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

reply to post by byteshertz

It matters not what the money is backed by - what matters is who controls the quantity of it in circulation.

Complete nonsense. You could have Jesus himself controlling the money supply and central banking would still be a disaster.

That is where it's value come from, gold backed money is technically no better than air because gold is so maliable it can be stretched to cover as much money as we pretty much want.

You can not print gold.

When gold was used in the past they used alot of gold in the currency, this meant more and more needed to be constantly dug up causing a constant short supply

More nonsense. My mom doesn't go to work everyday to get dollars, she goes to work to be able to purchase goods and services. Money is the means to allow indirect exchange. So the supply of money doesn't need to grow at all, and any growth of a paper currency would be nothing but counterfeiting.

I am a major Ron Paul fan, but in this case ROn needs to look a little deeper and see the reason why gold worked in the past.

Or maybe you just need to understand his position on money.

All AMerica really needs is a currency issued by the government, and wow look at that no national debt because the government has to pay off a private corporation - but then ofcorse all the politicans investments would also be gone..

Our money is issued by our govt, the Fed is a part of our govt-- the Fed being private is just socialist propaganda. 95% of the Feds profits are returned to the U.S treasury, the other 5% are use for operating cost.

THINK ABOUT THIS FOR A SEC: The government issues the currency, they spend the currency on the country, this is turn creates jobs and passes the money on to the people - The government owes nobody anything, the people have money.

LOL! No. You have no clue what you're talking about.

Private corporation lends money to the government

This currently isn't happening. In fact I wish the Fed was private, then it would at least have an incentive to keep inflation low and the economy running much smoother.

reply to post by saabacura

Take a step back for a moment, take a deep breath and just relax.

Understand that not all of Ron Paul's ideals may be implementable. However, his ideals are based in fiscal conservatism. When the value/amount of the dollar was tied to the nation's gold supply, it limited spending. The government wanted to increase spending on the Vietnam War and decided to default. The US dollar was no longer redeemable in gold and the government could now borrow and print as much as they wanted to plunging the country into a spiral of debt, interest and inflation.

A gold standard attempts to limit the amount of government spending. Thats the first goal. Secondly, Ron Paul takes issue with one of the nation's greatest thefts: FDR's Executive Order 6102. The government, our government, ordered the people at gunpoint to surrender their gold and give it to the "Federal Reserve".

This gold was America's wealth and it was confiscated and given to a private bank. Now we are told that the gold is stored in Fort Know. However, there has not been an audit in decades and recent reports have suggested that the gold may not even be there... If somehow we were able to return to a gold standard, we could take our near worthless Federal Reserve notes and redeem the gold that was stolen from the American people.

Bottom line being that whether or not the US will ever return to a gold standard, though a good idea, is a scary prospect to TPTB. It would force them to cut spending, much of which is used to maintain our global empire. It would also force an audit of Fort Knox, something else which seems to frighten the establishment.

Why does everyone think like this

"If we switch to the gold standard, we won't have enough gold for prosperity."

The gold standard does not have to be 1:1. If they did nothing more than put a small strip of silver or gold into each American hundred dollar bill, it would make it worth SOMETHING.

I dont buy the " we dont have enough gold to back" argument. Why cant you make $100 bill = 1 grain of gold or 1/2 grain of gold. there, done

reply to post by saabacura


yes...
it is a great idea to let a group of elitists run the value of our currency, i mean they already run everything else, and have been doing a great job so far, so why change anything?

Fiatmoney is not the problem.

Gold or the gold standard will not prevent a bubble in the housing market, nor in other investments.
If those bubbles burst, banks and investors should be allowed to fail, this is how a healthy market works.
We allowed them to grow to big to fail, and now they suck us dry, because we had to bail them out.
A goldstandard cannot and will not prevent this, but good regulation does.
If they were not to big to fail, we would not be in this mess.

Originally posted by mileysubet
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....

Exactly,which is why we got away from gold in the first place.... There is just not enough gold....

I do like a lot of what Ron Paul says though, so don't get me wrong.I'm just a realist and have no problem admitting what I agree with and what I don't agree with, politically....

I kinda agree.

I like RP a lot. I would definitely vote for him if he was on a ballot.

I am really, really unsure though of this gold standard thing. Inflexible monetary policy if the reason we switched in the first place.

I think more needs to come out of exactly he would do this. Until then I believe your questions and concerns are valid.

Ron Paul doesn't want to switch to a gold standard. He just wants the Fed or any other govt agency to be subjected to the same laws regarding counterfeiting and fraud that we are. If everyone doesn't have to follow the law why have them in the first place?

You people can't read or you missed it.

Reading this makes me want to go and get my checkbook and send more money to Ron Paul!

God Bless the USA if they get it wrong again and if they do not vote for this man who is the last bastion of political integrity left in this corrupt two party system that we’ve passively allowed and voted for!

The negatives to the gold standard (vs. fiat) would only be in implementation and initial valuing of the dollar. Once that's figured out (by someone not me, as I believe that when you multiply letters you get words) the resulting economic stability will far outweigh the initial rise and fall.

Personally I think we should go to silver. It's more stable, more plentiful (for easier implementation), and easier to be carried as coinage, thus turning coins into commodity money as it should be.

/TOA

reply to post by earthling42

Fiatmoney is not the problem.

Fiat money is the problem, no amount of opinion will change that.

Gold or the gold standard will not prevent a bubble in the housing market, nor in other investments.

If the Fed had its hands tied to gold, it wouldn't be able to inflate the money supply or suppress interest rates the way it does. So you're wrong, if the Fed was bound by gold it would've never been able to expand the money supply for Bush's stimulus package -- the housing bubble would have never happened.

[I don't support a gold standard though]

We allowed them to grow to big to fail, and now they suck us dry, because we had to bail them out.

They didn't have to do anything, they chose to bail them out.

A goldstandard cannot and will not prevent this, but good regulation does.

No one ever claimed that a gold standard would stop firms from growing ``too big``. What type of regulations will stop them from growing too big, in your opinion?

The gold standard would limit the world's wealth to the supply of gold. A gold backed money standard is a non-starter and thats why Ron Paul adandoned the idea. He just wants gold to be legal tender.

reply to post by Misoir

Originally posted by Misoir
reply to post by saabacura

 

Actually no he has not, what Paul has said is that the Federal Reserve through the use of interest rate maneuvering is able to cause the boom and bust cycle, as does all Austrian School Economists, because it fosters an environment of debt and mal-investment which would otherwise not be made. Through these mal-investments the results are obvious; you create bubbles which must then burst. By extending periods of low interest rates, rather than allow the market set the rates, you create the systemic threats to the economic structure.

The thrust of the Austrian theory of the business cycle is that credit inflation distorts this process, by making it appear that more means exist for current production than are actually sustainable (at least in some renditions; see Hülsmann [1998] for a "non-standard" exposition of ABCT). Since this is in fact an illusion (printing claims to property ["inflation"] is not the same thing as actually having property; see Hoppe et al. [1998]), the endeavors of entrepreneurs to create a structure of production not reflecting actual consumer time preferences (as manifested in available savings for the purchase of producer goods) must end in failure.

I have provided you so far with 4 links, 1 which will help you understand a transfer to the gold standard and 2 which explain the Austrian Business Cycle. Since you have obviously failed to read even the ones on the business cycle and instead intentionally perpetuate this misinformation based upon a lack of clarity and understanding of the issues at hand, which I have attempted to help you resolve, no longer will I waste my time here and would encourage others not to as well.

mises.org...

Come on did you really think saabacura started this thread because he actually understands, or for that matter could answer, the issue he himself brought up? No this was just a Ron Paul is evil or drinks to much kool-aid thread. And then you come here with your fancy words and linked articles...what were you thinking?

saabacra this isn't an xbox live game lobby, there are some extremely intelligent people on ATS, I am not one of them but that's beside the fact. You might be better served by reading the replies given because some of them don't just pander they actually answer the question at hand.

Originally posted by saabacura


With gold standard, money value never changes.

But golds value changes...

And the fiat system is hardly modern. But ok let's jus keep using this same great modern money system that is built to die, and ripe with corruption. I'm kool with that.

reply to post by saabacura


While I am generally a huge fan of Ron Paul..

I cannot agree with an outdated concept such as a gold standard.. The way our economy works now, it simply would not function IMO.

Originally posted by Miraj
reply to post by saabacura

 

While I am generally a huge fan of Ron Paul..

I cannot agree with an outdated concept such as a gold standard.. The way our economy works now, it simply would not function IMO.

Ron Paul does not advocate an outdated gold standard he advocates competing currencies something like this:

www.abovetopsecret.com...

Originally posted by camaro68ss
I dont buy the " we dont have enough gold to back" argument. Why cant you make $100 bill = 1 grain of gold or 1/2 grain of gold. there, done

Exactly people are under the illusion we need to replace trillions of inflated dollars with gold. That is of course a myth perpetuated by Keynesian financiers who wish to keep the perpetual debt system since they are the only ones who benefit from it in the long run.

It doesn't matter how much gold there is prices will always adjust to the mount of currency in circulation. With gold and silver prices would adjust back to pre 1913 prices most likely as it should be since they never should have been inflated from there to begin with.

reply to post by saabacura


Well, let's see....An interest free system of currency based on something REAL (Gold) instead of thin air, controlled by the United States Treasury instead of a Privately Owned Banking Cartel? Sounds absolutely great to me! And friend, Ron Paul is the only candidate that didn't blame the economy problems on Obama, and he is the only Congressman in Congress that follows the Constitution, and the only Congressman that isn't a Lawyer. He is a Medical Doctor.