What's Wrong with the Gold Standard?
I was thinking about how our monetary system has no material backing and just wanted some quick opinions as to why it's a bad thing. The reason I bring it up is because I've always promoted the gold standard, but gold only has value because people believe they can trade it, which is the same as our unbacked currency. Then again you can't decide how much gold there is in the world on a whim, as in by just printing more, so maybe that's the problem?
Even when the U.S. was on the gold standard, the government regulated the price of gold to keep it stable (and artificially low) so as not to affect the value that they placed upon the currency it supported
When FREE people engage in commerce, they will naturally trade value-for-value.
Gold, silver, and various other items have been used historically as money because men determined for themselves what was money.
Fiat monetary systems are bad primarly because they are an assault upon freedom.
They FORCE men to use something for money that may be (will be) of no value to them.
There are evil motivations for doing this that I won't get into here.
It's not fair to equate the gold standard to a fiat standard by saying the value of both derives from "belief they can trade it".
Men have not freely come to the conclusion that fiat money has value. They are not freely exchanging it.
The businessman goes to jail if they do not accept it.
Under this line of reasoning, a gold standard enforced by a government is equally corrupt.
A government should not be able to dictate what 3rd parties consider money to each other.
The government is in its right to determine what is value to IT, and insist you pay your taxes in this form of money.
But that's as far as I think it is reasonable to go.
When men are left to their own devices to determine what is money to them, de-facto standards will arise.
At this point, it may be beneficial for the government to regulate standards in weights/measures. But even here I would argue it is not NECESSARY.
There will always, however, need to be laws to protect against fraud (counterfeiting).
While I believe that the gold standard is better than no standard, the fact remains that the ideas of money, value and worth are all abstract. They are dependent upon what someone is willing to trade for them.
I had more, but it was turning into a blog post, so I think I will save it for a another time and place. ;-)
http://catalog.usmint.gov/webapp/wcs/sto...
Get a "Red Book" (Guide Book of United States Coins" by Yeoman and Bressett) at a coin store. While in the coin store, look at the FULL ARRAY of US Government Gold Coins that have been issued since 1985.
Conservatives allow their politics to inform their numismatics, so they do not know the full history of the forms and uses of money.
khalling was right about one thing: before 1861, the nation had hundreds (perhaps thousands) of independent banks issuing money. It was not all good money. But mechanisms of information called "Bank Note Reporters" were one solution. Also, as it happened, (and as I noted here), many of those local banks showed SPANISH coins though promising to pay in federal quarters and halves.
That said, the National Banking System required that banks deposit GOLD with the Treasury. In return for the gold (minimum $25,000), they got federal bonds. Against the bonds, they could create their own notes to lend, up to 90% of the value. It was NOT fractional currency. Despite that, banks still failed.
I could go on. I have quite a bit about numismatics on my blog.
Money as a Crusoe Concept
http://necessaryfacts.blogspot.com/2011/......
Gresham's Conjecture
http://necessaryfacts.blogspot.com/2012/......
Debt: The Seed of Civilization
http://necessaryfacts.blogspot.com/2011/......
Murray Rothbard: Fraud or Faker?
http://necessaryfacts.blogspot.com/2012/......
Numismatics as the Standard of Proof in Economics
http://necessaryfacts.blogspot.com/2011/......
Numismatics informs Economics
http://necessaryfacts.blogspot.com/2011/......
"de facto" gold standard: would require a fixed exchange rate between federal reserve notes and gold. that does not exist. Your definitions need to be defined since they are outside the accepted definitions of these terms. As to referring to my post as "nonsense," your arrogance coupled with lack of factual statements is corrosive to the discussion.
2. Throughout the 19th century, as new minor coins and subsidiary coins were issued such as the half cent, 2-cent copper, 3-cent silver each Congressional authorization act set the legal tender limit of the coin. The 3-cent silver of 1851 was legal tender up to 30 cents. Legal tender had a definition long before Grant.
3. You are perfectly free to write a contract in any form of exchange you want. You can open a gas station and sell for only silver or gold if you want. You can build a skyscraper and rent it out for bushels of apples. You are under no "legal tender" obligation to accept federal money.
4. The government issues all kinds of fancy fiduciary paper. It is not all "legal tender." They issue medals and medallions, military decorations, all of them very coinlike but not legal tender. The law says that this thing or that is or is not "legal tender" in order to specify what fancy paper and which fancy round things are intended as obligations of the United States.