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Why do you think this would be a good idea for the US Government in this day and age?
The benefit of a gold standard is that a fixed asset backs the money's value. It provides a self-regulating and stabilizing effect on the economy. The government can only print as much money as its country has in gold. That discourages inflation, which is too much money chasing too few goods. It also discourages government budget deficits and debt, which can't exceed the supply of gold.
A gold standard rewards the more productive nations. For example, they receive gold when they export. With more gold in their reserves, they can print more money. That boosts investment in their profitable export businesses.
The gold standard spurred exploration. It's why Spain and other European countries discovered the New World in the 1500s. They needed to get more gold to increase their prosperity. It also prompted the Gold Rush in California and Alaska during the 1800s.
During the Great Depression, the Federal Reserve raised interest rates. It wanted to make dollars more valuable and prevent people from demanding gold. But it should have been lowering rates to stimulate the economy.
originally posted by: VictorVonDoom
a reply to: JBurns
Bookmarking for future reading. Thank you.
I have to ask, though, why put this in the Mudpit? I don't really see this as a political insult type topic.
I am not an economist.
I once saw somewhere that there is more paper money than gold. If that is true, wouldn't that automatically invalidate any gold standard if not all of the money can properly be backed up?
originally posted by: SR1TX
Andrew Jackson is my Hero.
He had a temper of fire and did not really care what people thought about that. It was his passion for completely overcoming his opponents that made him such a powerful force. a Lot of controversy, because a lot of action.
He was a true American.
originally posted by: toms54
a reply to: FamCore
I am not an economist. I once saw somewhere that there is more paper money than gold. If that is true, wouldn't that automatically invalidate any gold standard if not all of the money can properly be backed up?