Our dollar bieng backed by nothing but faith, doesn't work. The government will continue to print more money, causing inflation and so the cycle never ends.

Having money backed by gold limits the government on what they can and can't do. It also limits banks. They have to have 100% of the amount of gold in thier vaults. The depression came when a man walked into the bank and asked for his money and they didn't have enough in gold to give him. He then went and spread the word. More and more people went to get thier money out and the banks couldn't give people their money because they weren't bieng required to have 100% of holding backed in gold. Gold has been a sucessful use of curency for thousands of years, it's only till the twentieth century that it changed.

We are in a depression, not a recession. They just don't call it that because it would cause panic. The population is bigger, so the country can handle it better, but it is a depression. If you think it's over, you obviously haven't heard that there is 10% unemployment now. It's only going to get worse. If the recession is over, it sure doesen't seem like it.

All of this is a paranoid conspiracy theory and that's as much as I'm going to say about it.

These are facts, not theory. And how it a conspiracy, i'm conspiring with anyone?

They aren't "facts," they're conclusions you're drawing based on an absolute worst-case scenario while lacking insufficient information or expertise to make such judgments. It sounds like your economics professor fed you a bunch of bull and you just accepted it. Having known my share of economics professors I would warn you that economists are notorious for speaking in certainties and absolutes when reality is anything but.

 

[Nowhere Man]

^ Enlighten me, what is our money backed by?

 

[auntiehill]

The Great Depression was a bit more complicated than a run on some bank with insufficient gold reserves. These days, FDIC addresses the issue of insufficient capital on hand anyway. I think switching to a gold reserve would lead to more harm than good, especially since gold isn't a non-fluctuating standard either.

^This. The Gold standard is NOT the answer, not by a long shot.

Gold is limited in its supply and its price fluctuates fairly dramatically--not to mention that credit would become even tighter under that system, as governments won't have the ability to print money when the economy needs it.

At least that's my .02 cents (cash).

 

[Alidar Jarok]

^ Enlighten me, what is our money backed by?

I already said market forces, but regulatory agencies who ensure trust is another. It's backed significantly by our credibility, yes, but the people who manage this aren't idiots. Short of total economic collapse, our money won't collapse. And if we do collapse, gold won't save us. Collapse of the dollar equals collapse of all currencies in the world, which will leave us as relative equals (so we'd be fine). If we had a gold currency in a scenario of total collapse, it would drop in value too as no one would have any purchase power to buy the gold.

Gold is worth a subjective value too. At least buying and trading currencies allow them to stay relatively close around each other. All it would take to destroy our economy with gold is a massive discovery of gold somewhere.

 

[Nowhere Man]

Gold Standard: An arrangement whereby the currencies of most countries are convertable into gold at a fixed rate.

So we would need most countries in the world to return to the standard, not just us?

Also, gold standard would hurt unemployment, for what it's worth. It would restrict flow of wealth and make it harder for more people to gain disposable income. That would reduce amounts people can spend, which will limit business growth who will then freeze hiring new employees.

Yes most countries would have to follow our lead, but they usually do that anyway. Yes, there would be less credit, but it would force companies to limit their expenditures. Ultimately it would lead to more small business'. It would require a lot of trust busting. There might be unemployment at first, but theres already unemployment. There is a way to ease us back into the system. There are other precious metals such as silver and copper. I think a combination of gold and silver standard would free up the suply. Less credit; but companies, governments and people would live within their means. Save and spend rather than borrow and spend.

 

[Nowhere Man]

^ Enlighten me, what is our money backed by?

I already said market forces, but regulatory agencies who ensure trust is another. It's backed significantly by our credibility, yes, but the people who manage this aren't idiots. Short of total economic collapse, our money won't collapse. And if we do collapse, gold won't save us. Collapse of the dollar equals collapse of all currencies in the world, which will leave us as relative equals (so we'd be fine). If we had a gold currency in a scenario of total collapse, it would drop in value too as no one would have any purchase power to buy the gold.

Gold is worth a subjective value too. At least buying and trading currencies allow them to stay relatively close around each other. All it would take to destroy our economy with gold is a massive discovery of gold somewhere.

If the countries of the world agree on the echange, the the rate will be fixed. There is only so much gold in the universe, that's why it's worth something. Think of it like comic books, only the rare ones are worth something. When they came out with special editions or some bullshit, it was only worth something because Marvel or DC said it was. When everyone has a copy of the same book, it's not worth shit.

Another form of economy is a resouce based economy.

http://www.thevenusproject.com/a-new-social-design/resource-based-economy

 

[SPOCKED]

Doing such a thing would benefit Glenn Beck.

Which could mean more Restore Honor/8-28 rallys!! Bring on the gold standard woooooo!!

 

[Nowhere Man]

All of this is a paranoid conspiracy theory and that's as much as I'm going to say about it.

These are facts, not theory. And how it a conspiracy, i'm conspiring with anyone?

They aren't "facts," they're conclusions you're drawing based on an absolute worst-case scenario while lacking insufficient information or expertise to make such judgments. It sounds like your economics professor fed you a bunch of bull and you just accepted it. Having known my share of economics professors I would warn you that economists are notorious for speaking in certainties and absolutes when reality is anything but.

Did I mention he predicted the financial crisis in 2006. He said to me in a discussion outside of class in sometimes in class that the housing market would cause a financial crisis worse than the depression. He laid it all out as it has played out now. He said it would be in two years(2008) and said that the government will do things that apear to work, but will fail. This is what is happening now.

I didn't believe him at first either, but I gave him the benifit of the doubt and sure enough it eventualll, bit by bit came true. You don't believe me now, but you will see. My friends and family didn't believe it either when I told them, they believe it now. He warned that the dollar would fail and suggested investing in gold. Good money always drives out bad, thats why gold will be back as the standard. This is not just his idea, but many economists believe this. This is the leading idea in many colleges and universities, not just that one. Don't take my word though, check it out yourself. I provided one video. You can go to the mises institute web site and other sites.

 

[Robert Maxwell]

These are facts, not theory. And how it a conspiracy, i'm conspiring with anyone?

They aren't "facts," they're conclusions you're drawing based on an absolute worst-case scenario while lacking insufficient information or expertise to make such judgments. It sounds like your economics professor fed you a bunch of bull and you just accepted it. Having known my share of economics professors I would warn you that economists are notorious for speaking in certainties and absolutes when reality is anything but.

Did I mention he predicted the financial crisis in 2006. He said to me in a discussion outside of class in sometimes in class that the housing market would cause a financial crisis worse than the depression. He laid it all out as it has played out now. He said it would be in two years(2008) and said that the government will do things that apear to work, but will fail. This is what is happening now.

I didn't believe him at first either, but I gave him the benifit of the doubt and sure enough it eventualll, bit by bit came true. You don't believe me now, but you will see. My friends and family didn't believe it either when I told them, they believe it now. He warned that the dollar would fail and suggested investing in gold. Good money always drives out bad, thats why gold will be back as the standard. This is not just his idea, but many economists believe this. This is the leading idea in many colleges and universities, not just that one. Don't take my word though, check it out yourself. I provided one video. You can go to the mises institute web site and other sites.

So? I predicted the housing/financial crisis a few years earlier than that. Clearly, I'm smarter than he is. You should thus listen to me, as my predictive powers are superior.