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The Gold Standard Explained!

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posted on Sep, 19 2008 @ 05:08 PM
The Gold Standard...

In laymans terms:

Gold standard made it "harder" to distribute credit without devaluing the worth of an ounce of Gold. However, this also put heavy strains on economic expansion .. that is to say, under the Gold Standard many of today's corporations, and thus our way of life, would not and could not exist.

There are some good and bad things about Gold.. the worst aspect is that Gold is limited, and so like all things in low quantity Gold dispersed over the population's value would be so high that economic stagnation or even collapse would be the only course. This also creates the by-product of a select few individuals hoarding the Gold. Not to mention the Government, who would have to enact steep taxes on it's people to make up the budget, as credit expansion under the Gold Standard is far lower then Wealth As Determined By Productivity. Another horrible aspect of Gold? Countries once waged massive campaigns to secure Gold supplies, killing millions in their wake, royalty would crush anything and any one to secure Gold.

Good thing? Tighter control of inflation, however, inflation is still there ... the Government can still issue 80 billion dollars of printed paper to save a bank under the Gold Standard, and when THIS happens, it creates HYPER inflation .. which destroys economies. However it controls the "natural growth" of inflation over the years so long as the money supply is constrained to a preset and designated amount, including a ceiling to be applied on how many new bills to be added to the money supply in any given year.

Under the Gold Standard America has nothing to sell to make a profit of Gold, our people are dirt poor.. if Government had to buy back Gold in order to back currencies .. the United States would collapse, as would most countries in the World.

No more McMillionairs driving escalades and living in nice houses, if you don't have a durable good to sell to generate a tangible profit, you are poor and we go back a few hundred years. If we enacted the Gold Standard, you would need hundreds of thousands of dollars to buy a single ounce of Gold, and the price would fluctuate drastically.. extreme volatility.. Just because $1 is backed by Gold, does not mean you can always trade in one dollar for an ounce of Gold..

Also, in a way, money supply is always tied up in Gold.. as the Dollar falls, Gold rises, as the Dollar strengthens, Gold falls.. This is the natural order of "how much can I get for this".. as the currency is based on productivity and estimated wealth, so is it's apparent value in comparison to supply and demand with precious medals.

I might not be able to buy something with a bar of Gold, that bar of Gold will depreciate and appreciate determined to how much $1 can buy..

Essentially, the de-peg of the Gold is the allowing of massive credit expansion ..

Good or bad, that is perception, just know that without credit expansion America is worth a fraction of what our current life style is perceived...

Just remember, your dollar may not be "backed by something" .. but you can still trade them in for cars, tvs, vacations, FOOD, and other goods and services.. if you don't believe me still and believe your money worthless, I highly encourage you to send me your unwanted Dollars, U2U me for a shipping address!!


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