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

gold?

bah, mere childs play.

the US mastered alchemy years ago, back engineering Rumpelstiltskins spinner found in iraq during the 1st gulf war.




we are just waiting for the wolves to pounce and then, BAM! all the gold we want.

reply to post by hawkiye


Know what your statement reminds me of? This scene:


'Tis but a scratch!

Originally posted by saabacura
With gold standard, money value never changes. So basically, there is no desire to invest/spend/use your money to take risks... 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.

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

edit on 12-8-2011 by saabacura because: title.

Your wrong about on the Gold Standard that the money value wouldn't change. It actually would here's why:

1) New Gold enters the market all the time: Through mining corporations, Prospectors, people selling jewelry, and another big overlooked one is people discovering ship wrecks carrying gold. Gold is being hidden and rediscovered all the time.

2) Supply and demand: right now we have a certain amount of people in the American job market, when new people enter the market (i.e. babies are born and grow up) there will be more demand for Gold driving the prices up. If you haven't noticed Gold has skyrocketed since 08 from about 980 to 1800. That's a solid investment, although that has nothing to do with population.

3) The other Gold and Paper Currency: Silver is also a popular metal to use for currency during the late 1880's there was a big political movement (part of the early populists) to try to add Silver as a currency. Just because you are on the Gold standard doesn't mean you have use it everyday as coinage. Paper currency has been used to act as a certificate that can be traded for a certain amount of gold if you so please, but Paper can be easily manipulated.

Also would people hoard gold any more than people hoard our current fiat money? I doubt it.
I'm not big on this idea of Paul's and would prefer something else, however Gold is solid and doesn't sway to inflation since there is a fixed amount on Earth. There is more to Ron Paul's campaign than the Gold Standard that I support way more. Plus who says he'd implement this right away?

Ron Paul on competing currencies:

We have been on a disastrous course for a long time. The money supply has doubled in the last year, our debt is unsustainable, the value of the dollar is going to continue its drop, and those Americans who understand where we are headed feel helpless and held hostage by foolish policy makers in Washington. When the bills finally come due and the dollar stops working we are in for some real social, economic and political chaos. That is, unless we take some major steps now to allow for a peaceful transition in the future. These steps are laid out in my legislation to legalize competing currencies.

First of all, no one should be compelled by law to operate in Federal Reserve notes if they prefer an alternative. We should repeal legal tender laws and allow Americans to conduct transactions in constitutional money. Only gold and silver can constitutionally be legal tender, not paper money. Instead, it is illegal to conduct business using gold and silver instead of Federal Reserve notes. Simply legalizing the Constitution should be a no-brainer to anyone who took an oath of office. Consequently, private mints should be allowed to mint gold and silver coins. They would be subject to fraud and counterfeit laws, of course, and people would be free to use their coins or stay with Federal Reserve notes, as they see fit. Finally, we should abolish taxes on gold and silver, which puts precious metals at a competitive disadvantage to paper money.

The Federal Reserve is a government-sanctioned banking cartel that has held far too much power for far too long and is in the end stages of running the dollar into the ground, and our economy along with it. The very least Congress can do, if they are not willing to abolish the Fed, and perhaps not even conduct a serious audit of it, is to allow citizens the freedom to defend themselves from being completely wiped out by their monopoly power.

www.campaignforliberty.com...

Originally posted by Xcathdra
reply to post by saabacura

 

We did just fine when we were on the gold standard. When we were pulled off of it is when we started having spending issues.

Spot on. The US was prospering on the gold standard until 1971 when Nixon took us off. Then came the '70s "gas shortage" and recession. After that, every economic "boom" was followed by a "bubble burst"; tech stocks, internet stocks, housing, etc.

The "rich" wouldn't be able to hoard their wealth if they had to give something of value for the work they wanted done. Instead, people are paid in paper that will always be worth less in the future than it was when it was earned. The fiat currency forces people to "invest" it in a risky gambling game (i.e. the stock market) to hold it's value. If the money was backed by a fixed quantity of a tangible asset, saving it would be just fine.

I haven't checked the numbers recently, but I'm pretty sure that you will find that an ounce of silver today would buy roughly the same amount of gas that an ounce of silver would have bought in 1960. If you earned a dollar in 1960 and saved it, it would have nowhere near the same purchasing power today. Fiat currency does not benefit the people who actually work for a living, it benefits those who print it, but only when they force people to use it under threat of violence.

I'll have some more kool-aid, please!

reply to post by saabacura


So what are you saying? That a value system based on the "Full faith and CREDIT of the united states" is better than a solid standard? When the dollar was based on the gold standard there were still loads of people investing in the markets doing just fine.

We also, at the moment, have a declining dollar value. Are you saying this is a better solution?
Because there have been very few instances of people getting raises for cost of living in the past few years you can say that people are making less money than they were a few years ago.

I honestly don't understand how keeping the flat money is better than basing things on the gold standard.
Can you explain in more detail?

Ron Paul doesn't want U.S govt to return to a gold standard.

He simply wants the Fed or any other govt agency to be subjected to the same laws regarding counterfeiting and fraud that we are.

The real problem lies not in letting go of the gold standard, but in the ignorance of us and an corrupt banking cartel and a bought government.
We had a great inflationary period from the 80's untill 2005 and gold was declining in value during that period.
What does that tell us? surely that it is not inflation which pushes the price of gold higher, but a lack of trust in the currency does.
Before the collapse of the housing market everybody was eager to buy a house, and now we see the same happening in PM.
Everybody is eager to buy untill the bubble burst.
The currency will never fail, worldwide they are reaching the ceiling and thus cannot continue to stimulate, hence the decline in economy worldwide.
In the short term stimulating with printing has great effects (QE1), but when people loose their savings because of erosion, and can not buy the same with their income, it starts to hurt the economy.
We have reached that point so no QE3 because it would do more damage than good.
My guess is that we will see massive cuts in the coming decade to reduce debts worldwide and even some restructuring of debts.

It matters not what the money is backed by - what matters is who controls the quantity of it in circulation.
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.
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, giving the money value - Today the money is spread everywhere but not worth a thing, as soon as the banks call in their loans the money in our hands turns to nothing because of the fiat currency debt based monetry system ponzi shceme ( I dub thee TFCDBMSPS ):



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. I said earier that gold is not better than air but that is not quite true - at least it is not just a number printed on a computer.

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..

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.

Instead of doing what they currently are: Private corporation lends money to the government which the government uses to pay the people who then need to pay back an ever increasing debt , more and more money is printed as loans keep being made and are backed by almost nothing, leading to run away inflation and repayments back to a private corporation... Why is this private corporation needed?

ITS NOT ROCKET SCIENCE

reply to post by saabacura
Ho, friend.

Misoir already pretty much settled it out on the first page, implementation and conversion would be the biggest issues. Then the only negative differences pretty much relate to having a less 'elastic' economy (meaning government actually has to control its spending and live within its means, as it can't just game the system or print more gold like they can with dollars).

Thus, if government wants more freedom to grow they have to approach it from the front and raise taxes, instead of stealthing in the back door and devaluing the currency.

I did mainly just want to point out that, as usual, Paul merely takes a market standpoint at this time. Get rid of legal tender laws, and allow competing currencies to enter the market against the dollar. This would sidelines any issues of a jump straight to a commodity-backed currency, as well as force a change in the Fed's handling of monetary policy for them to be more responsible to remain competitive. As is, you would not see a whole lot of people holding on to the dollar here in the US if other more-sound currencies less subject to shenanigans and manipulation were available.

Take care.

I've no desire to enter into the anti-Paul ignorance and trolling. Instead, I'll focus on the premise - reintroducing the gold standard. First of all, to all of those naysayers - please send me one, just ONE, example of a successful fiat currency that wasn't accompanied by ever-increasing debt. Thsi should be fun! I'll anxiously await examples.

Second, Paul isn't advocating returning to the gold standard. He is advocating the elimination of the federal reserve and a return to the Constitutional principle that only Congress has the legal authority to coin money, not some third-party extra-governmental agency with no oversight from Congress.

I continue to wonder at what point the histrionics of the anti-Paul crowd will actually contain some facts and some evidence to backup these ridiculous and baseless claims made about him? All I continue to read are the 2 party talking points drummed up against Ron Paul. Who, by the way, are scared to death that his message gains traction with the masses because that would strip away their dictatorial authority over us.

These posts continue to expose who the true sheeple are! Wake up already!!!

reply to post by kozmo

Second, Paul isn't advocating returning to the gold standard.

This is true.

He is advocating the elimination of the federal reserve and a return to the Constitutional principle that only Congress has the legal authority to coin money, not some third-party extra-governmental agency with no oversight from Congress.

This is a complete lie. You're confusing a lack of interest with a lack of control. Congress fully controls the Fed, what Congress creates it can easily eliminate. Also, Ron Paul doesn't want Congress to control the money supply either, he doesn't support central banking or planning, it doesn't matter who does it.

Originally posted by kozmo
I've no desire to enter into the anti-Paul ignorance and trolling. Instead, I'll focus on the premise - reintroducing the gold standard. First of all, to all of those naysayers - please send me one, just ONE, example of a successful fiat currency that wasn't accompanied by ever-increasing debt. Thsi should be fun! I'll anxiously await examples.

Second, Paul isn't advocating returning to the gold standard. He is advocating the elimination of the federal reserve and a return to the Constitutional principle that only Congress has the legal authority to coin money, not some third-party extra-governmental agency with no oversight from Congress.

I continue to wonder at what point the histrionics of the anti-Paul crowd will actually contain some facts and some evidence to backup these ridiculous and baseless claims made about him? All I continue to read are the 2 party talking points drummed up against Ron Paul. Who, by the way, are scared to death that his message gains traction with the masses because that would strip away their dictatorial authority over us.

These posts continue to expose who the true sheeple are!

Wake up already!!!

I DO NOT AGREE!

IF you ARE A GOLD businessman, you should
have every right to print gold coins WITH YOUR OWN GOLD!!!

RON Paul is FOR MORE REGULATION!!

If you can make gold coin dollars and I WANT TO BUY THEM
at the current price... You should be able to make and sell
whatever type of gold you want.

EITHER IT A GOLD STATUE OF BAEL

or a gold coin with a certain amount of gold in it..

The op brings up a valid point about the gold standard, and it bears to look into. The gold standard, the pros and cons of such.
Before we get into such, the first thing to look at is what is money. Money is a medium of exchange. This is the definition of money.
The gold standard, as would be proposed, is where the paper currency would be backed by equal amounts of gold behind it. Theoretically, if you had currency under a gold and silver standard, you should be able to go to the bank and exchange it for equal amounts of gold and silver. However, there is a down side to this and ultimately this lies in history. France, pre revolutionary times, there is a tale, and it is studied, how the king of France insulted a noble man, who then took all of his paper money and went to the local bank and demanded to exchange it into gold, thus bankrupting the country. (He had wagons full of it.) Gold is finite, there is a limited supply of this precious metal, as its usage covers a wide array of goods and services, from medical, to engineering, to jewelry, to even computers. Then there is the problem with the purity of gold, that was at one time handled by the Dutch that would assay the gold coins of one country to give the correct exchange rate of another country.
The advantages of a gold standard is:
Long term price stability. Gold does not go up and down like the fiat money, it is stable. It is rare, and not every one has such or can afford such. The gold supplies are limited, so the amount that is out is pretty much limited.
Gold standards would limit the power of government spending, as again, the limit of amount, means that the government could not spend as much money as it wanted, thus it would have to keep within its budget or come in under budget. Governments could not deficit spend and the last thing that the government could not do is constantly borrow. However, it would require a central bank to keep track of said gold and ultimately, means that the Fed and reserve would continue on, with more power than before.
The disadvantages are as follows:
As this is a limited resource, there would continue to be recessions and inflation, the markets would fluxuate. This is due to the shifting of the currency and this metal from one part to another. And if a new source was discovered, it would cause inflation if not hyperinflation to the large amount of gold flooding into the markets. This again was seen in Europe, at the time of the Spanish conquest of the new world. While Spain was nearly bankrupt, when the first shipment of gold from their new colonies came back, inflation hit hard. Some have even speculated it was hyper inflation.
Deflation would ultimately reward those who save, and punish those with any kind of debt. Lenders, such as banks would become much more wealthier, at the expense of the people, those who save, would gain and be rewarded, it would ultimately affect an economy in a negative way, as there would be no incentive to spend or risk.
During times of economic downturn, there would be no real way to stabilize any economy.
All monetary policy would be determined by the rate of gold production, so the government would have more control over how much was out on the markets, and be better in control over the masses.
Economies could be manipulated easily.
And countries could devaluate their own currencies with relatively ease, to make their debt cheaper than what it should be.

Those are the pros and cons of having a gold standard. The wisest course would be to keep the fiat currency with the same rules as the gold standard, to prevent the federal government from deficit spending.

Originally posted by Rockdisjoint
reply to post by kozmo

 

Second, Paul isn't advocating returning to the gold standard.

This is true.

He is advocating the elimination of the federal reserve and a return to the Constitutional principle that only Congress has the legal authority to coin money, not some third-party extra-governmental agency with no oversight from Congress.

This is a complete lie. You're confusing a lack of interest with a lack of control. Congress fully controls the Fed, what Congress creates it can easily eliminate. Also, Ron Paul doesn't want Congress to control the money supply either, he doesn't support central banking or planning, it doesn't matter who does it.

With all due respect, I am correct and you are confused. True he doesn't want Congress to control the money, he wants the Treasury to control the money. He wants Congress to COIN the money. With respect to who controls the Fed, you are partially correct - COngress does have some over-sight authority and you are further correct in your assessment of Congress' interest in exercising said authority. That being said, there are limits one what Congress can do with the Fed.

Originally posted by kozmo
First of all, to all of those naysayers - please send me one, just ONE, example of a successful fiat currency that wasn't accompanied by ever-increasing debt. Thsi should be fun! I'll anxiously await examples.

I can think of one:




You can still buy a railroad for just $100

reply to post by VictorVonDoom


Depending on which version of the game you buy. In some they cost different ammounts.

reply to post by VictorVonDoom



NICE!!!

You have made my day by making me spit soda through my nose! I thank you so very much for the great laugh!

reply to post by kozmo

With all due respect, I am correct and you are confused.

Nope, I'm never wrong.

True he doesn't want Congress to control the money, he wants the Treasury to control the money.

No he doesn't. He takes a Hayekian view when it comes to money.

He wants Congress to COIN the money.

No he doesn't, as I said before he takes Hayekian stance when it comes to money. Congress can coin money if it wants, but he doesn't think there should be any laws forcing people accept it as legal tender. There would be many coiners, printers, etc of money on the free market.

With respect to who controls the Fed, you are partially correct

Nah, I'm 100% correct [again].

That being said, there are limits one what Congress can do with the Fed.

You're making stuff up. Congress can do whatever it wants with the Fed. Who created these limits?

reply to post by asmall89


You're mistaken. The value of gold doesn't appreciably change. It's the value of currency that goes down. If you adjust the value of gold against the value of other commodities historically and then look at the equivalent currency, what you will find is that most have remained fairly constant over that time but that the value of currency has steadily gone down.

For example, to purchase the same $1,000 worth of goods in 1965 would require over $6,900 today. Money is being printed and devalued as a result.

purchasing power