Silly Objections about the Gold Standard

I was listening to the radio today and some commentator mentioned that going back to the gold standard is totally unreasonable because we “don’t have enough gold”.  This is really a silly objection.  The merits of gold take some explaining while the “don’t have enough gold” line is just a slogan type phrase without any thought put into it.  So lets take a look at the  “don’t have enough gold” line and root out the falsehoods impregnated in it.

Gold has traditionally been used as money precisely because it is rare.  The freemarket picked gold and silver because they are precious metals.  What makes them precious?  They are uncommon/rare.  It’s pretty simple, we don’t want gold to be common place because it would not work well as money.  The maket could have chosen steel but, steel production is about 545,500 times that of gold.  If I wanted to buy stuff with steel, I would need a huge truck to transport it.  The reason that gold has been used as money is because of its high value per unit of weight.

It is true that if the U.S. returned to the gold standard today that their would be far more dollars in circulation than in the past in proportion to U.S. gold reserves.  I would say “so what?”  The fact that there are more dollars in circulation simply means that gold would have to be re-linked to the dollar at a higher amount.  This has been done before in the 1930s when FDR revalued gold because of all the money that was printed under his and the Hoover administration.  Today we could re-link to gold in much the same way (but hopefully without confiscation).  So instead of 36 dollars for every ounce of gold it would be something like 1500 dollars an ounce or maybe even 40000 dollars an ounce according to some estimates.  This would simply mean that I would need to turn in 1500 dollars to the bank to recieve an ounce of gold.  With modern banking electronics and bank cards I would not even need to turn in Federal Reserve notes to recieve hard currency.  When I swipe my card for $15 it would simply remove gold from my alloted pile in the bank and put it into another alloted pile that is owned by the seller of the good I just bought.  Whether the gold is physically moved or just kept track of in a ledger would probably be up to the bank.  As you can see, modern technology would make a present day gold standard much more cost effiecent than 100 years ago when you had to physically withdraw gold from the bank.

I would also argue that the “not enough gold” argument misses the whole point entirely, or more precicely three points.

1)  The fact that gold is linked to the dollar means that the federal government could not print off money at will.  This money printing steals wealth from the population and hurts the poor and the middle class the worst because their wages are largely fixed and do not benefit from inflation like Wall Street and other politically connected groups. Putting a check on government inflation(theft) is the whole point of the gold standard. The dollar could be linked to anything hypothetically; silver, copper, land, or even oil could be used in the same way.  The reason gold has been used is because of its high value per weight but, this doesn’t mean that something else could not be used in the future.  Hell, the governemnt could use sea shells and it would still limit how much money it could print.

2)  Gold has value in itself.  I know pundits on TV and on financial shows say that gold does not have any value because it does not do anything but, they are simply wrong. Go into any pawn shop or Jewelry store. Gold is obviously highly valued by large segments of the population.  The reason it is money is because it is widely in demand.  This does not mean that everyone has to want gold but, instead means that someone, somewhere down the road will want to own gold.  This could change to silver or maybe energy units (like oil or killowatts) but gold has traditionally been the most widely valued good and that is why it is used as money.

3) Gold also provides a function as well. Gold provides a unit of account that allows all of society to make long term investment decisions.  Other things can be used as a unit of account but, gold arose on the free market because its supply is relatively stable, only growing at a very predictable rate of about 2% a year.  Today we use Federal Reserve notes as a unit of account but, we never know how much inflation is going to be year after year.  This creates massive distortions in the economic system that makes society poorer because of peoples inability to make long term investment decisions because of the intertemporal nature of investment.    All of civilization is based on people being able to judge the value of things in the present and over time.  Gold does this pretty well, government bureaucrats are pretty poor substitutes. Once again, many things can be used as a unit of account but in the past, the freemarket has used gold.

 

 

In conclusion, the whole “not enough gold argument” is pretty naive.  There are some better arguements against gold that are more intellectually sound like the “we need to inflate to save the economy!” argument. You can read more about that here, here, and here.

 

526 thoughts on “Silly Objections about the Gold Standard

  1. What Is FitSpresso? The effective weight management formula FitSpresso is designed to inherently support weight loss. It is made using a synergistic blend of ingredients chosen especially for their metabolism-boosting and fat-burning features.

  2. Its like you read my mind! You seem to know so much about this, like you wrote the book in it or something. I think that you could do with some pics to drive the message home a bit, but other than that, this is great blog. A great read. I’ll definitely be back.

  3. It’s the best time to make some plans for the longer term and it is time to be happy. I have learn this post and if I may I desire to recommend you some interesting things or suggestions. Perhaps you can write subsequent articles regarding this article. I desire to learn even more issues approximately it!

  4. What Is Wealth Signal? Wealth Signal isn’t just a financial tool; it’s a new way of thinking about and achieving wealth. Unlike traditional methods that focus on external strategies, Wealth Signal emphasizes changing your internal mindset.

  5. Howdy just wanted to give you a quick heads up. The text in your content seem to be running off the screen in Ie. I’m not sure if this is a format issue or something to do with web browser compatibility but I thought I’d post to let you know. The design and style look great though! Hope you get the problem resolved soon. Cheers

  6. Howdy! This is kind of off topic but I need some advice from an established blog. Is it hard to set up your own blog? I’m not very techincal but I can figure things out pretty fast. I’m thinking about creating my own but I’m not sure where to start. Do you have any points or suggestions? Thanks

  7. Woah! I’m really enjoying the template/theme of this website. It’s simple, yet effective. A lot of times it’s very hard to get that “perfect balance” between superb usability and visual appearance. I must say that you’ve done a superb job with this. Additionally, the blog loads extremely fast for me on Chrome. Exceptional Blog!

  8. I am really loving the theme/design of your website. Do you ever run into any internet browser compatibility problems? A handful of my blog audience have complained about my blog not operating correctly in Explorer but looks great in Opera. Do you have any solutions to help fix this issue?

  9. Its like you read my mind! You seem to understand so much approximately this, like you wrote the guide in it or something. I feel that you could do with some % to drive the message house a bit, however other than that, this is fantastic blog. An excellent read. I’ll definitely be back.

  10. Wonderful work! This is the kind of info that are meant to be shared across the web. Disgrace on the seek engines for now not positioning this post upper! Come on over and visit my web site . Thank you =)

  11. I’d have to examine with you here. Which is not one thing I usually do! I take pleasure in reading a post that may make folks think. Additionally, thanks for permitting me to comment!

  12. I am curious to find out what blog platform you’re working with? I’m experiencing some small security problems with my latest website and I’d like to find something more safe. Do you have any suggestions?

  13. I’ve been browsing online more than three hours as of late, yet I by no means found any fascinating article like yours. It’s lovely worth sufficient for me. Personally, if all site owners and bloggers made good content as you did, the net can be a lot more helpful than ever before.

  14. Those are yours alright! . We at least need to get these people stealing images to start blogging! They probably just did a image search and grabbed them. They look good though!

  15. Nice post. I learn something more challenging on different blogs everyday. It will always be stimulating to read content from other writers and practice a little something from their store. I’d prefer to use some with the content on my blog whether you don’t mind. Natually I’ll give you a link on your web blog. Thanks for sharing.

  16. I’d need to examine with you here. Which isn’t one thing I usually do! I get pleasure from studying a publish that will make folks think. Additionally, thanks for allowing me to comment!

  17. I am no longer certain where you are getting your information, but good topic. I must spend a while learning more or figuring out more. Thanks for wonderful info I used to be looking for this info for my mission.

  18. What i don’t understood is in reality how you are not actually much more well-favored than you might be now. You are very intelligent. You realize therefore significantly in the case of this subject, produced me individually consider it from a lot of numerous angles. Its like women and men don’t seem to be interested until it is one thing to accomplish with Lady gaga! Your own stuffs outstanding. At all times take care of it up!

  19. Howdy just wanted to give you a quick heads up. The text in your post seem to be running off the screen in Ie. I’m not sure if this is a format issue or something to do with web browser compatibility but I thought I’d post to let you know. The style and design look great though! Hope you get the problem solved soon. Cheers

  20. Hey there would you mind letting me know which hosting company you’re working with? I’ve loaded your blog in 3 completely different web browsers and I must say this blog loads a lot quicker then most. Can you suggest a good hosting provider at a reasonable price? Thank you, I appreciate it!

  21. Hello there, simply turned into aware of your blog thru Google, and found that it is really informative. I’m gonna watch out for brussels. I will appreciate should you continue this in future. A lot of other people might be benefited from your writing. Cheers!

  22. Hi! I know this is kinda off topic nevertheless I’d figured I’d ask. Would you be interested in exchanging links or maybe guest writing a blog article or vice-versa? My website discusses a lot of the same subjects as yours and I believe we could greatly benefit from each other. If you are interested feel free to send me an e-mail. I look forward to hearing from you! Fantastic blog by the way!

  23. Tonic Greens: An Overview Introducing Tonic Greens, an innovative immune support supplement meticulously crafted with potent antioxidants, essential minerals, and vital vitamins.

  24. You could definitely see your expertise in the work you write. The sector hopes for even more passionate writers like you who aren’t afraid to mention how they believe. All the time go after your heart.

  25. Good day! I could have sworn I’ve been to this blog before but after browsing through some of the post I realized it’s new to me. Anyhow, I’m definitely happy I found it and I’ll be bookmarking and checking back frequently!

  26. Do you have a spam issue on this site; I also am a blogger, and I was wanting to know your situation; we have developed some nice methods and we are looking to exchange methods with others, why not shoot me an e-mail if interested.

Leave a Reply

Your email address will not be published. Required fields are marked *