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Saturday, March 21, 2009

Q: what about the gold standard

My father and I do not agree on a whole lot of things. But he has this idea, which he sees as critical and urgent. Not being on the Internet, he has asked me to spread his concern for him, and to elicit feedback.

So the following is not my idea, nor do I agree with it-- though there may be a point in discussing it. And since a number of the writers/readers here are money & finance people, Scatablog seems a good forum.

Fire away! (My feelings are not on the line here.) I will forward replies, in print, to my father. Thank you.

From Vegaschuck:
  1. It is unconstitutional for the federal government to print money not backed by gold. The Constitution's insistence upon backing currency with gold and silver was a reaction to the Continental Congress's issuance of dollar notes without such backing (see the phrase, "not worth a Continental"). So the Constitution stipulated that paper money was to be backed by specific amount of gold. It was FDR who took us off the gold standard, a typical Communist grab, and now the dollar has no backing behind it.

  2. US paper currency money is therefore now worthless and will only regain value when it is again backed by precious metal. Only way to solve current financial crisis is to return to the gold (and silver) standard for our national currency. This will greatly calm the financial markets.
Please spread the word. Comments welcome.

2 Comments:

Blogger Mark Herpel said...

There are Sound Money or Honest Money Bills pending in at least 6 states right now. Montana is the most recent and perhaps has the best chance of passing. More info:
http://montanasoundmoney.org/, http://indianahonestmoney.org, http://dgcmagazine.com

Mark
editor@dgcmagazine.com
Skype IM 'digitalcurrency'

3:22 PM  
Blogger walldon said...

The current crisis has nothing to do with whether or not we're on the gold standard. Indeed, it would probably be far worse if we were, since any economic leverage the Fed has (admittedly, not much in a zero interest rate environment) would be lost.

For those who don't know it, the currency in circulation (which is what we're talking about, when we talk about the gold standard) is a miniscule percentage of the total money supply -- no matter which definition of "money supply" you use. And, if the currency were rationed by tying it to gold in some fashion, then other forms would take its place - e.g., bank notes, which were the circulating currency in this country for many years. Of course, these days, you might think twice about accepting a bank note from Citibank. Which gets to the heart of the current problem. Nobody has any confidence in any of the financial institutions (or much else). We learned in the Enron debacle that you can't believe the auditors because they're paid by the people they audit. No we've learned that you can't believe the bank regulators, the large financial giants, or the rating agencies either. Because of that, we're all flying blind right now, and when you're flying blind, it doesn't make sense to fly very high or very fast.

9:17 AM  

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