The gold standard

[JohnBirchSociety]

There has been some good, vigorous discussion about the merits of the gold standard in economics on this forum.

However, there continues to be a serious misunderstanding about what the gold standard actually entails. In particular, this misunderstanding ignores what the Constitution mandates on the matter.

It is quite simple. Constitutionally the gold standard (gold / silver, to be precise) means that Congress determines how much gold / silver equals a "dollar".

Fractional reserve banking is a violation of this. The Federal Reserve Note is a violation of this.

If you find yourself equating the value of gold to a "dollar", you are making a critical mistake. "Dollar" is a unit of measurement. Thus, it is incorrect to say, "That costs a dollar." Rather, you should say, "That costs a dollar of gold / silver (in the USA)". It would be like going to the grocer and asking for a "gallon". The grocer would respond, "A gallon of what?".

The value of Gold in society has been remarkably constant. About one troy ounce has, historically (since Roman times) been able to purchase a good suit of clothes.

Comments?

[HiJolly]

I think it's a moot point, and you would be well served engaging in other pursuits.

HiJolly

[MarginOfError]

I find it amusing how disagreement is equated to lack of understanding. Has anyone else noticed that?

[Wingnut]

I find it amusing how disagreement is equated to lack of understanding. Has anyone else noticed that?

I disagree with you. Obviously you have no understanding of what the OP was trying to say.

[JohnBirchSociety]

I find it amusing how disagreement is equated to lack of understanding. Has anyone else noticed that?

Disagreement often results from misunderstanding.

Such is the case with the Gold / Silver standard that the Constitution mandates.

People here have pointed to supposed "failures" of that standard in history, yet each time, it is pointed out that the standard wasn't followed at those points in history.

[FunkyTown]

Herein lies the problem: I don't have a problem with the gold standard. I don't - I've said this before and I'll say it again. However, I don't think that people's disagreement with it is necessarily based upon a lack of understanding.

Here's what someone might say to counter-argue against the gold standard: What is The Gold Standard?

[a-train]

Isn't it funny that the same people who demand that the government intervene in the business world to prevent monopoly also demand that the government uphold a monopoly of the money supply?

"The economy can't grow without fiat money and fractional reserve lending." What a funny statement. To say that is to say that economies didn't ever grow until the 10th Century A.D. Of course, the Romans debased their currency as their empire collapsed. Interesting correspondence though: the empire grew until it became unmanageable and then they started bebasing the currency to try to pay for the extreme size of the empire which failed.

-a-train

Edited October 23, 2008 by a-train

[rameumptom]

The problem with a gold standard was seen in the 19th century. There was so little available in some areas that money was scarce. It forced many areas into a barter system, and so they went backward in having a common means of trade.

This was a major problem in early Utah, as well. Hard cash (or gold, in this case) was needed to begin businesses and for loans/borrowing. If it was not available, then there was a shortage that caused inflation. If someone discovered a large vein of gold, then suddenly there would be deflation of the value of one's money.

Farmers struggled annually in the 19th and early 20th century, because they could not obtain loans to fix their farms, buy grain, etc; because the system was based on the gold standard.

And you can argue that it wasn't the standard described in the Constitution, but it would have worked the same way with Congress managing it. There would have been shortages in some areas of the country, causing inflation; and excess gold in other areas, causing deflation.

Gold is only as valuable as people put a price on it. In California, the gold rush created huge price increases in the area. Gold devalued, and deflation caused prices to spiral ever higher.

The USA lasted longer in the Great Depression than many nations because we were among the last to drop ourselves off a 100% gold standard in 1933.

The current fiat currency was established because it was holding back our ability to grow business. Our nation was stagnating in the 1960s and 1970s until two things occurred: we got off the gold standard, and we lowered taxes.

Our economy would not have grown as it has, had we stayed on a gold standard. We would not have had the fluidity of cash to bring about the technology boom of the 1990s, or the housing boom of this last decade.

Yes, it is also true that we would not have a nation and people that are deep in debt, either. For while on a gold standard, there would not have been the cash available to lend to people. Visa and Mastercard would have a limited number of people holding their credit cards. Most people would rent today, as homes would be outside their ability to purchase, as it was decades ago.

So, having fiat currency, like gold standards, are a two-edged sword. There is good and bad risks to both.

[Guest DeborahC]

Welp, all I can say is I'm just pleased as punch that I've been holding gold, not stock.

[Misshalfway]

Maybe we all need to where t-shirts that say....."Got Gold?"

[JohnBirchSociety]

Maybe we all need to where t-shirts that say....."Got Gold?"

cool n/t

[JohnBirchSociety]

The problem with a gold standard was seen in the 19th century. There was so little available in some areas that money was scarce. It forced many areas into a barter system, and so they went backward in having a common means of trade.

This was a major problem in early Utah, as well. Hard cash (or gold, in this case) was needed to begin businesses and for loans/borrowing. If it was not available, then there was a shortage that caused inflation. If someone discovered a large vein of gold, then suddenly there would be deflation of the value of one's money.

Farmers struggled annually in the 19th and early 20th century, because they could not obtain loans to fix their farms, buy grain, etc; because the system was based on the gold standard.

And you can argue that it wasn't the standard described in the Constitution, but it would have worked the same way with Congress managing it. There would have been shortages in some areas of the country, causing inflation; and excess gold in other areas, causing deflation.

Gold is only as valuable as people put a price on it. In California, the gold rush created huge price increases in the area. Gold devalued, and deflation caused prices to spiral ever higher.

The USA lasted longer in the Great Depression than many nations because we were among the last to drop ourselves off a 100% gold standard in 1933.

The current fiat currency was established because it was holding back our ability to grow business. Our nation was stagnating in the 1960s and 1970s until two things occurred: we got off the gold standard, and we lowered taxes.

Our economy would not have grown as it has, had we stayed on a gold standard. We would not have had the fluidity of cash to bring about the technology boom of the 1990s, or the housing boom of this last decade.

Yes, it is also true that we would not have a nation and people that are deep in debt, either. For while on a gold standard, there would not have been the cash available to lend to people. Visa and Mastercard would have a limited number of people holding their credit cards. Most people would rent today, as homes would be outside their ability to purchase, as it was decades ago.

So, having fiat currency, like gold standards, are a two-edged sword. There is good and bad risks to both.

Wow. You do know the Constitution was divinely inspired? And no, I'm not extreme on that position. Slavery is not divinely inspired.

The Constitution establishes a Gold / Silver standard. Thus, I'm of the position, on that merit alone, that it is the superior economic standard.

[rameumptom]

I believe the gold standard was the premiere view for that time. I believe there are perhaps better ways for economy besides gold, but back in the 1790s it was the best available for trade, etc. Especially for a new and weak nation.

I also own some gold and silver in my portfolio. I've kept most in CDs over the last year, as I've seen the writing on the wall for quite some time.

[JohnBirchSociety]

I believe the gold standard was the premiere view for that time. I believe there are perhaps better ways for economy besides gold, but back in the 1790s it was the best available for trade, etc. Especially for a new and weak nation.

I also own some gold and silver in my portfolio. I've kept most in CDs over the last year, as I've seen the writing on the wall for quite some time.

Excellent. It was the premier view because the framers knew of the dangers of fractional reserve banking as pursued by England at the time. They knew the dangers of fiat. They wanted to give the citizens real money that was not easily manipulated by conspiring individuals, such as we now see with the Federal Reserve.

Sad and funny it is that Greenspan, with his Phd., claims to not have seen it all coming, when the actions he espoused during his tenor were specifically pointed in the direction we are now in. When you increase the currency supply by billions it puts pressure on the acquisition of risk because the sound expenditures are covered. Then there becomes an imbalance as more liquidity moves to risk (sub-prime mortgage "security" bundles). It self perpetuates in artificial way (one that can not happen with real money). Then the Fed decides in their brillance to restrict the currency supply and whamo! Today is what we've got.

No economist with any sense could not have seen the effect of those actions. Greenspan is a feind of the worse kind. Bernake is no better.

I've been specifically predicting this crisis for nearly 5 years.

What writing on the wall jumped out at you?

Edited October 24, 2008 by JohnBirchSociety

[rameumptom]

It actually started in 1998, with Pres Hinckley's Priesthood Session talk on getting out of debt. I've been watching extremely close ever since.

Personally, I believe 9/11 was the fulfillment (or partial fulfillment) of the 1/2 hour of silence in the heavens, mentioned in Revelation....

[JohnBirchSociety]

It actually started in 1998, with Pres Hinckley's Priesthood Session talk on getting out of debt. I've been watching extremely close ever since.

Personally, I believe 9/11 was the fulfillment (or partial fulfillment) of the 1/2 hour of silence in the heavens, mentioned in Revelation....

Certainly could be a fulfillment. Whether or not it was, it was the end of the longest period in history (that I've been able to find) of a nation not having its' homeland attacked by outside forces (1812-2001). That says a lot.

I'm glad Pres. Hinckley woke you up a bit. Good for him and you.

I've been seeing this trend in specifics for 5+ years. In a general sense fiat currency ALWAYS collapses. Real money never does.

Sooooo....in a general sense, it is just a matter of time as to when the collapse begins.

I'm so glad the Founders had the foresight to avoid the problems of Fiat at the beginning of our nation.

Real money is so essential to individual liberty. I'm of the opinion that it is the central key-stone to individual liberty in the civilized world.

[YoungMormonRoyalist]

If anyone here is in the apocolyptic mood (I'm not quite yet), then invest in non-perishable food. I think that if an apocolyptic scenario does come our way, even gold will lose its value once people realize that it's merely a shiny rock. Food on the other hand? There's always some value to that.

[JohnBirchSociety]

If anyone here is in the apocolyptic mood (I'm not quite yet), then invest in non-perishable food. I think that if an apocolyptic scenario does come our way, even gold will lose its value once people realize that it's merely a shiny rock. Food on the other hand? There's always some value to that.

Food will be essential to survival, as it always has been, in particular in the midst of a collapse of any magnitude (Post-war Germany comes to mind). After the dust settles, 6months to a year (Post-war Germany comes to mind), then Gold and Silver coin in recognizable denominations like a "dollar" or "fifty-cent" piece, will be of great use.

At no point in all of recorded human history has Gold been worthless as a medium of exchange.

[a-train]

Why does talk about the gold standard always lead instantly to talk of starvation, food storage, the barter system, the end of the world, and major disaster? So many people say things like: "Your gold won't do you any good when you're starving to death." To be certain that is true, but it is also just as true of our paper money.

The gold standard will indeed be worthless in total anarchy and cataclysm as will a great host of things that are of tremendous value right now. Paper investments, baseball card collections, antiques, exotic sports cars, the list of things demanding a pretty penny today would be worth very little if anything at all in circumstances of destitution, deprivation, and desolation.

A precious metal standard is a monetary system that puts God, nature, and a free economy in control of the money supply. A paper system controlled exclusively by a select few gives them power to inflate and deflate the currency to suit special interests.

If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered. - Thomas Jefferson

What a tremendous example the thread on gasoline prices becomes! Gasoline can go up to over $4.00 a gallon and back down to $2.00 in a matter of months. Food, clothing, everything goes up with inflation and down with the subsequent crash. Those who have the inside track on the timing of these things make a fortune while the masses lose.

A precious metal standard alone will not prevent the debt cycle. It will not save us in times of enormous distress, it will not keep the stock market going eternally up, it will not make every American rich. It WILL keep the control of the money supply out of private hands.

-a-train

[Hemidakota]

I am wondering what form of monetary system will be in the Terrestrial state if the streets are paved with gold? LOL

[rameumptom]

Heber C Kimball relates a Dream:

I will tell you a dream which brother Kesler had lately. He dreamed that there was a sack of gold and a cat placed before him, and that he had the privilege of taking which he pleased, whereupon he took the cat, and walked off with her. Why did he take the cat in preference to the gold? Because he could eat the cat, but could not eat the gold. You may see about such times before you die. I wish to speak of these things while they are present with us, and I wish I could impress them upon your minds. The first season that we came here, I recollect that brother Brigham proclaimed the policy of our laying up grain, and told us to lay up a seven years' supply, and prepare for a famine. If our crops are now cut off, it will be one of the best things that has happened to this Church. When a servant of God counsels you, it is your duty to hear and obey his words. I am fully aware that the world do not like the idea of one man ruling this entire people with his word, but I would not give one farthing for this community if they could not be governed by one man, beloved and chosen of the Lord. You have no salvation only what you get through that source, and every true hearted Latter-day Saint believes so.

I have always been bemused when I hear someone propound the Gold Standard, saying "real money doesn't" collapse. I always think back to this dream that Elder Kimball quoted, stating that gold can easily become worth nothing! And I predict there will be a day when it will be exactly that way. Gold will be next to worthless, for no one will want it - they will want to eat.

So, in regards to surviving the last days, do you have your year's supply of cats in store?

[a-train]

see what I mean.

-a-train

[deseretgov]

I don't agree with te gold standard. The gold standard was just another way to convive people in the early 1900's that the Fed would be a good idea. As rameumptom said. Gold is not really worth anything. Especially when you are out in the wilderness trying to survive and get food for your family. There is no inherent value in gold. If you and your family are trying to survive and you try to give me(who is also trying to help my familiy survive), gold for food I would laugh in your face, because I would need food, ammo, or clothes, in return. Gold would have little more value than a shiny rock. So you can keep your shiny rocks I'm going to go get something of real value.

having said that I thing money should simply be markers for things of value. The money it's self should have no value, aka, just paper. But it should represent things of value. So if you have a cow you would get 1 cow's worth of markers(money) to represent that cow in trade. Instead of dragging the cow all over the countryside you would carry the markers in your pocket.

[a-train]

- see, they just keep saying the same old line!

[a-train]

The money it's self should have no value, aka, just paper. But it should represent things of value. So if you have a cow you would get 1 cow's worth of markers(money) to represent that cow in trade. Instead of dragging the cow all over the countryside you would carry the markers in your pocket.

First, there is no difference between a cow standard and a gold standard, except for the cow standard has much less durability.

Now, if we are going to print up this cow paper, who gets to print it? How do we keep them from printing extra paper with no real cows to redeem the paper for? And, if a cow dies, whose piece of paper becomes valueless? What system will determine who gets the bigger, better, more healthy cows for their piece of paper rather than a scrawny less healthy animal? And, in your example of the destitution of the wilderness, would anyone really except our worthless cow paper?

Plus, what difference is there between the current system and this cow paper besides the fixing of the price of cattle?

-a-train

Edited October 27, 2008 by a-train