NationStates Jolt Archive

Take a look at this (http://www.lewrockwell.com/orig3/haynes2.html), a column on the Gold Standard.
Under the gold standard, a government is limited – both legally and practically – as to how much paper money it can print. As recently as the Lyndon Johnson administration, the U.S. could print paper dollars equal only to four times the value of the nation’s gold reserves.
The really scary part, however, is what Haynes asserts about the money system we currently have:
History shows that no government, after going on a fiat monetary system, ever reverses course until its paper currency is destroyed There is no reason to believe this time will be any different.
Comments, anybody?

Bump

This is an interesting topic that not to many people discuss. I believe the Gold standard should be re-introduced. But dont know how much of a shock on the economy doing something like that would cause. My suggestion to ones that are really worried and have assets. To find a national currency such as the swiss franc to keep your money in. That way a large downward trend for the dollar or euro wont leave you high and dry.

The demise of the dollar has been predicted more often than the second coming. This is not much more than a chichek-little article full of misinformation. Here arejust a few gross errors;

"The Fed’s massive inflation of the 1990s resulted in the greatest advance in stock market history."

Umm, the 90s was one of the lowest inflation decades ever.

"Continued inflation is now pushing housing prices to record levels."

Gee, record levels! Sounds scary, but really, isn't that the definition of inflation in the first place?

There was more, but it is late and I'm tired, I really don't feel like diging around the net. Suffice to say, this is a fairly economically ignorant link. You know the old story about a little knowledge and dangerous things...

There are some great articles about inflation, gold and silver standards, foreign exchange and the history of currency, but I am sleepy now.

There is one book I like to suggest often, though I doubt anyone here ever read it - The Money Changers. It is a work of fiction written in the 70s full of murder, rape, mystery, fraud and stock and banking. It is an interesting glimpse into an economy most here have never experienced.

g-night

But doesn't America more or less live of its' ability to print so much money and use it to pay debts?
Because the US Dollar is such an international currency, they can use it without having to fear inflation immediatly.
But this is not my area of specialty.

But doesn't America more or less live of its' ability to print so much money and use it to pay debts?
Because the US Dollar is such an international currency, they can use it without having to fear inflation immediatly.
But this is not my area of specialty.
The correct answer to that would be a simple 'no'. The answer is found in currency economics - which is beyond the scope of what I'm willing to explain to you in this thread. I'd suggest you do a bit of your own research.

The Chinese used paper money during the Ching (Mongol) and Ming periods - needless to say it was ditched until modern times. Why, paper money because kinda worthless without backing ..

This is an interesting topic that not to many people discuss. I believe the Gold standard should be re-introduced. But dont know how much of a shock on the economy doing something like that would cause. My suggestion to ones that are really worried and have assets. To find a national currency such as the swiss franc to keep your money in. That way a large downward trend for the dollar or euro wont leave you high and dry.

Good idea. Nothing like destroying the credit-based world economy and putting the planet back 50-100 years. [/sarcasm]

Going back to gold is a very bad idea. I agree that there MUST be a limit on fiat currency (how much can be printed vs. the economy) but gold is just a commodity like oil, silver or even cotton.

Why was gold valuable in the first place? Because it was fairly rare, easy to verify, and maleable. In an age with credit cards and paper money, why do we need to base our monitary system on it?

Don't get me wrong. I like gold. I even own some. But starting hyper-inflation by "going back" to it is not the thing to do.

* Historically, an ounce of gold should be worth the same as a gentlemen's suit of clothes.
* Gold is currently hovering at $420/oz. That's about right.

More interestingly, would you really want something that fluctuates this wildly in value still governing the world's economy?

(nb: all values are in 1999 USD)
"The price of gold began rising until Columbus claimed the West Indies for Spain. It reached its all-time high of 2500 dollars an ounce.

The Americas became a rich source of gold. As Europe plundered the New World, the price dropped until 1600, where it settled out at about 500 dollars an ounce. It stayed there until the industrial revolution. Then something strange happened.

Gold prices began oscillating wildly, seeking out new lows. Each depression brought the value back up. In the late 1970s, gold rocketed to a brief high of 1400, 1999 dollars. But, by then, we'd separated gold from money. That brief spike represented short-term horse-trading. Gold had reached its all-time low of 200 dollars an ounce just before that. And at this writing it's worth around 300 dollars an ounce.
http://www.uh.edu/engines/epi1486.htm

...I'm thinking that once the oil market stabilizes in a few years that gold is due for another tumble.

But starting hyper-inflation by "going back" to it is not the thing to do.
I was under the impression that gold would de-flate the dollar eventually...

The Chinese used paper money during the Ching (Mongol) and Ming periods - needless to say it was ditched until modern times. Why, paper money because kinda worthless without backing ..
Our current money is effectively "backed" by our government's word....unfortunately if countries stop trusting said word there goes the dollar....

I was under the impression that gold would de-flate the dollar eventually...

More like permanently. With a dollar tied to a particular commodity that ITSELF fluctuates, the "no depression" economic cycle that we've enjoyed since WW2 would quite literally cease. You could be fine for four years and then *BANG* go into a slump that makes the (ahem) correction of Black Monday (October 1987) look like a trip to Disney World. :(

Our current money is effectively "backed" by our government's word....unfortunately if countries stop trusting said word there goes the dollar....

Actually, it'd be in the hands of the people more than other nations. Remember, most of the planet not only lacks specie currency (the notable exception being the UK), but nearly half the world, including CHINA, pegs their currency to the Greenback.

The way things are going, maybe the US should go to the Oil Standard...

There is no such thing as currency inflation! That is just another evil instrument that government uses to scare, control, abuse and oppress it's populace. Job outsorcing and trade deficits on the other hand, are real and what will lead to the economical collapse of any nation. Most currency is paper, and currently in the US it is backed by NOTHING. Fort Knox has been depleted of it's gold for the past 20 years. If I were President, I would print an abundence of new currency with my endless supply of paper and replace all the old currency. I then would go on to a fair and balanced distribution of wealth. I would ban job outsoucing and have fair and balanced trade. And any large conglomerates that would oppose this could simply leave the country, along with all the rest of the greedy Capitalists. They would be banned from ever entering this Country again. There are simple solutions for everything! End of conversation!

Actually, it'd be in the hands of the people more than other nations. Remember, most of the planet not only lacks specie currency (the notable exception being the UK), but nearly half the world, including CHINA, pegs their currency to the Greenback.

Sterling is a fiat currency too.

Sterling is a fiat currency too.

Is it? I thought it was still convertable for governments?

i know this doesn't have too much to do with this, but i've been thinking about this for a while and this has to do with inflation;

when there's a barter system and the goats breed allot, then you have goat inflation, heheh. and deflation when you kill off a whole bunch of them.