Originally Posted by EagleSeven

International currencies have been running by fiat, or the stability of said countries' economy, for quite some time. The reason the dollar has been so valuable is because people trust our economy to continually grow and produce the physical value that our growing money supply requires.

The whole "debt as money" concept as promoted in the video is indeed responsible of the record growth of our economy in the last half-century, and the economic growth of the Western World (and Japan) at large. There is only a limited quantity of gold on the planet, and as our world economy, and national economy grows, a gold-standard would required the increase in value of gold to represent our value produced. The lag in between gold prices and economic growth causes a lag in the market price reaction, thus limiting growth.


In essence, the non-gold standard currency the world employs allows for rapid growth, but is more fragile in the long-run. Indeed, an inflation rate of a couple percent is optimal for economic growth, so that commodity prices are maintained during periods of positive growth, so as to prevent economic loss due to price panic. To freak out about the lack of a gold-standard without addressing the benefits of such a system seems unwise. Of course, you are right, the majority of Americans don't want to touch this topic with a 10 foot pole.

For anyone who doesn't quite understand what I am saying in the above, let me put it this way. Modern banks are using future growth and creation of value to pay for loans they are giving out today. In the event that the growth doesn't happen and people panic, the bank could easily collapse. However, the creation of the loan allows the borrower to create growth that would otherwise be impossible.



As a result, as long as the economy keeps growing, the system will not collapse and the economy will expand at an exponential rate, along with our gross debt. Not a 10 year period has passed in the past 100 years where the US economy is weaker than at the start of the period, Great Depression included. If we were to go back to a fully gold-backed banking system, our economic growth would slow down, but our economy would be better prepared to survive a political collapse.

Which is better? It depends on who you are and how much you like to go to vegas

Originally Posted by stiffy

The idea that a fiat currency is necessary to support the needs of modern commerce has some merit, but it's an overstated argument in debates about monetary policy, used as a way to dismiss the "hassles" of the gold standard.

In actuality, we witness commodities adjust to market conditions sometimes faster than other units of account. (i.e. currency) If our currency were based on the amount of gold mined from the earth, the mining business would see booms and busts in line with the macroeconomy.

Originally Posted by Norrin Radd

Good post.

The problem is that people don't seem to realize that it is "healthy" to have normal ups and down in the economy.

What is not normal is to have an economy expand every quarter for eternity.

Common sense should tell us that perpetual growth is impossible and I guess we all know this and we are all praying that when the bubble bursts, those in charge will make the right decisions to lessen the impact and speed up recovery.

Of course we all know that eventually, the bubble will burst like a volcano and the party will be over. There will be haves and have nots and nothing in between.

tis sad.

Originally Posted by John Drake

That situation is exactly what your booms and busts give you, because each cycle the survivors from the last one become bigger and more dominant. Eventually they're all that's left, and this causes the collapse of your system. Leastways that is the essential Marxist argument, as I understand it. How do you answer it?

Originally Posted by Retro Fit

According to the U.S Gov, In Fort Knox alone, we have 147.3 million troy oz's of gold. At $800.00 an oz. thats $117,600,000,000....thats one hundred and seventeen trillion dollars we could print up as Gold certificates. Every fiat currency on the planet would bottom out against the dollar.
But, there are those who believe that the golds not there anymore, that X-pres Johnson dumped the majority of America's gold reserves back in 1967. In defense of this theory, let's not forget that theres been no audit of the Gold reserves at Fort Knox since Ike was president. They don't even call it the Gold "Reserve“ any more. Now they call it “deep storage gold” because it's not our reserves any more. In March 1968, the Bretton Woods international monetary system agreement, that had been in effect since 1944, was abruptly ended and replaced with a "two-tiered" Gold system. This, of course, meaning that the government had not one, but two ways to sodomize us financially. First, there would now be a free-market Gold price (The Government would no longer hold the price per oz at the artificially low $35.00 rate). Second, the US government would no longer redeem Dollars for Gold . And just like that, The gold at Fort Knox was reclassified. One day you could cash in your bill's for Gold. The next day, the bill's are only paper with no intrinsic value.
The Question remains, if Fort Knox's Gold is no longer the reserves backing our dollar, then just what is it now?
There are those who suggest that the endless increase in modern gold trading activity such as we see today, could only be possible with Fort Knox amounts of gold (being released in the market). I mean, somebody has access to this gold and they gotta be thinking "damn shame to let this go to waste"..."Just put off the audit till were all dead, Thanks...."
If the gold were there, then "we the people", who's gold it is, could get paid up and current without causing more inflation. A novel concept, no?

Originally Posted by Retro Fit

No, Eric's right. That is billion, not trillion....it was rather late last night when I posted that...My apologies. But hey, 146 billion would go a long way as well.

I'm not sure we could go back to a Gold only standard, but history has shown us that money has to have real value above and beyond the goods and services it can buy. It cannot be something the government can just print up as much as they please because they (always) eventually print up so much that it destroys the currency. Another point I was trying to make is, when we went off the gold standard, the fair thing to do would of been to allow people to turn in their paper dollars for gold, then come out with a new bill that wasn't redeemable in gold. Instead, the government, literally, kept all the gold for themselves. They even allowed foreign countries to transfer the paper for gold, just not U.S. citizens. That this fact has not gone down in history as the biggest con job ever, is a travesty of justice.

Originally Posted by Retro Fit

I like this one written by Alexander Fraser Tytler in "The Decline and Fall of the Athenian Republic", in 1776:

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising them the most benefits from the public treasury, with the result that a democracy always collapses over a loss of fiscal responsibility, always followed by a dictatorship. The average of the world's great civilizations before they decline has been 200 years. These nations have progressed in this sequence: From bondage to spiritual faith; from spiritual faith to great courage; from courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to complacency; from complacency to apathy; from apathy to dependency; from dependency back again to bondage."