Politics! And Your Money!

[a-train]

I have to say that I am bummed we can't mention any candidates on this forum anymore. Do we have the hard fast rules up on this yet?

I am very concerned about the economic situation of this country. From my youth, my father, a professional numismatist and my mother taught me the value of the Gold Standard of money. For those who are unfamiliar with this, I'll explain briefly.

A Gold Standard is a monetary standard under which the basic unit of currency is equal in value to and exchangeable for a specified amount of gold. It is simple. If your money is actually made of specified weights of gold, you have a Gold Standard.

Many don't know this, but our Constitution mandated that this country's money exist on such a standard. Only in the 20th Century did the U.S. Dollar become nothing but paper backed by nothing at all. Such money is called fiat money because it is only worth something as long as a government mandates that it is worth something.

I CANNOT SAY THIS SERIOUSLY ENOUGH

There has never been, in the history of the world, a fiat money system that didn't collapse except for those that exist today. A score or more have collapsed in the past 30 years. Ours is technically only about 35-40 years old.

Virtually every person I have ever discussed this with, who knows anything about this, and the means by which our country left the Gold Standard, believes we will ultimately be compelled to return to such a standard or suffer the total collapse of the Dollar and the U.S. economy.

If you have never heard of this, look up hyperinflation and you will read about the worst possible scenario for a fiat monetary system. But if you want the Cliff note, take a look at this:

This is real! This woman is burning money! In the middle 1920s, the German currency, a fiat currency, underwent the worst hyperinflation in known history. Her fire will literally burn longer than the wood this amount of money could afford. This money is worthless.

But it won't happen to America, right? We have it all figured out and Uncle Sam has everything under control, right? WRONG! Whether its this week or after our great grandkids are filling out their first applications for employment, a catastrophe like this is what we are headed to.

Here is another little known fact: There is no case in recorded history of a Gold Standard monetary system failing in this manner.

Do you think the Framers had a clue?

You may have noticed there has been some talk about this issue in the Presidential debates. What baffles me and scares me is that many of the candidates and public in general seem to have a feeling that this kind of talk is silly alarmist jive. Trust me, this is serious. The collapse of a fiat system has marked the end of many great empires.

In the mid 1990's, the Russians had an extreme case of inflation due largely to the actions of their Central bank which printed money and lowered interest rates in a failing attempt to stimulate the economy which only devalued their money and put them in a depression worse than the one we Americans call the Great Depression.

This is real ladies and gentlemen, if you don't know about this, you need to find out more NOW!!! We are slipping into a recession right now that will require radical and immediate action or we will be as broke as was Yeltsin.

Anybody watching this? Did you see any talk about this in the debates? Thoughts? Ideas? This is of tremendous concern to me and I hope America will wake up before it is too late. There is a movement that is peaking it's head out within this election that is headed to repair this situation, but I fear terribly that it will fall back into obscurity and go unnoticed for too long.

-a-train

[CrimsonKairos]

I studied this a bit when I was younger.

Problem is, we don't have enough gold to back all the paper money we have in circulation.

Our currency has value not just because of government mandate, but also because it represents the future prosperity and labor power of the USA. Other countries accept our money because it is assumed we will continue to run businesses and generate sales and have a working economy, etc.

America has had a pretty bad history with money, etc.

Pretty sad when John Pierpont Morgan had to bail the U.S. Government out of debt before they'd figure out to establish the Federal Reserve system and all the rest.

What solution would you advance, a-train? How would you rectify the fiat status of our currency?

[FrankJL]

CK pretty much has this one right.

We (The US) don't have enough gold reserves to back even half the currency we currently have in circulation, both in electronic and paper form.

Even including all the gold reserves held by all IMF countries we would still come up short.

Comparing our country now, and its currency to the events that lead to the hyperinflation of the early Weimar Republic is stretching the point a bit too far.

The Weimar Republic was very unstable from the start, and adding the effect of the Treaty of Versailles and the forced repatriations made the situation much worse. The reparations did damage Germany's economy by discouraging market loans, which forced the Weimar government to finance its deficit by printing more money, causing rampant hyperinflation.

I just don't see this happening with our currency, our our country in general.

[a-train]

Problem is, we don't have enough gold to back all the paper money we have in circulation.

What makes us say that? How is such a shortage even possible? Is there some reason to believe that the value of gold and silver could become so high that there isn't enough of it on the planet to back a liquid currency? And even if this were so, would we continue to run out of all the platinum and palladium and so on? Could it really be possible to run out of precious metals for the purpose of money?

Is that why we left the Gold Standard for a fiat system? There wasn't enough real money in the world to go around so we had to start making fake money and now we are all much better?

Is there any indication that artificial stimulation of any economy through extension of credit can result in anything other than eventual inflation or deflation, or both which are natural corrections. What is the root of deflation? Is it the contraction of money within an economy or the cause of that contraction?

Pretty sad when John Pierpont Morgan had to bail the U.S. Government out of debt before they'd figure out to establish the Federal Reserve system and all the rest.

Debt. Hhhmmmmmmm...... Why did uncle Sam need help? He was in debt you say?

I rest my case.

-a-train

[a-train]

the Weimar government to finance its deficit by printing more money, causing rampant hyperinflation.

I just don't see this happening with our currency, our our country in general.

Why won't the printing of tender to extend the deficit in this country not lead to hyperinflation or some other economic calamity? What protection do we have?

Would you advise me to use more credit cards to pay off other credit cards indefinitely in order to live beyond my means? Imagine I did this until my death and stuck my creditors at the end. Is that right? Is there some big difference between me alone and all of us as a nation in this regard? Should we live on the credit of credit and stick our kids with the bill when we die? How about someone else's kids?

-a-train

[CrimsonKairos]

Again, what would you advance as a solution?

[FrankJL]

but what is your solution?

Besides just saying go back to the gold standard, which I will tell you as economics major is neither practical nor feasible in this modern global economy.

[Moksha]

I have to say that I am bummed we can't mention any candidates on this forum anymore.

-a-train

You know, in the LDS hymnal, each song has a tune name. Perhaps we could refer to the candidates by their tune name. For instance, the current leader of delegates for the red party could be known as polyurethane. The leader of the blue delegates could be called, that woman.

[pam]

You know, in the LDS hymnal, each song has a tune name. Perhaps we could refer to the candidates by their tune name. For instance, the current leader of delegates for the red party could be known as polyurethane. The leader of the blue delegates could be called, that woman.

I think we need to stick to the rules so as to not get the site into any trouble with the IRS.

[Palerider]

You know, in the LDS hymnal, each song has a tune name. Perhaps we could refer to the candidates by their tune name. For instance, the current leader of delegates for the red party could be known as polyurethane. The leader of the blue delegates could be called, that woman.

or we could call her the old Helen Reddy song....I am Woman....I am sure with pammie being older than dirt will remember that song.....LOL!!!!

[pam]

or we could call her the old Helen Reddy song....I am Woman....I am sure with pammie being older than dirt will remember that song.....LOL!!!!

I am woman hear me roar in numbers too big to ignore. Nope I've never heard of it.

[Palerider]

I am woman hear me roar in numbers too big to ignore. Nope I've never heard of it.

yea right........

[a-train]

Again, what would you advance as a solution?

1. Withdraw from not only the unconstitutional invasion of Iraq, but withdraw our troops and the subsidization of regimes and our tax dollars from plans to intermingle in affairs of sovereign countries throughout the world and institute a constitutional foreign policy at the savings of trillions of U.S. Dollars and countless lives both American and foreign.

2. Institute a constitutional domestic policy and wipe out the bureacracies of this nation that eat up tax dollars and contribute to our relentless national debt while serving special interests, not individual freedom. Departments which deprive Americans of their economic liberty such as the Department of Education, Homeland Security, CIA, IRS and on and on would be eliminated at the savings of trillions of U.S. Dollars.

3. Operate the Federal Government on a balanced budget and use all surplus to rid us of the national debt.

4. Rid this nation of the Federal Reserve (again).

5. Have the Congress operate its constitutional authority to coin money maintaining the Gold Standard.

6. Allow Americans to possess once again the personal and economic liberty to practice frugality and philanthropy both individually and collectively in the care and succor of the sick and poor as we allow the economy to return to its unmanipulated and productive free state.

Certainly there are more details than this, but this is the general notion circulating among a growing movement in this country.

-a-train

[a-train]

but what is your solution?

Besides just saying go back to the gold standard, which I will tell you as economics major is neither practical nor feasible in this modern global economy.

Your right, it definitely would be neither practical nor feasible if our goal was to institute a single global economy. But that is not the goal. We are not on a mission to depart from the constitutional principles on which this country rests in an effort to assimilate our economy into a global one.

That is what is so dangerous about our situation. If we are willing to depart from every principle of freedom which we used to hold so dear and amass the largest debt in history in the effort to avail ourselves of the prosperity and wealth of the world, we are truly not worthy of freedom, but only the slavery of debt and the calamitous consequences thereof. Our policy both domestic and foreign should stand on the foundation of our constitution and become a shining example of a truly free economy in a sovereign nation unobstructed by outside influence.

-a-train

[FrankJL]

Your right, it definitely would be neither practical nor feasible if our goal was to institute a single global economy. But that is not the goal.

We don't have to try and institute a global economy, that has existed for some time now. It is a good thing. It has helped to not only raise our already high standard of living but has brought hope and industrialization to many 3rd world countries.

Regardless of what you may think we don't operate in a bubble. We can't go off and do something that is only in our own interests, because however we choose to handle our own economy will affect other counties around the world, which in turn will come around the affect us again.

We are not on a mission to depart from the constitutional principles on which this country rests in an effort to assimilate our economy into a global one.

Exactly where in the US Constitution is any reference to commodity backed currency? A1.S8 only states congress has the power "To coin Money, regulate the Value thereof". If anything this speaks of a fiat based currency then a commodity based currency.

That is what is so dangerous about our situation. If we are willing to depart from every principle of freedom which we used to hold so dear and amass the largest debt in history in the effort to avail ourselves of the prosperity and wealth of the world, we are truly not worthy of freedom, but only the slavery of debt and the calamitous consequences thereof. Our policy both domestic and foreign should stand on the foundation of our constitution and become a shining example of a truly free economy in a sovereign nation unobstructed by outside influence.

-a-train

More touchy feely stuff that ignores the realities of the 21st century world, while reminiscing of a 17th century world.

PS...as a percentage of GDP (how most economists measure the national debt) we are nowhere near a high point. Recall Truman had us to nearly 95%. Also in reality our debt has very little effect on our economy or our standing as a nation. It serves mainly as a pole for politicians to dance around during election time, trying to ramp up fear and intimidation in the uneducated masses.

[sgallan]

PS...as a percentage of GDP (how most economists measure the national debt) we are nowhere near a high point. Recall Truman had us to nearly 95%. Also in reality our debt has very little effect on our economy or our standing as a nation. It serves mainly as a pole of politicians to dance around during election time, trying to ramp up fear and intimidation in the uneducated masses.

Uhh.... I am very educated. I have been following the political process for decades now. You are just "spinning". And FWIW, you are being haughty, superior than thou, and even insulting, in doing so.

Are you really that special? Shall I bow before you as some sort of God?

Get over yourself..... politics is not religion. Though for people such as yourself I suspect you politics is more important than your general humanity, and even your relationship with God.

Disclaimer: This is obviously hyperbole, and I can do hyperbole in a personal way. Is politics so important to you that you want to go there?

Just curious....

[FrankJL]

I find it vaguely amusing that an atheist is questioning my relationship with God...

[drjme]

I have been following these issues from the other side of the world.

Here is a article from a guy whose progress in these areas I have been following for a while:

Senator Ensign sends the Definition of Dollar! VICTORY IS MINE!

Friday, December 21st 2007 — Christopher Hansen

For the links read this at:

Senator Ensign sends the Definition of Dollar! VICTORY IS MINE!

Well, after years and years of writing government officials asking what a dollar is I finally got it. It is, surprisingly, a clear and unequivocal answer to the question: “What is a dollar.”

Senator John Ensign of Nevada sent me the ANSWER written in a report by the Congressional Research Service. The most important part of the answer is found on page three (page two of the answer) when it states:

Ballentines Law Dictionary, 3rd Edition (1969)

dollar. The legal currency of the United States; State v Downs, 148 Ind 324, 327 ; the unit of money consisting of one hundred cents. The aggregate of specific coins which add up to one dollar. 36 Am Jlst Money A§ 8. In the absence of qualifying words, it cannot mean promissory notes, bonds, or other evidences of debt. 36 AM Jlst Money A§ 8.

American Jurisprudence, Volume 36, A§ 8 [T]he term “dollar” means money, since it is the unit of money in this country, and in the absence of qualifying words, it cannot mean promissory notes or bonds or other evidences of debt. The term also refers to specific coins of the value of one dollar. (27 Ohio Jur pp . 125, 126, A§ 3), (United States v. Van Auken, 96 US 366, 24 L ed 852)

Then the report defines Federal reserve notes:

Black’s Law, Second Pocket Edition (1996)

Federal Reserve Note

Federal reserve note. The paper currency in circulation in the United States. The notes are issued by the Federal Reserve Banks, are effectively non-interest-bearing promissory notes payable to bearer on demand, and are issued in denominations of $1, $5, $10, $20, $50, $100, $500, $1,000, $5,000, and $10,000.

“Payable” in what? In dollars of course. You cannot pay with a “promissory note”.

Therefore it is VERY CLEAR that Federal reserve notes ARE NOT dollars but should be able to be redeemed in “dollars.” FRNs, however, cannot, presently, be redeemed in “money” but only in other notes. Remember that the “term ‘dollar’ means money” which CANNOT BE promissory notes according to the report.

Therefore, whenever you receive Federal reserve notes (promissory notes) issued in any “$” denominations you should calculate their “value” in REAL “dollars” such as the report describes as:

DOLLAR. The unit employed in the United States in*calculating money values.* Blacks Law Dictionary, 4th Edition Revised (1957)

If you are a Nevada citizen I highly recommend that you contact Senator Ensign’s Las Vegas office and ask Special Assistant Mary Mason, to please send you a copy of the Congressional Research Service “report” concerning the definition of what a dollar is.

If you are in another State of this Union I highly recommend that you copy this letter from Senator Ensign’s office and ask YOUR Senator or Representative to send you a copy of the Congressional Research Service “report” concerning the definition of what a dollar is.

Then, if I were you, I would send this “report” to the IRS and tell them that you are relying on this report from your Congressman as to what a “dollar” is and that you now know that a Federal reserve note is a “promissory note” and cannot be a dollar and so you will calculate the “value” of “Federal reserve notes” by the fair market “value” of the silver Liberty dollar coins.

I would tell them that you will do this unless the IRS can show you the LAW, not the IRS’s opinion or the Department of the Treasury’s opinion, but the law that clearly and unequivocally states that a Federal reserve note has been defined by Congress to be a “dollar” and not just “promissory notes” or “debt instruments” or “legal tender” (pennies are legal tender and not dollars) that are “issued in denominations” of “$s”.

It is clear that these silver Liberty dollar coins, authorized by Congress at 31 USC Sec. 5112 (e) with the “value” of a dollar as per 31 USC Sec. 5112 (d)(1), meet all the legal requirements to be dollars as per the “report” while Federal reserve notes issued in various denominations of $s do not meet ANY of the legal requirements of a dollar but only those of, possibly, United States Securities and/or legal tender as per 31 USC Sec. 5103. But since they cannot be redeemed in “dollars” you are not even sure they meet those standards.

We Americans SHOULD have the right to know what the value of a dollar is in clear and unequivocal terms since, if we are liable for a tax by clear and unequivocal language, we must be able to calculate that tax using: “The unit (dollar) employed in the United States in calculating money values.” Blacks Law Dictionary, 4th Edition Revised (1957) (See report). Because if we cannot use the dollar to calculate “income” (whatever that is) then we CANNOT know the “value” of whatever we accepted as payment.

Keeping in mind the well-settled rule that the citizen is exempt from taxation unless the same is imposed by clear and unequivocal language, and that where the construction of a tax law is doubtful, the doubt is to be resolved in favor of those upon whom the tax is sought to be laid… Spreckels Sugar Refining Co. v. McClain,192 U.S. 397, 24 S.Ct. 376, 418, U.S. 1904

It is time to stand up against the Federal Reserve Bankster’s tyranny. This is your chance to do something. It may not be a lot but it is an opportunity to do something to stop this Federal Reserve Bank taxation (inflation is a tax) without representation. Did you elect the Board of Governors of the Federal Reserve Bank? NO! Does Congress audit the Federal Reserve Bank? NO! Is the Federal Reserve Bank the establishment of the Second Plank of the Communist manifesto? YES? Is the Income Tax the Establishment of the Second Plank of the Communist Manifesto? YES. Is Communism a religion? Professors and religious organizations around the country say that it is.

Stand up. Get a copy of the report from your Congressman/ Senator! Do it today.

And please forward a copy of what you receive to Christopher Hansen either by scanning it in and emailing it to me at [email protected] or mailing it to me at

Christopher Hansen

2657 Windmill PKY #107

Henderson, Nevada 89074

[a-train]

Regardless of what you may think we don't operate in a bubble. We can't go off and do something that is only in our own interests, because however we choose to handle our own economy will affect other counties around the world, which in turn will come around the affect us again.

Again, precisely. Our overspending and creation of gigantic debt and artificial economic growth is not only going to blow up in our face, it is going to have serious ramifications world wide.

Exactly where in the US Constitution is any reference to commodity backed currency? A1.S8 only states congress has the power "To coin Money, regulate the Value thereof". If anything this speaks of a fiat based currency then a commodity based currency.

Wow, do they have 'fiat' listed as a synonym for money in ecomonics these days? If so, we are definitely screwed.

Only in a our modern loose use of the term 'money' does it apply to articles of fiat currency.

Section 1:10 says: 'No state shall...coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts'

More touchy feely stuff that ignores the realities of the 21st century world, while reminiscing of a 17th century world.

OK, so bring me back to reality and tell me which economic school of thought holds that increasing and perpetual debt translates to something good for the debtor and what is the basis for this assertion?

PS...as a percentage of GDP (how most economists measure the national debt) we are nowhere near a high point. Recall Truman had us to nearly 95%. Also in reality our debt has very little effect on our economy or our standing as a nation. It serves mainly as a pole for politicians to dance around during election time, trying to ramp up fear and intimidation in the uneducated masses.

During the Civil War the Debt over GDP rose above 20% for the first time in the 19th Century and peaked right at 30% only to drop below 20% within a 16 year period. It declined for forty years until it got below 10% and in the early 1920's rose again during WWI peaking at around 38% or so and dropping back below 20% in 1928.

The next ten years, in the Great Depression, it rose from 20% to a record 40% in around 6 years. As we entered WWII it spiked to 120% by 1947. It fell sharply with the war's end, but still took 20 years to go below 40% again. Over the next 20 years it floated at middle-high 30s. But, from the Cold War to the end of the 1st Gulf War it soared back up to 65% which fell to a low of just below 60% in 2000-2001. We are now at the highest point since WWII at over 65%.

Only about a dozen of the 231 years since our Independence were higher than where we are right now and they were all in succession during and after WWII. What indication do we have that we are nowhere near a highpoint? And I only wish it were true that the 'uneducated masses' had instilled in them a fear of the dangerous troubles associated with runaway government spending of fiat currency. We can only hope. This is, after all, why I bring it up.

-a-train

[a-train]

I have been following these issues from the other side of the world.

Here is a article from a guy whose progress in these areas I have been following for a while:

To all: While information such as what Drjme has given may look to some like a pamphlet from a crazed conspiracy theorist, THIS IS REAL. This is VERY real. Google it, search it, do what you have to do. The Framers sought to protect us from this and we have to fight it!

This is not a scare tactic, the political machine isn't pushing this message. We need to search for candidates that will help us get rid of the Federal Reserve and put us back on the path that our constitution started us on.

-a-train

[CrimsonKairos]

Yes, let's repeal the Federal Reserve, abandon centralized banking, revert to the days where a private banker could "buy" the U.S. government, and discard the economic lessons of the past century since the Fed was created (1913).

The Founders had lots of insight and great ideas. I say that having studied them and political science to a moderate degree. However, the very existence of constitutional amendments highlights the fact that the Founders could not foresee every eventuality. They lived in a different world than us.

We cannot revert to a gold-backed standard of money for a few reasons:

First, because there isn't enough gold in the world to back all the Federal Reserve Notes (FRN's) floating around.

Second, because if we tried to retire FRN's and replace them with gold certificates, the economy of the USA and the rest of the world would go into a spiraling shock.

Third, because the amount of gold in the world is fixed, whereas the economy and output and growth of nations is not fixed and requires a floating or fluid system of valuing currency.

Gold has no intrinsic worth anymore than a FRN does. Gold only has value because we assign value to it. I'd rather have a handful of FRN's than a lump of gold if my local Safeway only accepts FRN's and not gold as the method of purchasing food.

This ubiquitous and seemingly immortal push to revert to a gold standard and abolish the FED and so forth is nosensical to me. Didn't we learn anything about why gold-backed currency was unable to deflect the Panic of 1893 and the Panic of 1907 (among others)?

Didn't we learn anything about why the U.S. was ripe to slide into the Great Depression after having had to use so much of our gold to help Britain stabilize after they had decided to revert to gold-backed currency, a decision which ultimately failed?

Gold-backed currency issued by the Federal government is no longer a pragmatic or even possible option in today's world.

As the USA has advanced and as the years have passed, using metal coins or ingots or bars as the standard national monetary unit has become impractical and dangerous.

When gold-backed currency wasn't cutting it, we had efforts like the Bland-Allison Act and the subsequent Sherman Silver Purchase Act to stabilize the economy through the "Free Silver" mentality (i.e unlimited coinage of silver bullion). Only problem is that whenever a new silver or gold mine is discovered, the amount of bullion increases, causing deflation in value of the already-existing gold or silver coinage, which leads to inflation in prices of goods and services (if we were to be strictly on a monometallic or bimetallic standard), etc.

The difference is that governments cannot regulate how much gold or silver the world has or can produce. This leaves a gold and/or silver-backed currency system up in the air in terms of stability and unable to keep pace with the every-growing world economy. Then there's the problem of, say, a country like China exporting goods to us for x amount of gold, which gold we won't ever see back because China doesn't rely on imports from the USA. So effectively our gold and silver would in large measure slowly trickle over to China's coffers, leaving us with what for currency?

Then there's the problem of being unable to adequately expand the supply of representative money (read: gold or silver certificates) due to requirements that banks have x percent of all deposits in their vaults in the form or gold or silver. So if I deposit $10 gold dollars with a bank, but the law requires them to keep 40% on hand, that means they can only loan out $6 of those dollars, which means that on a macro scale, there is an insuperable self-imposed limit on how much credit can be offered to stimulate or invigorate an economy. It was this fact that in part lead to the worsening and lengthening of the Great Depression.

In addition, the Sherman Silver Purchase Act required the government to purchase a minimum of $2 million worth of silver each month, issuing certificates that could be redeemed for silver OR gold. So smart investors redeemed their certificates for gold, effectively causing a "run" on the USA's gold supply.

That is why FDR issued Executive Order 6201 and made possession of all but token amounts of gold illegal. People were hoarding it, no more certificates or promissory notes could be issued by banks since they had to have that minimum x percent of all deposits on hand and no more gold was circulating due to this unanticipated "run" on the USA's gold supply.

So banks couldn't make loans; wages couldn't be paid; unemployment rose; productivity dropped; farmers defaulted on loans; banks went broke (about 9,000 by the end of the Great Depression); and the U.S. government would have been unable to honor the gold certificates it had issued to foreign investors and depositors.

Those are a few reasons why a gold-backed currency is not feasible or even possible anymore. The Gold Standard may have worked for the Founders and so forth, but by 1893 our economy was already seizuring due to the limits of a gold-backed currency trying to keep pace with a rapidly growing and industrializing national economy.

Whether you look through the economic lens of Mises or Keynes or Marx for that matter, the fact is that unless a national economy doesn't expand or grow, metallic-based currencies fail time and again.

There's a reason all the nations of the world have abandoned gold-backed currencies, and no, its not because of some devious conspiracy cooked up by J.P. Morgan and the "money trust" in the early 1900's, or some far-reaching international conspiracy that resulted in the Bretton Woods agreement, or whatever other theories are floating around.

The facts are that gold-backed currency cannot adequately deal with the issues of stagflation, economic expansion, hoarding, debasement, and a few other rather troubling things.

Now, I understand the desire for, say, a reform in our fiscal policy and/or monetary policy from time to time. I agree that being in debt is never a great thing. I agree that we should spend our money (even if it is fiat currency) wisely and make sure we don't needlessly spend money overseas in deals with questionable regimes, nor should we have to borrow tons of money from countries like, oh, China.

BUT...reverting to a Gold Standard and/or abolishing the FED would not solve our economic problems. In fact, it would worsen them until we reached a point where we'd have another forced sale of private gold to the government and a new Federal Reserve Act of 1913.

What is the real issue here? I mean if you couldn't buy groceries or gas or cars or function in the economy with your FRN's then I'd understand. But our system works. It works the world over. It's no longer backed with an inelastic source like gold, but instead with the labor and industry of the American people.

Gold doesn't work. Silver doesn't work. Gold and silver together don't work. History has shown this. So before we launch an ill-advised experiment with our currency and national economy, we'd do well to remember what happened to the rest of the world the last time we had a Great Depression.

Our financial woes echoed through Canada, Latin America, and in Europe, particularly in "Germany" and the Weimar Republic where we could no longer afford to loan them gold to pay back the war reparations they still owed from WWI, and it was the sudden halt of their economy partly caused by our inability to bail them out due to our own Great Depression that created the perfect storm for Hitler to seize power and promise to solve many of their financial woes.

Just remember one thing: That woman who's shown stuffing marks into her stove only had to do that because gold-backed currency failed the USA. Its simple history. The lesson is clear: When America stumbles, the world stumbles, and when the world stumbles, very unsavory characters step in and offer to solve the problems but in fact end up creating more problems and hardship for the USA and the world as well.

Buy gold if you want; do the digital gold certificate thing if you want; more power to you. The fact is, though, that we cannot operate on a gold-backed currency anymore, and several wrenching economic disasters in our nation's history underscore that point.

[FrankJL]

I was going to add something to CK's rather exhaustive post, but I can't think of anything he didn't cover..

Nice work...

[Fiannan]

How about political parodies? There are some hillarious parodies out there that I think people here would love.

[CrimsonKairos]

One last thing I wanted to note was that while Alan Greenspan spoke in favor of a hard currency/Gold Standard in 1966, and though he is fundamentally a monetarist, he himself admitted that administering theory as doctrine is rarely practical within the global economy of which the USA is a part.

[a-train]

Wow, long.

The argument about whether we can get enough gold to back the currency is irrelavant. As I already stated, all that is implied is that the currency must possess some intrinsic value. Gold, silver, platinum, yada, yada.

if we tried to retire FRN's and replace them with gold certificates, the economy of the USA and the rest of the world would go into a spiraling shock.

You mean like hyperinflation? Certainly nobody is asserting this be done overnight. It would have to be planned and executed orderly over time.

because the amount of gold in the world is fixed, whereas the economy and output and growth of nations is not fixed and requires a floating or fluid system of valuing currency.

This is exactly the reason to base the currency on something like gold, it is a natural resource that cannot be artificially produced and inflated and deflated unscrupulously; a tyrannical practice that ever accompanies fiat systems including ours.

Gold has no intrinsic worth anymore than a FRN does.

I guess that is true if you only have a speck of gold with a current market value equal to that of a green piece of paper. I think the cost of production for a single FRN is like 6 cents right now. That's around the value of 0.00125 gram of gold. But would we even pay 6 cents for one if their was no US Government? Of course, one is worth about what 4 cents was worth in 1913 when we got the Federal Reserve.

Didn't we learn anything about why gold-backed currency was unable to deflect the Panic of 1893 and the Panic of 1907 (among others)?

It didn't keep us out of the civil war or cure influenza, but that isn't what its for is it? So are you telling me that since we went to the Federal Reserve and to fiat we haven't had any panics?

Only problem is that whenever a new silver or gold mine is discovered, the amount of bullion increases, causing deflation in value of the already-existing gold or silver coinage, which leads to inflation in prices of goods and services (if we were to be strictly on a monometallic or bimetallic standard), etc.

But this isn't a problem for our fiat currency? The Chinese have over a trillion they could dump whenever they feel the desire. Imagine an extra trillion in the economy. If you think gas is high now, sheesh!

The difference is that governments cannot regulate how much gold or silver the world has or can produce. This leaves a gold and/or silver-backed currency system up in the air in terms of stability and unable to keep pace with the every-growing world economy. Then there's the problem of, say, a country like China exporting goods to us for x amount of gold, which gold we won't ever see back because China doesn't rely on imports from the USA. So effectively our gold and silver would in large measure slowly trickle over to China's coffers, leaving us with what for currency?

But this trickling can't happen with FRNs? Certainly the modern purchasing to those countries would be electronic. The backed gold would be here anyway. When they put those dollars back into the world economy or into ours, it wouldn't be any sort of a problem for us.

Then there's the problem of being unable to adequately expand the supply of representative money (read: gold or silver certificates) due to requirements that banks have x percent of all deposits in their vaults in the form or gold or silver. So if I deposit $10 gold dollars with a bank, but the law requires them to keep 40% on hand, that means they can only loan out $6 of those dollars, which means that on a macro scale, there is an insuperable self-imposed limit on how much credit can be offered to stimulate or invigorate an economy. It was this fact that in part lead to the worsening and lengthening of the Great Depression.

We don't want an artificial increase in money supply. That is the whole point. Artificial stimulation of the economy through great credit extension is what causes such disasters. The longer you delay one with credit, the greater it will be. Much of the other economic woes you mentioned were not due to the Gold Standard at all, but improper government intervention in the economy, which in and of itself usually serves to replace one woe with another.

Whether you look through the economic lens of Mises or Keynes or Marx for that matter, the fact is that unless a national economy doesn't expand or grow, metallic-based currencies fail time and again.

Like which one? What gold currency in the history of the world went valueless? When did they ever just throw their gold out with the orange peels?

There's a reason all the nations of the world have abandoned gold-backed currencies, and no, its not because of some devious conspiracy cooked up by J.P. Morgan and the "money trust" in the early 1900's, or some far-reaching international conspiracy that resulted in the Bretton Woods agreement, or whatever other theories are floating around.

Your right, it's much simpler than that, instant gratification, that's why. Most of Europe came off of the Gold Standard because of the debt incurred during WWI. Instead of waiting for the rise, they all wanted to get a jump on everyone else and sunk deeper into debt.

Gold doesn't work. Silver doesn't work. Gold and silver together don't work. History has shown this. So before we launch an ill-advised experiment with our currency and national economy, we'd do well to remember what happened to the rest of the world the last time we had a Great Depression.

The Great Depression wasn't a result of a backed currency. It was the woes of debt. That is what fiat currency is all about, debt. And history has shown the dangers of debt, not the dangers of real money.

Just remember one thing: That woman who's shown stuffing marks into her stove only had to do that because gold-backed currency failed the USA. Its simple history.

This was a direct result of the FED. The debt associated with the War of 1812 knocked around 24% off the value of the Gold US dollar, but it bounced back sharply and ROSE in value for 60 years. Then, the debt from the Civil War hurt it bad and took 50% of the value of the dollar which again rebounded quickly and ROSE until WWI. The rebound didn't come because of the actions of the FED. Instead, we had the Great Depression which STILL resulted in a rebound in the 1930s and 40s which was interupted before reaching pre-WWI value by WWII.

There was no rebound after WWII, the FED has systematically eaten away the value of the US dollar since. A dollar today will buy what was a nickel in 1935 and what was about 4 cents when Joseph Smith was alive.

Don't buy the lies. Debt is debt, never money. We will either wake up before a catastrophe, or one will wake us up, we hope.

-a-train