What Would Happen to Money Supply if We Returned to the Gold Standard?

Of course, Ron Paul's citation of a dubious authority does not thereby invalidate the idea of a gold standard. I leave that effort to Federal Reserve Chairman Ben Bernanke, a Bush II appointee, who gave this explanation to a group of students in March:


The gold standard would not be feasible for both practical reasons and policy reasons. On the practical side there's just not enough gold to meet the needs of a worldwide gold standard. But more fundamentally than that, the world has changed...In a modern world, the commitment to the gold standard would mean that we are swearing that under no circumstances, no matter how bad unemployment gets, are we going to do anything about it using monetary policy.

That is, first, as the world economy grows, it's unlikely that the total amount of world gold will keep pace. And second, if a government cannot create more money when people are refusing to spend or lend, how will unemployment ever be addressed?

Gold Standard

So, is this the reason that we can't return to the gold standard? I think it is because the U.S. doesn't have as much or any of the gold they claim to have. I understand the pros and cons of both systems, but the big question I have is why hasn't there been a recent audit of the gold?

Not a lot i would imagine.

First of all, where IS the gold? Who owns it now? Would they have to give it up for redistribution to those who want to redeem their currency for gold? Would they be compensated? With what?

There are a lot of questions that need to be answered before that scenario can be viable.

I have a feeling that gold might be a bit like diamonds - much more plentiful that the diamond mine owners would have you believe. In the case of diamonds, DeBeers controls the supply so tightly with their monopoly that they keep prices artificially high.

reply to post by troyroser


It helps if you read the article at the supplied link before you give your two cents.

reply to post by SUICIDEHK45


The sources of gold create a choke point and a danger to your currency. Plus it is a commodity that is used industrially for countless things.

Currency would be highly unstable.

Now for the other side.

Realistically, any system will crash and burn cyclically.

whoever is president gets assassinated publicly

Gold and fiat currency for the most part had the same problems, gold can be bought up by the rich and power can thus again be consolidated at this point they control the same things that they can control in a fiat currency world...there isn't much difference.

Gold is hard to come by and takes resources to acquire and this leads to territory disputes/wars etc, you think going to war over oil is bad, wait until gold is the world currency backer...you cant afford to acquire oil without having gold first to finance that industry...

Rare minerals and materials are flawed in the sense that they regulate TOO much the worlds ability to acquire it and compete with other nations...whoever owns the gold owns the world...just as today whoever owns the ability print money out of thin air owns the world...

I'm not sure what a good stable economy would be based off of that won't ultimately be able to be consolidated by the few to rule over the many...as we have always seen...

Maybe the problem is that whatever we decide to use to hold value can has unlimited purchasing ability because morals and ethics aren't universal. With enough consolidated value one man, few men can buy governments, legislators, judges, etc...and were right back to square one...influence and power the direction of the world and all its people...

I don't know how to avoid that because its all based on morals and ethics and those are well...unreliable...

reply to post by SUICIDEHK45


Personally i think the bankers have just horded gold for AEONS now... !^^!^!!

the federal reserve doesn't own any gold so i'd imagine they'd be relying on all those CASH4GOLD commercials.

first they would have to have the gold.

So if you took the dollar to a gold standard, it would be based on the amount of gold holdings the US has.

The problem is the amount of legit dollars in circulation is equal to more gold than has been mined...

So your dollar would be worth maybe an atom or two of the gold the us holds.

So how much is that amount worth? not much, so the dollar would be destroyed.

Careful talking about the Gold standard. Last person to talk like that was Assassinated.

JFK

gold is as equally worthless as paper money.

the only difference is gold cannot be created and no one knows how to make it, if it is even possible.

diamonds can be created in laboratories, so in a sense, diamonds are even more worthless besides their industrial and aesthetic qualities.

what will happen is that the london gold fixing pool, which twice daily, sets the price of gold, will determine the value in paper currency.

the chairmanship and the gold fix, formally held by the rothschilds, but now rotated, will ultimately be responsible for the value of money, because they set the price of gold.

is it wise for 5 banks to set how much value the currencies of over 190 nations on earth will be worth and the prosperity of over 7 billion people.

Originally posted by randomname
gold is as equally worthless as paper money.

the only difference is gold cannot be created and no one knows how to make it, if it is even possible.

diamonds can be created in laboratories, so in a sense, diamonds are even more worthless besides their industrial and aesthetic qualities.

what will happen is that the london gold fixing pool, which twice daily, sets the price of gold, will determine the value in paper currency.

the chairmanship and the gold fix, formally held by the rothschilds, but now rotated, will ultimately be responsible for the value of money, because they set the price of gold.

is it wise for 5 banks to set how much value the currencies of over 190 nations on earth will be worth and the prosperity of over 7 billion people.

I beg to differ.. Bible says Gold is Gods Currency, you can NEVER go wrong investing in Gold. In fact, I recommend every one invest in Gold!! (Do your home work first of course)

reply to post by Sly1one


There is no such thing as a "world currency". However, ever since the United Nations Monetary and Financial Conference, otherwise known as the Bretton Woods Conference, the dominant currency of the world has been the U.S. dollar. The Bretton Woods Conference that made the U.S. dollar the dominant world currency took place in July of 1944, not even a year before Germany's surrender of World War II, and at that time, the U.S. dollar was backed by gold. It was not until 1971 that the dollar was taken off of the gold standard. This move is known as the "Nixon Shock" that ended the then existing Bretton Wood system.

The Austrian School of Economics advocates a return to the gold standard for obvious reasons:

Most of the times when people who are in favour of a gold standard use the term 'Gold standard' they are in fact referring to the system of free market money, Or simply allowing people to choose whatever currency they to use for trade. The main reason the term gold standard is used as shorthand is due to gold being used throughout history as the most popular commodity that people use as currencies when they are free to choose.

Because the federal Constitution empowers Congress to coin and print monies, a return to the gold standard, as opposed to fiat currency would be a return to a sound dollar, or the stabilization of the dollar:

First, the U.S reports owning more like half a trillion dollars' worth of gold at today's market price. Second, the point of a gold standard would be to stabilize and restrain the money supply, not to shrink it. Now bear with me as I spell out the mechanics. The bogeyman of the "gold bugs," a term for those who promote the gold standard, is inflation, what they call the "debasement" of "fiat" currency: money created by government decree. In the old days, that was "paper" money. Today it's chiefly electronic. The means of debasement is said to be the removal of precious metals from the money -- chiefly, less gold and silver. Or, as is the case today, total removal -- and the retraction of any promise by government to redeem paper money, or its electronic equivalent in your bank account, for such "precious" metal.

Were not going to get back on the Gold standard, ever.. The goal is to bankrupt the WORLD economy so they can start there One World Currency.. Not only has this been prophetic views for YEARS, I believe it was also stated in the Bible as well.

Just sayin

In my opinion, gold is just as much as a fallacy as paper money and digits in a computer.

People say fiat money isn't backed by anything. What is gold backed by? While it has uses in industry, the amount of gold required for such industry isn't anywhere near enough to warrant the high price of gold.

Currency is always about one thing. While they say currency can be backed by gold, or oil, or whatever else, the REAL value of currency comes from the LABOR that currency can be traded for. Oil is a product, while oil is basically backing the US dollar, it's the LABOR of getting that oil out of the ground, refining it into useful products that the value comes from.

The dollar's true backing is a given amount of labor units that 1 dollar will guarantee. That's the true value of a currency, not gold or oil. Why would you want to trade in your money for gold? What use is it to you? You want to wear shiny metals on your body to look cool? Trading your money for labor is what makes it useful.

Then people set, or accept, the value of their labor. I decide, or accept the offer, that 1 hour of my time is worth $10, or $20,or $30. That's where the instability of currency comes from, that everybody places a different value on a given amount of their time, or of other people's time.

If we had a planned economy where everybody made the same amount of money per hour of work, currency would be stable and inflation wouldn't exist. One hour of labor is always worth a given amount, say $15, so $15 always stays constant as representing a single hour of labor from an individual.

The price of products is still tied to the value of labor. If I buy a product for $15, I'm accepting that I would be willing to trade 1 hour of my labor for that product. The paper dollar, or the digits in a computer, or a little chunk of gold is just a means to more easily transfer the value of labor from one party to another.

It all comes down to labor, regardless of what form of currency you are using, because people accept that their labor is worth a given amount of value, and then compare that value to a product they are buying, they are simply trading their labor for a product indirectly. Instead of going out to dinner, and racking up a $15 bill, and then paying your $15 bill with one hour of labor, you pay it with fifteen dollars of currency, which represents your hour of labor, in a way that's easy to trade and store between people.

And because the value of different people's work is always variable because of people's age, gender, education, physical ability, danger of certain types or labor, currency is never going to be stable. It doesn't matter what they say it's backed by, be it gold, oil, spacebucks, because it's really backed by assumed amounts of labor value you can redeem that currency for.

Which is why, as I said, currency and economies can never, ever, be stable unless you have a strong central controlling organization that enforces that every single person's labor is worth the exact same amount of value regardless of any factor. This too would be bad. A guy sweeping the floor for one hour is not providing anywhere near the value as a guy doing life saving surgery for one hour. Because this system is unacceptable, we have to live with unstable currencies and economies.

unless you have a strong central controlling organization that enforces that every single person's labor is worth the exact same amount of value regardless of any factor.

I.E. One world Currency, and One World Order ! :p

What if we backed it by something other than gold something that the banksters have not been hoarding.
It doesn't need to be gold. It simply needs to have value.

Originally posted by VforVendettea
What if we backed it by something other than gold something that the banksters have not been hoarding.
It doesn't need to be gold. It simply needs to have value.

Anything you can back currency with can be hoarded, except labor, which is what really backs currency anyway. So backing the dollar with AA batteries or hot pockets wouldn't change anything, as they could be hoarded just as easy (probably easier) than gold.

Throughout history things like beads, salt, spices, etc have been used as actual currency, not just currency backing. What you can use for currency is nearly unlimited, but it always comes back to currency simply being used as a medium to transfer the value of labor between different parties.

When we had a gold standard in the 1960's the U.S. didn't honor the standard and printed new dollars without gold backing the new dollars, would you now trust them to not do this again on a new gold standard?

The BBC is on the government side publishing this ridiculous quote which says that governments simply won't stick to a gold standard therefore gold cannot be trusted!

"You can't force a government to stay on gold, so therefore gold has no credibility," says Lord Lawson, chancellor of the exchequer in the 1980s under Margaret Thatcher."
www.bbc.co.uk...

To answer the OP, if we returned to a gold standard the supply of dollars would still be increased with new unbacked dollars.

The second question regarding the audit, since 1971 the U.S. went outlaw on the international gold treaties, if the U.S. were to audit then international law claims that are still in effect would be filed for that gold.

There will be no gold standard for currencies yet gold remains very precious in it's physical state, while paper claims on gold have increased dramatically in the past 10 years as have currencies. Physical gold is far more precious to those who already hold the world's gold when compared to the world's debt which is not that precious as an item to hold. At some point this will become clear to wealthy entities without their own physical gold but holding currency based debts as a store of value.