Trump proposes returning to the gold standard.

a reply to: enlightenedservant

The article is right that the US could go on a gold standard without 100% reserves, the problem is staying on it.

Without international cooperation the price of gold is volatile. If the price went up the US could run out of reserves in months. If it went down the US would massive increase its monetary base resulting in potential inflation and exchange rate collapse.

Putting the US back on gold would almost certainly make the US much poorer and reduce living standards.

originally posted by: TheConstruKctionofLight
a reply to: Krazysh0t

but smart people have figured out ways to keep it from doing so up until now.

If "smart" makes you feel better that you are not actually "slaving" day in day out to the system good luck to you.

Maybe instead pretending like destruction is inevitable, we could work together to improve it?

Keep your head in the sand - all bubbles burst eventually. History attests to the simple fact.

You are starting from the assumption that it's a bubble in the first place.

a reply to: ScepticScot

100% reserves? According to the detailed post (HERE), we don't even have 10% lol. And that's assuming that the gold the Treasury counted is of the correct specs (purity) and there to begin with.

And why would there be international cooperation to maintain a stable gold price now? That proverbial genie's been out of the bag for almost 50 years now. You'd basically be expecting every single gold speculator on the planet to give up their business plans.

Also, I'm curious how the actual process would supposedly go. Over the years, I've heard various people make this claim that it's somehow feasible. But I never hear the detailed plan to actually accomplish it.

1. Congress passes a new "Gold Standard Act" that states what?
2. The US President at the time signs this act into law.
3.
4.
5.
6.
7.
8.
9. Now we're officially back onto the gold standard.

LOL What kind of "plan" is that? And what would the supposed benefits be for normal citizens, anyway?

originally posted by: enlightenedservant
a reply to: ScepticScot

100% reserves? According to the detailed post (HERE), we don't even have 10% lol. And that's assuming that the gold the Treasury counted is of the correct specs (purity) and there to begin with.

And why would there be international cooperation to maintain a stable gold price now? That proverbial genie's been out of the bag for almost 50 years now. You'd basically be expecting every single gold speculator on the planet to give up their business plans.

Also, I'm curious how the actual process would supposedly go. Over the years, I've heard various people make this claim that it's somehow feasible. But I never hear the detailed plan to actually accomplish it.

1. Congress passes a new "Gold Standard Act" that states what?
2. The US President at the time signs this act into law.
3.
4.
5.
6.
7.
8.
9. Now we're officially back onto the gold standard.

LOL What kind of "plan" is that? And what would the supposed benefits be for normal citizens, anyway?

That's exactly my point. Starting a gold standard is easy, pass a law stating the dollar is worth x amount of gold.

It's the making it work afterwards that's the difficult part.

The US has to be willing to buy & sell gold at the price it sets. Even if it only allowed international convertibility the amount of dollars held outside the US is way way in excess of US gold reserves. Even a small rise in the price of gold would create a massive run on the reserves.

I wasn't suggesting that International cooperation in the form of a new Bretton Woods was likely. I was saying that it would be a requirement for a gold standard to even have a chance of working for a short period.

a reply to: enlightenedservant

Granted, that's the what the thread was based on. You may very well be right....in this case.

I will look for opposing articles discounting this position taken by the Forbes article. So far, I've seen little hew and cry in opposition to the article outside ATS posters.

I will not waver on the view that what's going on with our currency violates every common sense control of finances.

It may very well be an 'academic' debate rather than applicable, anyways.

As one poster stated an 'asset based' system would include gold reserves without being restricted only to gold. It could already be, unofficially, in place seeing the USD stays fairly close to other currencies despite the debt.

originally posted by: ScepticScot

originally posted by: enlightenedservant
a reply to: ScepticScot

100% reserves? According to the detailed post (HERE), we don't even have 10% lol. And that's assuming that the gold the Treasury counted is of the correct specs (purity) and there to begin with.

And why would there be international cooperation to maintain a stable gold price now? That proverbial genie's been out of the bag for almost 50 years now. You'd basically be expecting every single gold speculator on the planet to give up their business plans.

Also, I'm curious how the actual process would supposedly go. Over the years, I've heard various people make this claim that it's somehow feasible. But I never hear the detailed plan to actually accomplish it.

1. Congress passes a new "Gold Standard Act" that states what?
2. The US President at the time signs this act into law.
3.
4.
5.
6.
7.
8.
9. Now we're officially back onto the gold standard.

LOL What kind of "plan" is that? And what would the supposed benefits be for normal citizens, anyway?

That's exactly my point. Starting a gold standard is easy, pass a law stating the dollar is worth x amount of gold.

It's the making it work afterwards that's the difficult part.

Yeah, but that's pretty much true for any national plan. Congress could pass a law right now saying we'll build a literal bridge from California to Hawaii. Passing the law itself would be easy. But actually building it would likely be impossible, which is about as likely as I see us going back to a gold standard.

I'm not trying to be rude here but this whole subject irritates me lol. And I literally see no benefit to it for normal citizens.

originally posted by: nwtrucker
a reply to: enlightenedservant

Granted, that's the what the thread was based on. You may very well be right....in this case.

I will look for opposing articles discounting this position taken by the Forbes article. So far, I've seen little hew and cry in opposition to the article outside ATS posters.

I will not waver on the view that what's going on with our currency violates every common sense control of finances.

It may very well be an 'academic' debate rather than applicable, anyways.

As one poster stated an 'asset based' system would include gold reserves without being restricted only to gold. It could already be, unofficially, in place seeing the USD stays fairly close to other currencies despite the debt.

There are far more arguments against a gold standard than for it. Here is just one.

www.businessinsider.com...

a reply to: nwtrucker

Ok, let's suppose the Dollar was now backed by any other commodity. That commodity could be a precious metal, a common metal, corn, rice, whatever. How would this change help the common citizen?

originally posted by: enlightenedservant

originally posted by: ScepticScot

originally posted by: enlightenedservant
a reply to: ScepticScot

100% reserves? According to the detailed post (HERE), we don't even have 10% lol. And that's assuming that the gold the Treasury counted is of the correct specs (purity) and there to begin with.

And why would there be international cooperation to maintain a stable gold price now? That proverbial genie's been out of the bag for almost 50 years now. You'd basically be expecting every single gold speculator on the planet to give up their business plans.

Also, I'm curious how the actual process would supposedly go. Over the years, I've heard various people make this claim that it's somehow feasible. But I never hear the detailed plan to actually accomplish it.

1. Congress passes a new "Gold Standard Act" that states what?
2. The US President at the time signs this act into law.
3.
4.
5.
6.
7.
8.
9. Now we're officially back onto the gold standard.

LOL What kind of "plan" is that? And what would the supposed benefits be for normal citizens, anyway?

That's exactly my point. Starting a gold standard is easy, pass a law stating the dollar is worth x amount of gold.

It's the making it work afterwards that's the difficult part.

Yeah, but that's pretty much true for any national plan. Congress could pass a law right now saying we'll build a literal bridge from California to Hawaii. Passing the law itself would be easy. But actually building it would likely be impossible, which is about as likely as I see us going back to a gold standard.

I'm not trying to be rude here but this whole subject irritates me lol. And I literally see no benefit to it for normal citizens.

You may have missed my comment when I said returning to the gold standard would make the US poorer and reduce living standards.

I am a just making the point it's not impossible. It's just a really really stupid idea as the economic costs of doing so would devastate the US economy.

originally posted by: AugustusMasonicus

originally posted by: openminded2011
Russia and China are rapidly backing their currency with gold...

No they aren't, stop making things up.

I assume you were being facetious

www.marketwatch.com...

www.telegraph.co.uk...
war.html
www.profitconfidential.com...

originally posted by: ScepticScot

originally posted by: TheConstruKctionofLight
a reply to: Krazysh0t

but smart people have figured out ways to keep it from doing so up until now.

If "smart" makes you feel better that you are not actually "slaving" day in day out to the system good luck to you.

Maybe instead pretending like destruction is inevitable, we could work together to improve it?

Keep your head in the sand - all bubbles burst eventually. History attests to the simple fact.

You are starting from the assumption that it's a bubble in the first place.

It is a logical assumption. One definition that seems to fit for 'money' is 'an idea backed by confidence'. So in every basic accounting course, assets and liabilities rule the day. Until it gets to currencies, that is. Then we get "what bubble?"

What's eroded by all the machinations, justifications and reasons why not returning to a less manipulated system, is confidence. From bitcoin to calls for returning to a gold standard. All points to the loss of the 'confidence' factor.

Unarguable. There's your 'bubble'. When it pops, that's the real question....

originally posted by: nwtrucker

originally posted by: ScepticScot

originally posted by: TheConstruKctionofLight
a reply to: Krazysh0t

but smart people have figured out ways to keep it from doing so up until now.

If "smart" makes you feel better that you are not actually "slaving" day in day out to the system good luck to you.

Maybe instead pretending like destruction is inevitable, we could work together to improve it?

Keep your head in the sand - all bubbles burst eventually. History attests to the simple fact.

You are starting from the assumption that it's a bubble in the first place.

It is a logical assumption. One definition that seems to fit for 'money' is 'an idea backed by confidence'. So in every basic accounting course, assets and liabilities rule the day. Until it gets to currencies, that is. Then we get "what bubble?"

What's eroded by all the machinations, justifications and reasons why not returning to a less manipulated system, is confidence. From bitcoin to calls for returning to a gold standard. All points to the loss of the 'confidence' factor.

Unarguable. There's your 'bubble'. When it pops, that's the real question....

No it totally is arguable. The US Dollar is a liability on the US government, which has the ability to tax the largest economy in the world. I see no reason for seeing it as a bubble.

originally posted by: ScepticScot

originally posted by: nwtrucker

originally posted by: ScepticScot

originally posted by: TheConstruKctionofLight
a reply to: Krazysh0t

but smart people have figured out ways to keep it from doing so up until now.

If "smart" makes you feel better that you are not actually "slaving" day in day out to the system good luck to you.

Maybe instead pretending like destruction is inevitable, we could work together to improve it?

Keep your head in the sand - all bubbles burst eventually. History attests to the simple fact.

You are starting from the assumption that it's a bubble in the first place.

It is a logical assumption. One definition that seems to fit for 'money' is 'an idea backed by confidence'. So in every basic accounting course, assets and liabilities rule the day. Until it gets to currencies, that is. Then we get "what bubble?"

What's eroded by all the machinations, justifications and reasons why not returning to a less manipulated system, is confidence. From bitcoin to calls for returning to a gold standard. All points to the loss of the 'confidence' factor.

Unarguable. There's your 'bubble'. When it pops, that's the real question....

No it totally is arguable. The US Dollar is a liability on the US government, which has the ability to tax the largest economy in the world. I see no reason for seeing it as a bubble.

I didn't really think you would... It was intended for others.

Let me go even further. It can be argued that we, the people, have not only endorsed a 'gold standard', we're buying into it. "Diversify your portfolio, buy gold." If one buys any amount, one gets a piece of paper stating you own 'x' amount of gold. That piece of paper IS a fiat. It represents your 'gold'. It is a form of 'money'.

There's where the 'confidence' is going. Gold.

So the shoring up of 'confidence' in the official fiat by using the means already being implemented by many 'won't work' or isn't necessary, as you say, because there is no bubble.

Bitcoins, anyone?

originally posted by: openminded2011

originally posted by: AugustusMasonicus

originally posted by: openminded2011
Russia and China are rapidly backing their currency with gold...

No they aren't, stop making things up.

I assume you were being facetious

www.marketwatch.com...

www.telegraph.co.uk...
war.html
www.profitconfidential.com...

The telegraph link doesn't work.

The other two don't say anything about China backing it's currency with gold. Quite the opposite for the last one.

originally posted by: openminded2011
[
I assume you were being facetious
.

No.

Now quote the specific parts about them going to a gold-backed currency. I won't hold my breath.

originally posted by: nwtrucker
a reply to: Krazysh0t

Just another thought. Per your numbers the total value of the current gold is about 7.5 Trillion with a national debt of 20 Trillion, so the numbers don't add up.

OK. So having 7.5 trillion backing your 20 trillion debt isn't better than having nothing backing that 20 trillion debt?

The gold standard doesn't just back debt, it backs the entire money supply. One of the big reasons we can't have a gold backed dollar is that we don't know how large the money supply is. The money supply is measured in several different values, most notably M0, M1, M2, M3, and M4.

M0 is physical money. Bills and coins.
M1 is the total amount of M0 (cash/coin) outside of the private banking system plus the amount of demand deposits, travelers checks and other checkable deposits
M2 is M1 + most savings accounts, money market accounts, retail money market mutual funds, and small denomination time deposits (certificates of deposit of under $100,000).
M3 is M2 + all other CDs (large time deposits, institutional money market mutual fund balances), deposits of eurodollars and repurchase agreements.
M4 is M3 + Commercial Paper +T-Bills

So where this really gets tricky is that a lot of this is essentially credit rather than money created by the federal reserve. Fractional Reserve Banking involves giving banks the ability to make money in addition to the government. The current M4 value is unknown, and hasn't been known for over 30 years because it's not tracked. M3 was the old standard but about a decade ago they stopped tracking it because it became impossible. M2 is primarily used now because M1 is too narrow but it's not really a true representation of the money supply.

The M4 which is what a gold backed currency would have to back is north of 500 trillion dollars, it might be over a quadrillion if the estimates are too conservative.

On top of this, let me offer up another point for you, gold backed currency would require a fixed value for a dollar. This would essentially make our currency unusable on a global exchange.

originally posted by: nwtrucker
Sure there's always been debt. It's been just a bit easier of late, yes? Now you can print as much as you want, when you want. That wasn't always the case, was it.

Yes, you've always been able to do that. A gold standard would not constrain government spending like you imagine because physical holdings can be leveraged, and in the past were (they still are, it's just a different type of leverage). That's where the historical 10% down for a loan came from. The banks would leverage at 10:1, so you provided 1/10 the assets and they would provide 100% of the financing without risking any of their own money. Governments can do this too.

originally posted by: Krazysh0t
a reply to: nwtrucker

People need to regain their trust in systems. We let our paranoia take the better of us more often than not these days. Things aren't perfect, but many seem to use that as an excuse to say everything is #ed and want to tear everything down.

I've got the opposite opinion, look at the crypto market. There is a whole lot of blind faith in these systems, and rampant speculation.

It's so bad that many companies have started to fund themselves using what are called ICO's, Initial Coin Offerings which are a cryptocurrency generated by that company that can later be exchanged for that companies services, essentially they're gift cards. Because of the blind faith people have put in crypto's (which it's in no way deserving up) a lot of investors have put a lot of money into these coins/gift cards expecting returns rather than into actual investment vehicles.

To give a physical analogy of this. Imagine if the funding of disneyland was paid for in the issuance of disney dollars at a 1:1 ratio. Then when they went live, disney adjusted the converstion of disney dollars such that it was 100:1. That is what is going on right now with crypto, yet people are still blindly buying in because they have too much trust in the system.

originally posted by: enlightenedservant
And if we're being honest, even a balanced budget won't change anything other than to stop the national debt from increasing. We need large yearly budget surpluses to actually start paying down the national debt.

No we don't, inflation will take care of the debt over time if we stop adding to it. 20 years of a balanced budget would make our current 21 trillion debt seem similar to what 6 trillion would be to us today, to say nothing of all the additional GDP in that time. There's really no reason to ever pay any of it down, though there is a reason to stop increasing it.

a reply to: Aazadan

Ok. That's interesting information,