The Argument for Gold Currency

In video form:

The author does make some rather outlandish claims – World War One is probably the one war in human history which no human action could stop.  And it would have been fought just as bitterly and as long even if everyone had to use gold for all transactions.  But the basic thrust is true – fiat money allows irresponsibility.  And both in government and private transactions.  You don’t fret about fake money which will lose its value…so you are easily swayed to spend it on all manner of stupid things.  Things of real value, on the other hand, tend to be carefully husbanded.

But we can’t go back to gold!  So goes the consensus.  But I wonder why anyone believes this – if anyone can come up with a good reason, I’m all ears.  But for me, it is a very simple operation.

You pick a date and say on that date all US currency will be revalued at a 100-1 ratio:  for each 100 fiat dollars, you now have 1 gold dollar.  This is done universally:  you’re $20 an hour wage now becomes 20 cents an hour.  Your $200,000 house now becomes a $2,000 house, and so on.  The $1,600 ounce of gold now becomes $16.  Hey, presto, we can make a $20 gold piece, again.  You know, like we used to.

Gold for the higher denominations ($20 and up), silver and copper for the lower ($10 on down, with real copper used for pennies; though we’d probably have to start minting half-pennies, too).  Paper currency could still be issued, but it would be chained like iron to the amount of gold and silver in the treasury.  The nature of finance dictates you can issue more paper currency than there is gold and silver, but you can’t go too far…if you do, the value of the paper currency becomes worthless as people hoard their gold currency and start using the paper for other purposes.  There can still be chicanery, but not on such a grand scale that 98% of the people’s money is stolen.

Gold and silver are decreed as the currency of mankind – fiat money is the currency of con artists.  A free people cannot long endure money men using fake money to steal the wealth of a nation.  We must know that when we labor and earn a dollar that the dollar will remain constant in value…even if we just stick it in a coffee can for 50 years.  For nearly 200 years America grew and thrived under gold currency – for 40 years we have weakened and shriveled under fiat currency.  Time to change – and as we are genuinely conservative, our best bet is to change back to where we were, rather than trying to “conserve” the fiat currency of liberalism.

HAT TIPMish’s

4 thoughts on “The Argument for Gold Currency

  1. doug July 26, 2011 / 11:05 am

    As a conservative, I’ve never been on board with the gold standard for currency – – I just never understood the fascination with it. When you and others point out that the value of the dollar needs to be constant or stable and a gold standard would do that, I’m just not sold on that.

    The value of gold relative to the dollar has been wildly unstable. Gold prices have skyrocketed over the last ten years relative to other consumer goods and products. It is acting more like a speculative instrument than it is a stable commodity. Why not choose something different?

    The fascination with comparing what the dollar can buy vs. gold nowadays really is counterargumentative. All that it shows is that those things that are in highest demand relative to supply get ‘bid up’ to a larger amount of disposable income. Those that are in high demand but have a large supply take up relative little of income nowadays, and those products with a large supply/selection relative to demand have reduced in price relative to inflation.

    Gold, itself, and it’s alarmingly high value/ low supply would do absolutely no good backing
    a currency. It is not stable, the demand is ever increasing beyond it’s supply. Attach dollars to it, and it would skyrocket even more….and for what purpose? Some imagined belief that it will stablize the value of the dollar.

    • Mark Noonan July 26, 2011 / 2:51 pm

      Doug,

      You don’t actually have to use gold – you can use any readily available commodity. The key is to have something of actual value as a store of wealth. Remember what happens with a fiat currency – one fine day, the Federal Reserve prints up $2 trillion and that means all the dollars you had the day before lose part of their value. What this works out to is part of your wealth being stolen – because you stored it in fiat currency – and being given to someone else. This is, essentially, what the central bank of the world have been doing for more than a century…with the United States getting fully involved with it in 1971. Gold – or other hard currency – means that if you create a dollar of wealth today it will certainly be worth a dollar tomorrow…and the day after, and 20 years from now.

      The reason it is important to have a hard currency is right in front of us – our $14 trillion in debt could not have been built up in a hard money economy. Fake money allows us to do this…because we can print more to pay off the old debts. The financiers like it because even though their dollars lose value with everyone else’s, the fact that they have first call (via the banks) on fiat currency issuance means they can earn enough interest to overcome the decline in the value of the fiat currency. Fiat currency is the largest transfer of wealth in human history – transferring it from those who make wealth to those who don’t (who then use part of it to buy the loyalty of others who also don’t produce wealth…government employees, welfare recipients, etc).

      And here is the real kicker – from 1800 to about 1910, the cost of living for the average American went steadily down. Outside a couple bursts of inflation caused by the War of 1812 and the Civil War (especially the Civil War when we issued fiat currency to pay for the war – but fiat currency redeemable after the war in gold), year by year the cost of the basics of human life in America declined. Since 1910 prices have steadily risen. The big change of was signified by the creation of the Federal Reserve in 1913…and while there was a short-lived decline in prices during the Great Depression, they still never returned to 1910 levels, and after that was over it was a steady rise in the prices paid for the basic necessities…and this started to skyrocket when we completely decoupled our currency from gold in 1971.

      A loaf of bread cost a nickel in 1910…adjusted for inflation, it should cost $1.16 today…the average price is $2.28. So even our higher wages (which, adjusted for inflation, are much higher than in 1910), the massively higher taxes and prices we pay compared to those of 1910 means, at beast, we’ve advanced only slightly in real, per-capita wealth over the past 100 years. We’ve got more gadgets, but we’re being robbed blind.

      Time to end the endless rip off – time to return to gold.

      • doug July 26, 2011 / 4:40 pm

        Mark, I’ll reply a bit later more thoroughly, but your bread example can be seen a different way…..I always pay less than $1.16 a loaf for my bread, just so you know….always. Yes, our standard of living is so large right now, that I can choose to spend more for bread if I wish to, but I don’t.

        In 1910 a gallon of milk was 30 cents (since we’re looking at basics). I’m guessing that would mean close to $7 a gallon today. not only do we pay much less but we get a gallon that has less chance of carrying food bourne illnesses.

  2. phillip marler August 2, 2012 / 4:57 pm

    doug: the milk back then was more healthy, and your assumption about buying power is wrong.

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