Gold Standard

hellblazer

hellblazer

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Sep 20, 2008
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I'd like somebody knowledgeable on this topic, preferably Guerrilla, to help me on this.

I've always liked the idea of a gold standard because it seems it would be harder to devalue the currency at the rate they're currently doing. So it would be harder to cause hyperinflation.

However, I heard from somebody recently that a gold standard wouldn't work in today's world because with the size of today's economies(trillions of dollars), it would be impossible to have that much gold should the people decide to redeem their dollars. That we simply don't have enough gold to have a gold-backed system.

So what is the ideal monetary policy? What is the ideal financial system? Paper currency backed by nothing seems idiotic to me, and is only leading to this crazy fuck Bernanke devaluing our dollar. But if our dollar was backed by gold, and everyone redeemed their dollars, wouldn't we run out of gold?

Sorry if this is a retarded question, I've been trying to think of the perfect financial and monetary system lately and this point is bothering me.
 


There was a thread very similar to this a few days ago: http://www.wickedfire.com/shooting-shit/136071-but-doesnt-gold-standard-idea-suck.html

The amount of gold doesn't matter. It is just a measuring stick.

I posted a few quotes which may somewhat clear up that matter:
The deeper reality, however, is that the supply is not even important. Remember that the primary function of money is to measure the value of the items for which it is exchanged. In this sense, it serves as a yardstick or ruler of value. It really makes no difference if we measure the length of our rug in inches, feet, yards or meters. [...] no matter what measurement we use, the reality of what we are measuring does not change. Our rug does not become larger just because we have increased the quantity of measurement units by painting additional markers onto our rulers.

If the supply of gold in relation to the supply of available goods is so small that a one ounce coin would be too valuable for minor transactions, people simply would use half-ounce coins or tenth-ounce coins. The amount of gold in the world does not affect its ability to serve as money, it only affects the quantity that will be used to measure any given transaction.

-G. Edward Griffin; The Creature From Jekyll Island
Click to expand...

What is the effect of a change in the money supply? Following the example of David Hume, one of the first economists, we may ask ourselves what would happen if, overnight, some good fairy slipped into pockets, purses, and bank vaults, and doubled our supply of money. In our example, she magically doubled our supply of gold. Would we be twice as rich? Obviously not. What makes us rich is an abundance of goods, and what limits that abundance is a scarcity of resources: namely land, labor, and capital. Multiplying coin will not whisk these resources into being. We may feel twice as rich for the moment, but clearly all we are doing is diluting the money supply. As the public rushes out to spend its new-found wealth, prices will, very roughly, double—or at least rise until the demand is satisfied, and money no longer bids against itself for the existing goods.

- Murray Rothbard; What Has Government Done to Our Money?
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Let us now suppose that the miners, in their quest for a better standard of living, work extra hours and produce more gold this year than previously [...] Now things are no longer in balance. [...] The result of this expansion of the money supply over and above the supply of available goods is the same as in our game of Monopoly. The quoted prices of the suits go up because the relative value of the gold has gone down.

[...] When the miners see that they are no better off than before in spite of the extra work, and especially when they see the tailors making a greater profit for no increase in labor, some of them decide to put down their picks and turn to the trade of tailoring. [...] When this happens, the annual production of gold goes down while the production of suits goes up, and an equilibrium is reached once again in which suits and gold are traded as before.

-G. Edward Griffin; The Creature From Jekyll Island
Click to expand...
 
There is a lot of questions in this post, so I will take one.

The argument that there is not enough gold to support the trillions already created into existence today is false. Gold revaluation would happen to balance the outstanding "money" with the supply of gold.

So in other words, if there is 60 trillion or so USD in existence and there is only 1000 tons backing the USD, they would balance the price of gold to the available dollars. Not sure if that is the most concise way to explain it, but just think that gold is something that is itself a currency, you trade your fiat dollars for ounces of gold. That ounce of gold can be traded with $1 or $100 depending on the golds market price.

This actual event has been taking place right under your nose over the last 10 years and will continue to do so as all fiat currencies are being debased. The endgame might be an official gold revaluation to fix the monetary system and go back to some sort of sound currency (I don't think we will get a traditional gold standard).

Does that make sense?
 
The only thing that matters is who controls the printing of the money.

Whatever stuff backing it up could mean less.
 
anything would be better than the Federal Reserve System....except for the system that will replace it.
 
hellblazer said:
So what is the ideal monetary policy? What is the ideal financial system? Paper currency backed by nothing seems idiotic to me, and is only leading to this crazy fuck Bernanke devaluing our dollar. But if our dollar was backed by gold, and everyone redeemed their dollars, wouldn't we run out of gold?
Click to expand...

I do not think most people are promoting a true gold standard where people can convert their notes to gold at will. What people are talking about is forcing money supply growth to be a function of the total value of the country's gold reserves.
 
savantmarketing said:
There is a lot of questions in this post, so I will take one.

The argument that there is not enough gold to support the trillions already created into existence today is false. Gold revaluation would happen to balance the outstanding "money" with the supply of gold.
Click to expand...

Can't work, because there's too much "false" money out there. Switch out to gold currency, and all those liabilities backed up with made-up money crash & burn, causing a catastrophic collapse of the world's economy. In other words, there's been too much creative accounting going on for decades to easily switch back to something like a gold standard without severe consequences.
 
June 4th, 1963- Executive Order 11110

November 22, 1963-
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Who do you trust to count the gold? The pressure to fake gold holdings will be immense. If you can't trust your country not to kill millionse of innocents in foreign countries, try trusting them to count gold accurately, and to ensuring the purity of the gold.

The whole gold-standard thing is a fail. Currency should be based on the PR rank of all the home pages in your country. End of manipulation. Trust the google-monopoly! pffft, that's never going work either, but it's just as realistic.
 
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Or switch back to barter.
 
Like others said it doesn't matter how much paper money there is. When there is more money printed it would simply make the price of gold go up. Well its not actually going up, the dollar is just going down.

So say years ago every had 1 dollar and that was the price of an OZ of gold. As inflation happened and people started to have 10's and 20's the value of gold would go from $1 per OZ to $10 per OZ or $20 per OZ.
 
Jake1125 said:
Who do you trust to count the gold? The pressure to fake gold holdings will be immense. If you can't trust your country not to kill millionse of innocents in foreign countries, try trusting them to count gold accurately, and to ensuring the purity of the gold.

The whole gold-standard thing is a fail. Currency should be based on the PR rank of all the home pages in your country. End of manipulation. Trust the google-monopoly! pffft, that's never going work either, but it's just as realistic.
Click to expand...

If you really want to do it right money shouldn't be forced by any nation. Money and commerce should be left entirely in the free market. If you want to use gold, use it. If you don't trust gold, don't use it. If you want to pay with paper do it. If you want to pay with debt do it. If you want to pay with other commodities do it.

We don't need to have any standard. Standards develop on their own. We didn't have the government force USB or Firewire on us. They both came about from the free market. One is not better than the other. Some people like USB, others like Firewire. If we don't like either of these we can create something better and maybe that will become the standard if people like it enough.

Money works the exact same way. If left in the free market the free market will determine what will be used for money. We would have private companies issuing notes backed by whatever we feel comfortable with. If these people became assholes and started ripping us off we would stop using their notes and turn to an honest company. Companies would be competing against each other to create the most honest currency possible. We would have tons of innovation in measuring conversions and all that. It would be dialed in like any other unregulated industry (technology).

The gold standard is better than government issued fiat money. But if we really want to talk about the best kind of money it should be the money created in the free market. The free market will determine what is best and the people will support the best form of money developed. We don't need a gold standard and we don't need governments to issue money. We should try something totally off the wall and crazy like the freedom to choose what money we use. I thought Americans were supposed to be free.
 
Jake1125 said:
Who do you trust to count the gold? The pressure to fake gold holdings will be immense. If you can't trust your country not to kill millionse of innocents in foreign countries, try trusting them to count gold accurately, and to ensuring the purity of the gold.

The whole gold-standard thing is a fail. Currency should be based on the PR rank of all the home pages in your country. End of manipulation. Trust the google-monopoly! pffft, that's never going work either, but it's just as realistic.
Click to expand...

Its already managed and measured by the mints who form it into bars.

Look up "suisse", its all measured and certified with serial numbers just like the dollar is.

PampSuisseGoldBar.jpg
 
And you dont like Ron Paul? The only candidate with an understanding of how the monetary system works, the only one who can site crucial dates and events in the history of our monetary system?

At this point there is no way to go back to the gold standard, but it is important to understand what the gold standard did, control inflation. What would be the perfect monetary system now? No idea, that would be a question for someone smarter than I.


hellblazer said:
I'd like somebody knowledgeable on this topic, preferably Guerrilla, to help me on this.

I've always liked the idea of a gold standard because it seems it would be harder to devalue the currency at the rate they're currently doing. So it would be harder to cause hyperinflation.

However, I heard from somebody recently that a gold standard wouldn't work in today's world because with the size of today's economies(trillions of dollars), it would be impossible to have that much gold should the people decide to redeem their dollars. That we simply don't have enough gold to have a gold-backed system.

So what is the ideal monetary policy? What is the ideal financial system? Paper currency backed by nothing seems idiotic to me, and is only leading to this crazy fuck Bernanke devaluing our dollar. But if our dollar was backed by gold, and everyone redeemed their dollars, wouldn't we run out of gold?

Sorry if this is a retarded question, I've been trying to think of the perfect financial and monetary system lately and this point is bothering me.
Click to expand...
 
hellblazer said:
I'd like somebody knowledgeable on this topic, preferably Guerrilla, to help me on this.
Click to expand...
Slayerment has really impressed me in the last year with his grasp of all of these topics. I tend to agree with him 99% so by all means lean on his knowledge.

hellblazer said:
So what is the ideal monetary policy?
Click to expand...
Free market money. Let the market place settle on a standard through competition and exchange. That is how gold came to be money worldwide.

Money and laws, to have any rational basis, have to come from the private sector. Governments co-opt control of these very important mechanisms because they are the levers of civil society, but the original basis for, and determination of money, comes from the market.

hellblazer said:
Sorry if this is a retarded question, I've been trying to think of the perfect financial and monetary system lately and this point is bothering me.
Click to expand...
It is not a retarded question, and there is a lot of disinfo out there from economic illiterates.

There is a great book by Murray Rothbard called, "What has Government done to our Money?". If you read that, you will know everything you will need to know as a layman and a businessman about currency.

It is only about 100 pages of short text, here are links to read it for free digitally or order a copy. Can also be found at Amazon and so on.

http://mises.org/resources/617/What-Has-Government-Done-to-Our-Money

Kiopa_Matt said:
Can't work, because there's too much "false" money out there. Switch out to gold currency, and all those liabilities backed up with made-up money crash & burn, causing a catastrophic collapse of the world's economy. In other words, there's been too much creative accounting going on for decades to easily switch back to something like a gold standard without severe consequences.
Click to expand...
There are severe consequences to the phony accounting, unless you think that it can go on forever, and that the longer it goes on, the consequences don't become worse.
 
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