Quit drinking Ron Paul kool-aid: What are the NEGATIVE consequences to switching to Gold Standard?

What will the world be like with Gold Standard? Ron Paul and its supporters keeps on talking about this...

It is important to know that 'pondering about what gold standard world would look like' is DIFFERENT from 'what will the world be like if we changed our current system to a gold standard'!!!

It is very important distinction because we don't care what gold system would look like. we kind of know due to history..... But we don't know what will happen when going from our modern fiat system back to our ancient gold system!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Ron paul keeps talking about positive things, how stable gold standard would be in "theory"

But he never talks about what the negative consequences of changing our monetary system from current to gold.

I am more interested in the negative consequences from switching to fiat currency to gold currency.

For starters...

With our current system with inflation, money gets cheaper by year to year. So to combat it, you must invest/spend/use your money by taking risks!!! You must let you money flow through the system or you are losing money due to inflation. Plus, only through investments/risks can you make a lot more.

With gold standard, money value never changes. So basically, there is no desire to invest/spend/use your money to take risks. You don't want to take that much risk cause investing it will not get you big returns either compared to above. So basically with the gold standard, I envision the rich hoarding money. Money doesn't flow like above. Money is stagnant. The rich will hoard all the gold/currency and never use it.

I wait to see the replies from the Paultopians. I'm forseeing lots of denials that there could ever be a drawback to anything Mr. Paul has ever uttered.

So, I'll just be making popcorn.

I guess the negative consequences of changing from fiat to gold...?

all of our current investment strategies are based on the fact of inflation. So you change to gold standard???

What happens to our world????????????????????????????????????????????????

Are you serious? Actually, when does common sense come into play? I want to know. It seems as tho there is something else going on. Either ignorance or common sense must be bumping heads or their is someone who thinks that they know better. Which is it?

Well I would assume (I am no financial genius) that the most devastating downfall would be the fact that we don't have enough gold to back or current dollar value in the reserve....

Yep there is too much money to and not enough gold to back it up so if everyone went to pull their gold out the country would go down as it wouldn't be able to give people what is theirs and you would have riots everywhere.

Originally posted by OrionsRage
Are you serious? Actually, when does common sense come into play? I want to know. It seems as tho there is something else going on. Either ignorance or common sense must be bumping heads or their is someone who thinks that they know better. Which is it?

edit on 12-8-2011 by OrionsRage because: (no reason given)

a fooolissssh answer!!!!!!!

FYI: Gold has nothing to do with the dollar! JFK's murder had alot to do with that!

Originally posted by saabacura

Originally posted by OrionsRage
Are you serious? Actually, when does common sense come into play? I want to know. It seems as tho there is something else going on. Either ignorance or common sense must be bumping heads or their is someone who thinks that they know better. Which is it?

edit on 12-8-2011 by OrionsRage because: (no reason given)

a fooolissssh answer!!!!!!!

Quit drinking too much of that Ron Paul cool aid. You know that nothing is as it seems. and nothing is that simple

It really all depends upon implementation actually. In the short term, should implementation be done in an unsuccessful way, then the consequences could be dire for the entire global economy, stability of the markets, and a spiraling of our currency into uncharted territory. So changing from fiat currency to a gold backed currency is a little like walking a match across a large puddle of gasoline, one wrong move and the whole system could ignite.

However assuming it is done correctly, which means a gradual transfer of currency, then the results can be positive, because not only would we have a much stronger dollar but inflation levels would generally be flat. Since WWI the US Dollar has lost 95% of its value.

But I believe the Ludwig von Mises Institute can explain it better than I can.

saab...what else does your 3rd grade education have to offer?

Technically a "paultopian".

1. I have been under the impression that he wasn't going to rush anything that the Government can't yet handle.

2. Wikipedia covers a lot of historical issues with it:
en.wikipedia.org... We were exchanging Gold and US Currency all the way until Nixon, surprisingly.

3. Alan Greenspan states the problems sufficiently:
www.gold-eagle.com...

But with unlimited dollar conversion into gold, the ability to issue dollar claims would be severely limited. Obviously if you cannot finance federal deficits, you cannot create them. Either taxes would then have to be raised and expenditures lowered. The restrictions of gold convertibility would therefore profoundly alter the politics of fiscal policy that have prevailed for half a century.
[...]
The immediate problem of restoring a GOLD STANDARD is fixing a gold price that is consistent with market forces. Obviously if the offering price by the Treasury is too low, or subsequently proves to be too low, heavy demand at the offering price could quickly deplete the total U.S. government stock of gold, as well as any gold borrowed to thwart the assault. At that point, with no additional gold available, the U.S. would be off the GOLD STANDARD and likely to remain off for decades.
[...]
Alternatively, if the gold price is initially set too high, or subsequently becomes too high, the Treasury would be inundated with gold offerings. The payments the gold drawn on the Treasury's account at the Federal Reserve would add substantially to commercial bank reserves and probably act, at least temporarily, to expand the money supply with all the inflationary implications thereof.

like nature, you live you die, your happy your sad, you're up you're down, you win you lose, youre in love youre in hate.....

economic cycle is just like that up and down Be it in gold or in fiat. Perhaps in fiat, that may be more pronouced but the belief that there will be no ups and downs in economy when you go to gold standard is a fooking lie.

100% fact.

Really, because of the high value of Gold, I'd prefer to be on Silver, or even Copper, if we can't control this inflation.

i guess i'll have to use my gold toilet for buying stuff and not going to the bathroom in.

Looks like another Nazi Zombie thread....

looks like another thread.. well he talks about real problems and how to fix thenm and how to get the country back on there feet.. or just keep letting th crisis play out... id rather pick hime cause that mans got solutions

Originally posted by Misoir
It really all depends upon implementation actually. In the short term, should implementation be done in an unsuccessful way, then the consequences could be dire for the entire global economy, stability of the markets, and a spiraling of our currency into uncharted territory. So changing from fiat currency to a gold backed currency is a little like walking a match across a large puddle of gasoline, one wrong move and the whole system could ignite.

However assuming it is done correctly, which means a gradual transfer of currency, then the results can be positive, because not only would we have a much stronger dollar but inflation levels would generally be flat. Since WWI the US Dollar has lost 95% of its value.

But I believe the Ludwig von Mises Institute can explain it better than I can.

Your are right. It really depends on it it can be done. Can it even be done????? that is the question.

Can we really change from fiat to gold at this point????????

Originally posted by OrionsRage
saab...what else does your 3rd grade education have to offer?

I laughed so hard! It was really funny. I swear i finished 3rd grade.

I think...also not being an economist I hesistate to wade in here but whatever...I think the biggest difference is that in a fiat system, the "smart" move is to take on a lot of debt, whereas in a gold system, savings would be rewarded. You'd have to save longer to get anything (like a house for example) but once you had it, it would be much more securely yours.

Fiat is like the hare and Metals are like the tortoise. With fiat you can get rich quicker but you can also flame out more spectacularly and your wealth is always unstable. In a gold system, it would take much, much longer to gather wealth, but it would be more stable and the stored value would be less likely to vanish in a puff of smoke.