Is it time to return to the gold standard?

[Robert Maxwell]

I'm not preaching a belief, i'm telling facts. I've seen no argument that others have offered that is clear and logical. I think history has proven that the current system has not worked. I put a poll because I do want to know other peoples opinions. Has anyone actually took the time to watch the video? Maybe they would understand better what it is i'm talking about. Furthermore, what makes everyone so sure that I am so wrong anyway?

The current system has produced and distributed more wealth than any previous system--perhaps all prior systems combined. Do you think it's a coincidence that the enormous expansion of the post-WWII global economy coincides with the world's largest economies dropping the gold standard? I don't.

Yeah, we have downturns and recessions and uncertainty, but it's foolish to pretend those same things didn't happen under the gold standard.

What you want is to return to a system that limits the creation of wealth and controls inflation while providing no other benefits. If you want to reduce living standards across the globe, by all means, bring back gold!

What you're doing right now is judging the past 60 years of economic development through the lens of current economic turmoil. Because we're in a rough spot right now you just assume the whole system "doesn't work."

Few things are as annoying as people coming in with judgments and opinions and calling them "facts." You haven't presented any compelling facts to encourage a return to the gold standard. The world's economy experienced unprecedented expansion after going off the gold standard. That's a fact.

I don't understand what you are saying. Yes, wealth has been created, that is false wealth generated by a fiat currency system which has caused the false belief of a prosperous currency!

I'm just gonna stop you right there. "False wealth." Yeah, lord knows last time I tried to spend my worthless "fake money" made out of paper, I was told it wasn't real so I couldn't buy anything.

And my car and everything in my apartment just went *poof* because it realized it was purchased with "fake" money.

You seem to have a very, very basic understanding of the nature of fiat money and how it works. And as they say, a little knowledge can be a dangerous thing. Case in point.

 

[Nowhere Man]

Bernankie is following the failed policies of his predicessor

You attribute the state of our current economy entirely to the policy of not using a gold standard? You realize things are more complicated than that. Are you able to separate all other policies out of the way and say, if we had a gold standard, even if all other policies were maintained, we wouldn't be in the current situation?

BTW, you're welcome to take your money and exchange it for gold. Nothing is stopping you. Then you won't have a faith-backed currency.

I'll try to explain it. I've been avoiding this because I have several papers that I don't feel like re-typing and I can't get my scanner to work. To answer your question, no, I don't think not having a gold standard is the answer to all our problems. I don't think all of our problems stem from not having a gold standard. I will try to summarize my thoughts as well as my Professors thoughts.

The creation of "greenbacks" took the power away from the states and privately owned banks to distribute money which was backed by gold. The federal government can now print money when it wants. Fast foward to the 1890s, finance industrial capitalism has taken over. An agrarian society cannot survive and the South is forced to industrialize slowley. What used to be used as capital, such as a farmers crop cannot be used because banks won't give out that type of credit. A credit based economy begins to form. Governments and companies no longer have to save and spend or tax and spend, but instead borrow and spend. Fast foward to post WW2. We now have a system where a centralized banking system is created. The idea that we can just put thinkgs on credit grows and by the 60s credit cards begin to spring up. Fast foward to the 1970s and 80s, we are now are off the gold standard permanately.

This creates a system where credit is used to buy everything, people stop saving and spending, we are told it's ok, just put it on the card. The fractional banking system allows for banker to take our dollar and break it into 9 pieces. Bankers take that piece and give out loans on that and they can make loans 9 times streaching that dollar our more and more. This in turn causes more and more money to be printed. The government wages wars and spends money. They sell out bonds to Japan, China and Europeean countries. They now hold our debt in the faith that one day we will pay that back(we will never pay it back)

The printing of money causes inflation which is hidden in the FIRE market. More and more regulation causes a socialistic state and not a free market. The fedral reserve attempts to hold off inflation by artificialloy raising and lowering the interest rate, depending on the situation. More and more financial banks are created to "oil the machine". Somewhere along the line the financial banks and regular s&L banks are intermingled. This allows financing of just about anything with very little capital to put down. This also allows for dirivitive markets to grow and the holders of loans gets lost. Turns out nobody holds the loans. More money is created for the financing and the real estate. More money is created for dirivitives. More money is created for war.

All the while we are told to keep buying huses and cars and just put t on credit.Just take out a loan, you don't need good credit, you don't need a big deposit. In the end the bubble bursts. Because everything is intermingled and the bubble was so huge the government is forced to print even more money to bail out the banks and the car companies. This is an idea created by Timothy Gietner and Henry Paulson who scared us into doing this. How convienient is it they used to work on Wall st.? Nobody thought to just bail out the individuals instead.Either way we have to spend the money.

Under a gold:standard companies, banks, government, and individuals are forced to live within their means and save and spend. Yes there is less wealth to create conditions that I laid out, but people can still be wealthy. It used to take generations to create that much wealth, it's not natural to gain that much wealth in such short periods of time. Is it completely dependant on a gold standard, no. Is it a good place to start, yes. It also depends on trust busting and dismantling the Fed. It also depends on getting rid of federal regulations and lobbyists. It depends on a lot of things, but a gold standard can and will work if you work it. Good money always drives out bad money.

People asked why I started this thread. I started it in hopes of getting people to understand these things. You may not believe it now, as I didn't in 2006, but it's coming. We will return soon enough. It's a progress toward getting back to a smaller limited government. It's a return to the Republic it was suposed to be, a weak central government. I'm not trying to be paranoid or spread fear. It's what I believe, it's what I see happening. I'm not alone in this belief. I actually welcome it. Imagine the country as it was pre- Civil War. Or what the Confederacy would have been. I'm not talking about slavery or anything like that. I'm talking about a country that shares power with the states and local government rules. It's coming, so invest in gold now. If it doesen't happen we will fall like Rome, The British empire, The Greeks, Caprica and the Twelve Colonies
I asked peoples opinions because I truly do care. I care what you guys think, but I want you to know what i'm thinking and I want to give you guys a heads up. If i'm wrong I'll give you all a dollar of my paper money, which is backed by faith.

Dam, that took forever to write.

 

[Nowhere Man]

The current system has produced and distributed more wealth than any previous system--perhaps all prior systems combined. Do you think it's a coincidence that the enormous expansion of the post-WWII global economy coincides with the world's largest economies dropping the gold standard? I don't.

Yeah, we have downturns and recessions and uncertainty, but it's foolish to pretend those same things didn't happen under the gold standard.

What you want is to return to a system that limits the creation of wealth and controls inflation while providing no other benefits. If you want to reduce living standards across the globe, by all means, bring back gold!

What you're doing right now is judging the past 60 years of economic development through the lens of current economic turmoil. Because we're in a rough spot right now you just assume the whole system "doesn't work."

Few things are as annoying as people coming in with judgments and opinions and calling them "facts." You haven't presented any compelling facts to encourage a return to the gold standard. The world's economy experienced unprecedented expansion after going off the gold standard. That's a fact.

I don't understand what you are saying. Yes, wealth has been created, that is false wealth generated by a fiat currency system which has caused the false belief of a prosperous currency!

I'm just gonna stop you right there. "False wealth." Yeah, lord knows last time I tried to spend my worthless "fake money" made out of paper, I was told it wasn't real so I couldn't buy anything.

And my car and everything in my apartment just went *poof* because it realized it was purchased with "fake" money.

You seem to have a very, very basic understanding of the nature of fiat money and how it works. And as they say, a little knowledge can be a dangerous thing. Case in point.

I think he's talking about a false sense of wealth, but i'm not sure. The problem is that you belittle peole when trying to make a point. Your simplifying both of our points to make us look like shit and it's not so black and white as you are attempting to make is.

Fiat money is defined as:money not redeemable for any comodity; it's status as money is conferred innitially by government, but eventually by common experience. It is money created by the government and says, hey, this is money now. It's only money because they say it is. It is backed by nothing other than faith.

The fact of the matter is we all pretend to be experts of everything that is dicussed on this website. Most people are only experts at one or maybe two things. Out of all of those people most of them are not experts, but just pretty good or mediocre. Your right, I don't know you and I don't know how much you know about the economy. You certainly don't know everything, nobody does. We all know what we've read and been taugh in school or watch on tv. I challenge anyone to remember every little detail that they learned in school. I challenge anyone to remember everything they learned from a year ago. I've been studying the Civil War for two semesters in a row and I don't remember everything I learned. I can retain most, but not all. We are all going on what we do know. I think it's shitty to try and belittle people or make them feel stupid just because they are not an expert.

 

[Robert Maxwell]

I don't understand what you are saying. Yes, wealth has been created, that is false wealth generated by a fiat currency system which has caused the false belief of a prosperous currency!

I'm just gonna stop you right there. "False wealth." Yeah, lord knows last time I tried to spend my worthless "fake money" made out of paper, I was told it wasn't real so I couldn't buy anything.

And my car and everything in my apartment just went *poof* because it realized it was purchased with "fake" money.

You seem to have a very, very basic understanding of the nature of fiat money and how it works. And as they say, a little knowledge can be a dangerous thing. Case in point.

I think he's talking about a false sense of wealth, but i'm not sure. The problem is that you belittle peole when trying to make a point. Your simplifying both of our points to make us look like shit and it's not so black and white as you are attempting to make is.

Fiat money is defined as:money not redeemable for any comodity; it's status as money is conferred innitially by government, but eventually by common experience. It is money created by the government and says, hey, this is money now. It's only money because they say it is. It is backed by nothing other than faith.

The fact of the matter is we all pretend to be experts of everything that is dicussed on this website. Most people are only experts at one or maybe two things. Out of all of those people most of them are not experts, but just pretty good or mediocre. Your right, I don't know you and I don't know how much you know about the economy. You certainly don't know everything, nobody does. We all know what we've read and been taugh in school or watch on tv. I challenge anyone to remember every little detail that they learned in school. I challenge anyone to remember everything they learned from a year ago. I've been studying the Civil War for two semesters in a row and I don't remember everything I learned. I can retain most, but not all. We are all going on what we do know. I think it's shitty to try and belittle people or make them feel stupid just because they are not an expert.

The point of this thread, unless I missed it, is whether or not a gold-backed currency system is superior to fiat currency. Ample evidence has been presented in this thread to demonstrate the shortcomings of backed currency.

The reason commodity-backed currency looks attractive is because you can redeem it for said commodity and because the supply is inherently limited, therefore controlling inflation to some degree.

But there are very obvious flaws, too, as others have explained. If there is a sudden increase in the backing commodity's supply, it instantly devalues your currency. Likewise, if the commodity has a supply shortage, you severely disrupt the ability to move money around which translates into an economic slowdown.

Fiat currency has the benefit of allowing supply to be tightly controlled, as we do in the US. If you control supply, then inflation isn't a huge concern--you contract the supply when you want to slow down or reverse devaluation of your currency. It doesn't wind up being tied to the availability of some commodity, which is often outside the control of the body issuing the currency.

It's unfair to say fiat currency isn't backed by anything. It's not backed by anything tangible, but it is backed by the full faith and credit of the issuing government. In other words, its value is determined by the stability of the issuing government and prevailing confidence in the strength of their economic fundamentals.

Economies are driven very much by perception so it makes a great amount of sense for currency to be driven by similar parameters.

I don't think I'm any kind of economics expert. I listen to people with a lot more expertise than I have. I do quite a bit of reading on this subject. I find it fascinating. There was even a time when I thought a gold-backed currency would be a wise choice, and then I did my own research into it and found all the reasons it was abandoned and the benefits of fiat currency.

Our current system is hardly perfect--I haven't seen anyone claim that it is. No system will be, unless and until we manage to eliminate scarcity and don't require an economic system based on it. For the time being, fiat currency is the best mechanism we've found.

There are certainly ways we can improve the existing system, and many have been brought up in this thread. But from everything I have read, I believe it would be overkill and counterproductive to go back to gold.

I was originally dismissive of your posts because you came in here acting as if you'd discovered some profound truth, that all our problems would be solved if we'd just wise up and go back to gold. People like easy answers, both giving them and hearing them. "If we just do this one thing everything will be great!" But the world doesn't work that way. There may be benefits to going back to gold but there are also many disadvantages and risks, and as far as I'm concerned it doesn't offer enough advantages over fiat currency. Prevailing economic thought agrees with this conclusion.

At some point we will no doubt find and latch onto another system, and hopefully it will be better. But that means we should be looking forward, not backward.

 

[Marc]

BTW, you're welcome to take your money and exchange it for gold. Nothing is stopping you. Then you won't have a faith-backed currency.

he'll just have a hard time buying groceries and paying his bills.

 

[Alidar Jarok]

Maybe he'll find a bank happy to accept gold as a currency. Then he can pay credit card for everything. Of course, gold is inherently less flexible precisely because of its value. It's really hard to have small values when using gold.

 

[Nowhere Man]

Here's a couple of links to help bring my point home.

Section: THE RIGHT EAR
Liberals and the media snickered at Jack Kemp and Steve Forbes in 1996 because of their support for a return to the gold standard to help insure sound money. But critics have said little about much-respected Federal Reserve Chairman Alan Greenspan, who, when asked about the gold standard, recently told a Senate committee, "I've been recommending that for years. . . . It would probably mean there is only one vote in the Federal Open Market Committee for that, but it is mine." The Fed chairman, who also believes "that antitrust laws ought to be abolished" told the committee "that all economic regulations should have fixed lifespans" and that the Fed itself should cease operations.

Copyright of Human Events is the property of Human Events Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.


http://content.ebscohost.com.proxy-...tentCustomer=dGJyMPHX6oHx2POK97HreefkuX3m5fGM

 

[Alidar Jarok]

Liberals and the media

Normally I would stop reading there, but I decided to give it the benefit of the doubt. I don't know how you can simultaneously fear that the federal reserve will stop carefully managing our money so to make it valueless and then praise Greenspan. Clearly, it shows that the federal reserve isn't managed by idiots.

Second, using Greenspan's arguments against monopolies doesn't help your case. I could bring up strong arguments in favor of anti-trust regulation from a market economic perspective that would hurt his views here and distract you from whatever main point he was making. For a short version, look up Herberger costs and Tullock costs.

 

[Marc]

Here's a couple of links to help bring my point home.

Section: THE RIGHT EAR
Liberals and the media snickered at Jack Kemp and Steve Forbes in 1996 because of their support for a return to the gold standard to help insure sound money. But critics have said little about much-respected Federal Reserve Chairman Alan Greenspan, who, when asked about the gold standard, recently told a Senate committee, "I've been recommending that for years. . . . It would probably mean there is only one vote in the Federal Open Market Committee for that, but it is mine." The Fed chairman, who also believes "that antitrust laws ought to be abolished" told the committee "that all economic regulations should have fixed lifespans" and that the Fed itself should cease operations.

Copyright of Human Events is the property of Human Events Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.


http://content.ebscohost.com.proxy-...tentCustomer=dGJyMPHX6oHx2POK97HreefkuX3m5fGM

You know that Ron Paul's been pushing this same shit for years and nobody's paying any attention to him either.

 

[Red Ranger]

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

This. Plus, Nixon taking the U.S off the gold standard was one of the best things ole Tricky Dicky did for this country. For the most part, in the decades since, the U.S. dollar has been the strongest world currency. The present weakness won't last. Then, watch Glenn Beck cry real tears when gold prices drop like a bad habit.

 

[Holdfast]

This is developing into a fun thread.

I'm going to address most of this reply to Darth Picardous rather than Hunter. That's not meant as a slight to Hunter, just that I think Darth is raising an interesting issue that hasn't been fully addressed, whereas I think most of Hunter's points have already been addressed (and in my opinion successfully so) in one form or another upthread, and I don't feel like paraphrasing what I or others have already written.

I'm also going to forego the usual extensive multiquote/rebuttal BBS method of argument, because I'm more interested in our fundamental differences in perspective rather than an intellectually unsatisfying argument of attrition.

Without wishing to put words in his mouth (so correct me if I'm wrong Darth!), I think Darth's fundamental ethical position is that the medium by which we measure value in our economic system should be based upon a measurable quantity of something concrete. He chooses gold because it is relatively consistently highly valued over an extended period of time, due to its scarcity, difficulty of production and durability.

I can respect this position.

In terms of practicalities, I believe that the adoption of such a system would wreak untold havoc on our current economy and so would have to be phased in over many decades to avoid chaos. I also think the red herring of fractional vs full reserve banking is best dealt with separately rather than being integrated into an argument about gold standards, as it really is a different topic, but I think he would agree with that too.

So from his perspective, I can see how his position on determining value is internally coherent and consistent.

My core theoretical disagreement with it is that it is an arbitrary way of determining value. It may be consistent, but it is still arbitrary. I would say it is more intellectually satisfying to acknowledge that value is not immutable but dependent on context. As such, how our economy measures value should itself be mutable. Only fiat money allows that to happen because it reduces value to a theoretical abstraction rather than a tangible commodity.

Now, he's right to say that gold generally holds its value (though there are several historical periods of varying length where this is not true). That simply reflects that core human societal structures haven't really changed very much over the centures, so it is absolutely appropriate that gold has retained its value. But on a theoretical level (and practically too, given those historical periods I mentioned), gold will not always be equally valuable, so basing our economy's determination of value on it is inappropriate.

I would argue that value/worth should always be based on supply and demand. Gold is certainly currently valuable and liable to remain so for a very, very long time to come because demand will remain solid, and supply relatively limited (I happen to have significant exposure to it myself, albeit via proxies rather than as bullion, as part of an overall portfolio). But that doesn't mean our entire economy has to be linked to its value.

If for some reason, supply/demand market consideration make a different metal, or indeed, currency, more desirable, it is right that it should appreciate relative to gold. If you have a currency linked to a gold standard, rather than free-floating, you limit the ability of other things to change value with respect to gold. That inevitably distorts the market, and I don't believe market distortion is good for our economy in the long-term.

Now, opponents of fiat money would say that inflationary pressures, speculation, and the derivatives market, create far more of a distorting effect than a gold standard would. Under most circumstances, I would concede the point. The counter-argument however, is that under a free-floating system, the market can correct itself through a crash. The gold standard's distortion is locked into the system permanently, akin to a "house effect" or bias, and that's what makes it more dangerous in my eyes to the safe long-term operation of a free market.

Thoughts?

 

[paudemge]

Maybe not the gold standard, but some kind of mixture of commodities, made up of various precious metals and maybe oil, natural gas and coal.

 

[stj]

The creation of "greenbacks" took the power away from the states and privately owned banks to distribute money which was backed by gold. The federal government can now print money when it wants. Fast foward to the 1890s, finance industrial capitalism has taken over. An agrarian society cannot survive and the South is forced to industrialize slowley. What used to be used as capital, such as a farmers crop cannot be used because banks won't give out that type of credit. A credit based economy begins to form. Governments and companies no longer have to save and spend or tax and spend, but instead borrow and spend.

Salmon P. Chase, the Civil War Secretary of the Treasury who presided over the creation of greenbacks to finance the war, ruled against this kind of money as Supreme Court Justice Chase. The "fast forward" skipped over such inconvenient facts as this.

But it takes true gall to weep crocodile tears over the poor farmers crushed by fiat money, when the Grange and the Populists were soft-money men, if not outright bimetallists. They did so because, as William Jennings Bryan so famously put it, they were being crucified on a cross of gold. The financiers insistence on hard money denied credit to the farmers, instead of zombie greenbacks.

The professor mentioned above is an intellectual thug, a swindler damaging gullible minds by indoctrinating them into an inhuman ideology, founded on crank economics.

As for the general notion that there has to be a commodity standard of wealth, the true wealth of nations lies in the machinery, transportation system, school system, sewers etc., all the appurtenances of civilization these subhuman fucks want to loot.

 

[Nowhere Man]

Bettina Bien Greaves
How to Return to the Gold Standard

November 1995 • Volume: 45 • Issue: 11 • Print This Post • 13 comments
Mrs. Greaves, FEE’s resident scholar, bases this proposal on the understanding and recommendations presented in the writings of Hans F. Sennholz, Henry Hazlitt, Percy L. Greaves, Jr., and Ludwig von Mises.
There is no reason, technically or economically, why the world today, even with its countless wide-ranging and complex commercial transactions, could not return to the gold standard and operate with gold money. The major obstacle is ideological.

* Please don't post complete articles. *

 

[Nowhere Man]

* Please don't post complete articles. *

 

[Darth Picardous]

Without wishing to put words in his mouth (so correct me if I'm wrong Darth!), I think Darth's fundamental ethical position is that the medium by which we measure value in our economic system should be based upon a measurable quantity of something concrete. He chooses gold because it is relatively consistently highly valued over an extended period of time, due to its scarcity, difficulty of production and durability.

I can respect this position.

Thats a pretty good summary Holdfast. However my arguments have not been good enough to convince you.

Hunter, you were absolutely correct in my interpretation , as the system is a false wealth generator. Most Americans don't realise the American dollar has been devalued by 97% since 1913. A millionaire today is nowhere near equivalent to a Rockefeller or a Carnegie. Look, I really don't care if Jarock thinks it's an orderly process the way the US dollar is being downgraded, so is burning your house down one room at a time, or Maxwell thinks fiat is so good now, just ask Germans after the hyperinflation of 1923 how valuable their currency was then. Excess credit generation has produced a multitude of economic bubbles, with the major US banks now the reciever of subsidies at the home of capitalism. Very communist isn't it?

 

[Robert Maxwell]

Without wishing to put words in his mouth (so correct me if I'm wrong Darth!), I think Darth's fundamental ethical position is that the medium by which we measure value in our economic system should be based upon a measurable quantity of something concrete. He chooses gold because it is relatively consistently highly valued over an extended period of time, due to its scarcity, difficulty of production and durability.

I can respect this position.

Thats a pretty good summary Holdfast. However my arguments have not been good enough to convince you.

Hunter, you were absolutely correct in my interpretation , as the system is a false wealth generator. Most Americans don't realise the American dollar has been devalued by 97% since 1913. A millionaire today is nowhere near equivalent to a Rockefeller or a Carnegie. Look, I really don't care if Jarock thinks it's an orderly process the way the US dollar is being downgraded, so is burning your house down one room at a time, or Maxwell thinks fiat is so good now, just ask Germans after the hyperinflation of 1923 how valuable their currency was then. Excess credit generation has produced a multitude of economic bubbles, with the major US banks now the reciever of subsidies at the home of capitalism. Very communist isn't it?

Neat, I got a shout-out. I feel honored.

You'll notice I specifically talked about control of the money supply, because hyperinflation absolutely is a real concern if you don't have a good monetary policy. But by the same token you ignore what would happen if the commodity that backs a currency experienced a sudden explosion in supply. There you go, your gold-backed currency is now hyperinflated.

You've also not bothered to address the fact that commodity-backed currencies limit wealth generation. You've just called it "false wealth" out of hand without any justification for such a statement. Say you took all your "fake money" and bought land, houses, etc. with it. Are you going to tell me those things aren't "real" wealth, that they have no real value? And if you bought them with fiat currency, then it stands to reason that it, too, has value--value enough to purchase such things.

Is the value of fiat money variable? Absolutely. That is one of its strengths as well as a weakness. No one has claimed otherwise. But its variability is useful as a strength because you can control the money supply to adjust the value of your currency. Gold-backed currency does not afford this luxury--at least not very easily. You consider this a strength, but I consider it a flaw since it reduces macroeconomic liquidity.

I'm not arguing that gold has no advantages over fiat currency, just that the combination of its advantages and disadvantages do not overpower the benefits of fiat currency.

A more interesting idea brought up in this thread was using a basket of tangible assets to determine currency value. Since it is not tied to the availability of a single commodity (such as gold), it would evade many of the drawbacks of using gold alone. A major point against it would be its complexity--you'd have to decide what items to include, how to gauge their value in objective terms, etc. But if you want currency backed by something tangible, I think that would be a better way to go.

That you admit we've long since passed "peak gold" is essentially an admission that a return to a gold standard would result in economic stagnation almost instantly. We just got out of a recession and you are talking about plunging us into an even worse one.

 

[Nowhere Man]

^ I mentioned in an earlier post that a combination or mixed bag would work. Nobody paid it any mind and then the other guy said it. I suggested, gold, copper and something else. I think the other guy said oil. I think that would work. See, we ate coming to a compromise.

As far as implementing a gold standard, it would slowly be introduced and compete with fiat money at first. The market would decide which is better. Then once it is established, every bit of wealth acquired pre-gold standard would be just as valuable as before. Your car, house, land, cat. Everything past that point would be deterred by that gold standard. All fiat money in existence would be allowed to be used. It would be allowed to run it's course and then no more of that money would be printed. It's not like one day we would wake up and now we are on the gold standard.

 

[Robert Maxwell]

^ I mentioned in an earlier post that a combination or mixed bag would work. Nobody paid it any mind and then the other guy said it. I suggested, gold, copper and something else. I think the other guy said oil. I think that would work. See, we ate coming to a compromise.

As far as implementing a gold standard, it would slowly be introduced and compete with fiat money at first. The market would decide which is better. Then once it is established, every bit of wealth acquired pre-gold standard would be just as valuable as before. Your car, house, land, cat. Everything past that point would be deterred by that gold standard. All fiat money in existence would be allowed to be used. It would be allowed to run it's course and then no more of that money would be printed. It's not like one day we would wake up and now we are on the gold standard.

I don't think using other precious metals besides or in combination with gold really helps. Oil is an interesting one but far too volatile in terms of supply/demand fluctuations. Land might work since there is a finite supply of it and that supply doesn't fluctuate--but rather, its value does. Take that and the value of our industrial infrastructure (power generation, physical plants, etc.) and you might be onto something that paints a picture of how economically healthy a country is and value its currency accordingly. I'm just totally against using a single benchmark to determine the value of currency. It puts all your eggs in one basket--and you don't necessarily have any control over said basket.

 

[Nowhere Man]

^ Another one I mentioned before was a resource based economy. Basically the world shares resources equally. There is a link. I heard about it on trek movie.com. The way I understood it was it would be the closest thing to the economy in Star Trek. I haven't seen the video in a while, but frI'm what I remember, that's what it was.