Should the United States go back on the gold standard? If so, why?

Yes, backing up our money with words doesn't work.

A nice dream.

Yes and damn Frank the Crippled Commie for taking us off the gold standard because we're stuck with fiat funny money.

Not practical any longer. Unless you have a one foot cube of gold.

Never gonna happen.

No, but it's WAAY better than what we have now.

It is an old system, where precious metals were a store of value, which is the problem. Gold is a fiat currency. It mostly only has value as a store of wealth and exchange, just like other fiat currencies. The difference, and the reason gold is better than counterfeit money created out of nothing by private bankers and then loaned at interest is that someone has to do work to get gold. It has a store of value in its acquisition. People have to collect and refine it, which requires work, energy, and time. Gold already has capital investment when it arrives in spending form.

The better way would be for the US to kick all the Jews out, then create its own currency, which would be a fiat, but without the central bankers collecting interest off of every dollar created (through debt, as modern money has no capital investment, but is actually a debt owed to the FED). We had a similar system before 1913, but it was too cumbersome for the Jews to rig it to their benefit. If the money supply isn't inflated, it's value actually goes up, so hoarding gold isn't and wouldn't be necessary, as it is under a gold standard.

The government was charged under the Constitution to establish a national currency. It illegally transferred that responsibility to a private bank. I wish more people would grasp this.

HISTORY: The government held the $35 per ounce price until August 15, 1971, when President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value, thus completely abandoning the gold standard.
In 1974, President Gerald Ford signed legislation that permitted Americans again to own gold bullion.

You're missing half the story here. Look up Bretton Woods Agreement. Nixon was stuck with a bum steer, also called a schitt policy, and had to do SOMETHING to keep the dollar from collapsing due to the absence of gold in the US.

Yes. It would provide intrinsic value to the dollar which in nonexistent at present. They could toss silver into the pile as well.

A return to the gold standard is seen by some as a panacea for most economic ails, what problem(s) would it solve?

You're missing half the story here. Look up Bretton Woods Agreement. Nixon was stuck with a bum steer, also called a schitt policy, and had to do SOMETHING to keep the dollar from collapsing due to the absence of gold in the US.[/quote

No I am adding to the story just as you did. It is an old story about a two edged sword.

Who's sock puppet is this one?
Member since 2009, only 38 posts, stopped posting in 2012, fired it up again last month.
Just in time for the coming election?

Of course. It's real money (that, and silver). The paper stuff were just tickets for real money, gold and silver, that you could claim on demand. The claim ticket system (notes for gold and silver) made things a little more convenient for exchange. Then they told us it was still backed by gold, only you can no longer redeem the claim tickets for your actual money (1933, FDR) unless you were a foreign government. Then (1971, Richard Nixon) they told foreign governments that they too were stuck with the claim tickets on gold and silver, and could no longer receive the actual gold and silver for them. That marked the cutting loose of our currency from anything real, and we've seen the consequences: out of control spending by the government, perpetual debt and inflation, the combination of which will inevitably result in a dollar crash. It's like a law of physics. You can't get around it.

There isn't enough gold to back the currency now.

In 1933 the price was $35 an ounce. Now it's over $1,000. A million dollars--very rare in 1933 but not rare now--in gold weighs 3600 pounds the last time I calculated it.

So, if we could not stay on the gold standard back then, how could be possibly get back on it now?

Spend and spend and just print the money.

Like the Weimar Republic in Germany in the 1920s when it took a wheelbarrow of cash to buy a loaf of bread.

Or Zimbabwe. When I was there 80 million dollars of their money was worth 0.2 US cents. The inflation rate was 16 septillion percent (whatever that is) a year. They stopped using their own money because the cost of printing a bill got to be more than the value of the bill.

The question is when.

You reveal your ignorance. You can still buy a good used car for an ounce of gold, about as good a used car as you could buy with a gold-backed twenty dollar bill back in 1930.

You can still buy a gallon of gas for a tenth of an ounce of silver, about what you could buy with a silver dime in 1930.

That's all you need to know to understand that your statement is absurd.

All they need do is reinstitute "Free Coinage," which means you give the Treasury Department an ounce of gold and they will give you a one ounce US Gold Coin, or a new gold-backed Twenty-Dollar Bill, at your choosing. Simultaneous with this, they would have to repeal the Legal Tender Laws. Voilà Done.

you would prefer the bitcoin?????

So if criminals break into our homes and steal all our possessions today, what's the point of having laws against it? Same logic.

Indy,

Time to go back to school... I just ran $1,000,000 and threw in $1300/oz for gold (not sure what the current price is). Came op with ~48lbs, not 3600lbs.!!!

Still a lot though.

What you folks who say there's not enough gold/silver don't get is that as soon as folks abandon fiat currency (which is nothing but a Ponzi Scheme), the purchasing power of gold and silver increases dramatically, i.e., you will have immediate and rapid deflation in real terms, to the point that what you could have purchased for one ounce of gold can then be purchased for a gram of gold. Same with silver. In other words, we're then in the realm of orders of magnitude, real terms, deflation. The total gold and silver supply, in other words, is 100% elastic to the population to which it is in demand as money.

$1800 per troy. About a tie to all time high....

The roof is about to come off.

i doubt we'll go back in any meaningful way. it's been about 50 years of the current rule of law related to money. helicopters full of money fly over and shovel it out to the masses, and not a word is mentioned about the growing debt.

if we do try to go back things will look very murky smoky even on all the horizons we can see. we've learned to live without gold, except in our electronic and communications devices.

but gold and silver were once very good ideas, even better than wampum and animal skins. why not sell all the gold to individuals and shift to all digital as the next best thing.

Regardless, the gold standard is returning.

The dollar has no backing of value anymore, we can't even keep ourselves in toilet paper.

Crypto could be useful but not BTC. Chainlink probably has the most promise on a technical basis, but something like XMR would be better purely as a medium of exchange.

"The gold standard is still the gold standard among monetary systems." - Lawrence White

https://www.zerohedge.com/markets/civilized-relic-monetary-system-good-gold

YES!

at some point, sooner or later, the issue of interest rates (possible usery) will have to be addressed, or rewrite the arithmetical laws. it use to be addressed about every 50 years in the ancient world. we're in the post-modern era now as many folks are learning. we left kansas long ago.

This right here pretty much sums it up very succinctly.

Based on ignorance, as I explained above.

Why not. Lead may soon be the new gold. If it does,I'm sitting pretty good

We should of never come off of it.

It'll never happen.

When FDR took office in 1933 the Federal Reserve had already issued 3 times the gold certificates that there was gold held in reserve to redeem the certificates. This happened under the 4 previous administrations after 1913, 3 of which were Republican.

The copper in a pre-82 penny is already worth more than one cent (originally, a copper penny was a mere token, having only a minuscule metal value vs the face value of the coin itself). It might soon be worth more than the face value of a zinc dime at the current rate.

It will, but likely only after a dollar collapse, at which point there will be no other option. Why do you think international banks and governments buy and hold so much gold? They know what they don't want you to know.

The original system was that the government had nothing to do with paper gold and silver notes. Private banks issued them after you deposited your gold and silver there. Sometimes they also over issued notes, which is why they made it a Federal system instead, but that's even more likely to fail than a private system. What they should have done in response to banks over issuing notes was to prosecute the directors for fraud and throw them in jail. That would have put an end to it.

Me? No thank you.

yep. but here we are. we're all happy in our jobs, our work, and our taxes to be paid to the federal, state, & local gov'ts. we're pretty willing to maintain the status quo, but there's a few outlyers wanting to begin throwing rotten tomatoes. at least gold & silver don't rot.

So you're saying that we're going to have to start moving the decimal place over and adding zero's to Zogbucks, a la Zimbabwe??

The gold standard worked so well for us in 1929. Oh, wait....

Money needs something of solid value to back it up. Indebtedness and wishful thinking isn't cutting it.

The gold standard isn't the panacea some of you think:

No, they should have been hanged. The Federal Reserve with the knowledge of the politicians (they had to know) issued certificates promising redemption in gold for over 20,000 tons of gold when there were in fact only about 6000 tons available. It is the crime of the age. FDR inherited the problem but I guess he and congress and the courts knew what a catastrophe would ensue if justice was done. So we still have the criminal central bank and our money is paper that becomes worth less and less as time marches on.

Khadafy was killed because he had a lot of gold and was gathering a cabal of other countries to start trading in money backed by gold and buying and selling oil with that money.

Oil is traded in dollars. It screws other countries because we, but not they, can magically print petrodollars.
Regardless, the ponzi scheme is in the process of toppling, no matter what we do. The bankers, Russia and China know it. Thats why they areloading up on gold.

They dont think trading in seashells will work.

That was the doing of the Federal Reserve, established in 1913, not the gold standard.

PS Gold and silver used as currency/money isn't precisely identical with "the gold standard." Lots of systems can be a gold standard that go beyond merely allowing gold and silver to function as currency/money. The simplest form would be for government to simply eliminate all laws designed to prevent them from being used as currency/money, and to allow folks to accept paper notes for gold and silver at their own risk, while prosecuting bankers for fraud when they issue more notes than they have gold/silver to back.

Sir: I respect you as one of the smartest men to grace this forum but I suspect the problem that showed up in 1929 had it seeds in the injection of fake money into the system by the Federal Reserve during WW1 and the roaring twenties. Money that claimed to be backed by gold and was not.

AMEN!!!

I'll see your Milton Friedman and raise you one Murray Rothbard.

There will be enough when its value hits $80,000 an ounce.

The causes were many, but that wasn't one of them.


If you'd like a simple explanation of what really happened, I suggest watching the first half of this:

Bingo. It's elastic, and automatically rises in value (in a natural economy) to account for all existing production and wealth.

no

Fair enough, but how many people have a million dollars in CASH? Lots of value in houses, retirement funds, stocks, bonds, etc. But the average family can't come up with $400 to cover a minor car repair. So there's that.

Anyway, count me into the "no" category. It simply serves no purpose, for the exact same reason mentioned above. In today's society, only a tiny little bitty fraction of the assets of our nation is in cash. It really doesn't matter if the value of real estate or stocks or frozen chicken thighs is expressed in Silver Dollars, bitcoins, Gold Sovereigns or ECU's. As long as it's a well defined, commonly accepted unit, the economy will rock along fine.

I'm watching but it seems I'm right about the criminality of the central bank creating fake money which created a fake bubble.

My favorite Rothbard Book is free on YouTube:

Here's chapter one:

Watch further. The real problem that prolonged the depression was not enough money in circulation, not the other way around.

Rothbard rejected the application of the scientific method to economics and dismissed econometrics, empirical and statistical analysis and other tools of mainstream social science as useless for the study of economics.[49] He instead embraced praxeology, the strictly a priori methodology of Mises. Praxeology conceives of economic laws as akin to geometric or mathematical axioms: fixed, unchanging, objective and discernible through logical reasoning without the use of any evidence.

Hmmm. What does that remind me of??

It is easier to be worth your weight in Gold if you are on the low carbohydrate, high fat diet.

$1,683 /oz = $5.4M/200 pounds.

I'm obviously in way over my head in this ocean. I know I do not like being forced to accept federal reserve notes which are issued on a line of credit from the central bankers that obligates me and my offspring to pay whatever they require. I would be fine with a dual system where I was free to contract a buy/sell agreement for gold, silver, platinum, copper or whatever was agreeable between the parties involved. As I understand that sort of contract is illegal and if so the reason is that NOBODY would want Federal Reserve notes.

Why not. The Khazarian Mafia money changers, now known a Jews, have your best interests at heart.

Just ask le Roy. Hes the man in the know and will tell you so. RE gold standard, he guessed "no".

Not true. You can absolutely sign a contract to be paid in gold, or anything else for that matter. Problem is, who's going to sign it with you? Certainly not your phone company, or mortgage company.

Then there's the small issues of things like who's going to take the risk of the price fluctuation in gold over the term of the contract.

Reminds me of the fact that governments following the recommendations of Keynesian economics (the pseudo-scientific approach you advocate) has gotten us to where we are today.

US Courts have long ago ruled that the Legal Tender Laws authorize them to reinterpret any contract term requiring payment in specie as one for the equivalent in US Currency, based on recorded values at the time the contract was formed.

A simple version .

Fake money is a very bad road to go down. It will become clear as time goes on. We are acting like a family that has inherited a fine estate and now we are desperately in hock to the banker who kept extending us credit when his aim the whole time was to take everything and make abjectly poor tenant farmers of us. We have done it to ourselves. Jacob Schiff and Paul Warburg had the Federal Reserve Act ready to go as soon as Woodrow Wilson was elected. Like the UnAffordable Care Act was ready with its 2000 pages as soon as Obama got in place. We willingly put our own head on the block.

"You missed it by that much!" Gold ounces (troy) are bigger and there are only 12 per pound... 4.9...

And what did Friedman say about Keynes and Keynesian economics in the above video?


What did Keynes himself say in his last published letter just before his death?

Allowing banks to extend us credit that we have no hope of paying back is a terrible evil. They are not loaning us money to help us. They expect to foreclose. I wish Trump would find a way to declare national bankruptcy and send the banks away without allowing them to foreclose on our future.

Don't think we (US) have the gold.

g

Doesn't need to exist in the Treasury. Just re-institute "Free Coinage." Under "Free Coinage," if you want gold coins or gold-backed paper currency, you bring your gold (or silver) to the Treasury (They would set up offices all over the nation), and at the counter you hand them your metals and receive the coin equivalent, or gold/silver backed paper notes, at your preference, or they will electronically deposit the gold and/or silver backed currency into your bank account.

"You shall not crucify mankind upon a cross of gold." (Just for historical perspective and discussion.)

The person speaking was angry because we had demonetized silver. He had no problem with gold, so long as it wasn't exclusive to that metal.

Correct - as I said, just wanted to bring in the history. Bryan's reasoning for free silver (Hi-Yo, Away!) could probably be extended to the non-money idea as well.

No, I think it's like a lot of other things from the past in that people's view of it tends to be clouded by nostalgia into thinking it was better for the economy than it really was. We forget that when we were on the gold standard there was often a shortage of cash to the point that much of the country would go months or even years without seeing any, leading to a large barter economy that couldn't be taxed (anyone remember stories about dr's and others having to take payments in farm products because there was no cash?). The govt just didn't have enough gold to print the amount of money that the economy needed.

The US also couldn't control the gold supply, there were periods of massive inflation after new gold rushes came on because of all the new gold hitting the economy. Not quite as likely as today but still possible.

The govt loses the ability to do quantitative easing to either speed up or slow down the economy. I think the 25 years after WWII is probably an abberation due to pent up demand from the depression/war and extra people from the baby boom, but for most of the time we were on the gold standard there was a pretty severe recession every decade or so, that hasn't really happened since we went off it.

Not trying to be a smart azz, but this is a serious question as I'm probably overlooking something but I can only see two ends in that scenario.

First, the govt has to pay market value for the gold someone brings in. This pegs inflation/deflation directly to the price of gold. If there's lots of pessimissim or speculation driving up the price of gold we've got bad inflation that has nothing to do with the economy as a whole and I don't see a way to fix it. If the price of gold is down when everyone is optimistic and buying tech stocks instead of gold then we've got deflation which isn't good either.

Second, if the govt doesn't pay market value for the gold people bring in but rather a fixed price, people are just going to use gold instead of currency if the fixed price is less than spot price, which would sink the value of the dollar. If the fixed price is higher than spot price everyone and their brother would arbitrage it by buying gold and exchanging it which would bankrupt the govt pretty quickly. I don't see a way around this other than just outright banning ownership of Gold like FDR tried to do

How would we get around this?

"The government just didn't have enough gold to print the amount of money that the economy needed" Bull shut, the Federal Reserve did print however much money it wanted and called it gold certificates to finance WW1 and the roaring twenties stock market boom. There was not gold enough but for about 1/3 of the gold certificates. We could have followed William Jennings Bryan's advice and fixed a ratio for silver to gold and still had sound money and Bryan's advice as he fought to keep us out of WW1. But no, we have enjoyed living on credit and fighting folks like Germany, Japan,Korea, and Vietnam on credit and putting our parents and feeble on the government credit. Now we are destitute. You will see soon enough.

By defining the dollar as a fixed weight in either gold or silver (but not both, as that creates problems of its own). This way the price of an ounce of silver is always going to be (lets say) $30.00 US, or the price of an ounce of gold is always going to be (let's say) $1,800.00 US, because that's the new definition of a US Dollar (one-eighteen-hundredth of an ounce of gold or one-thirtieth of and ounce of silver). Since the value of the those metals, as measured against a bushel of wheat, a good horse's saddle, a good pair of men's dress shoes, a side of beef, etc., remains fairly stable over the decades (centuries), so does the dollar.

I get what you're saying but I don't know that the US has the power to fix the global market price of gold (without tremendous investments on the open market to manipulate the price). For most of the time we were on the gold standard we were one of the largest producers of gold if not the largest, now we're down to 4th place. Russia and China are ahead of us and produce almost 3 times what we do. Every ounce they produce will devalue our currency unless we buy it on the open market. If we don't buy it we get in the situation where gold in the us sells for $1800/oz and on the open market it sells for $1850/oz. Speculators are going to obtain dollars, trade them in for gold to the us got and then sell the gold on the european or asian markets for a $50 profit with no risk which is pretty quickly going to bankrupt us even worse than we are

Weve been with our fiat system about 50 years. How did we make it until then?

At a fundamental level, you're thinking about it wrong. Once the dollar is defined as a fixed amount of gold or silver, all that a fluctuation in gold or silver value (on the world market) can do is cause a fluctuation in the purchasing power (strength) of the dollar.

Good question, but it has been 87 years officially and longer than that under the table. I am upset but have no recourse over the banks stealing our kids future. We've been suckered in with free printing and distribution of money the same way I sucker in smart independent industrious wild hogs with free corn. Then when it's too late the trap shuts or the bullet hits home.

Under a gold standard, inflation, growth and the financial system are all less stable. There are more recessions, larger swings in consumer prices and more banking crises. When things go wrong in one part of the world, the distress will be transmitted more quickly and completely to others. Dec 19, 2016
Why a gold standard is a very bad idea — Money, Banking ...
www.moneyandbanking.com

I might write an article on why living on credit and using other people's money is a really bad idea.

Ironic,


All this talk of gold,
Comes back to its value,
In $$$.

Our money is fine.
Because we have always been fine. Stable. Solvent. Productive.


That's changing, unfortunately.


How you count your wealth is going to be one of
your smaller problems when your country disintegrates.
That, is our bigger problem right now.
Gold notes aren't going to hold this thing together.
It's the people, and today's people aren't interested in U.S. (us?)
just me!

www.theatlantic.com Business Why the Gold Standard Is the World's Worst Economic Idea...Matthew O'Brien August 26, 2012

The greatest trick Ron Paul ever pulled was convincing the world that the gold standard leads to stable prices.

Well, maybe not the world. Just the Republican Party. After a 32-year hiatus, the party's official platform will include a plank calling for a commission to look at the possible return of the gold standard. There might be worse ideas than this, but they generally involve jumping off the Brooklyn Bridge because everybody else is doing it.

Economics is often a contentious subject, but economists agree about the gold standard -- it is a barbarous relic that belongs in the dustbin of history. As University of Chicago professor Richard Thaler points out, exactly zero economists endorsed the idea in a recent poll. What makes it such an idea non grata? It prevents the central bank from fighting recessions by outsourcing monetary policy decisions to how much gold we have -- which, in turn, depends on our trade balance and on how much of the shiny rock we can dig up. When we peg the dollar to gold we have to raise interest rates when gold is scarce, regardless of the state of the economy. This policy inflexibility was the major cause of the Great Depression, as governments were forced to tighten policy at the worst possible moment. It's no coincidence that the sooner a country abandoned the gold standard, the sooner it began recovering.

When we were on the gold standard. 1 oz of gold in 1800 was worth $20. 1 oz of gold or $20 would buy you a two suits. In 1900 1 oz of gold was worth $20 and again, both would buy two suits.

Then sometime around 1912 Wilson created the Federal Reserve, thus the downfall of the dollar via inflation. In 2000 1 oz of gold could still buy you two suits, however with inflation, $20 would only buy you the socks.

Gold kept it's constant value, but fiat money not backed by gold, rose over time with inflation.

See the difference. During the 1800's a $20 gold piece was one ounce and kept it's value. This was also true with the silver dollar, which today is worth about $30+ dollars.

Pennies made before 1980 are worth about 2 cents in metal with today's prices. Nickles made before 2010 are worth about 8 cents in todays prices. Kennedy dollars made after 1964 are worth about $3 in metal.

Wonder why there is a shortage of change. Preppers know this and are saving their old change. Paper money can become worthless, coins will not, especially some coins with silver, gold, and copper in them.

We should go back on the gold standard, but peg what we have in reserve to what is already printed and freeze it. With fiat money and the Federal Reserve, the government can release more money into the system by paying debt off with inflated dollars. Prices will keep rising, like they did in the 1970's when Nixon got completely off the gold standard. We were only partially on it still after 1912, but got completely off in the 1970's.

Ammo and food may be the barter currency in the next few years if they do away with money and make it all electronic via cards and chips. Buy it cheap and stack it deep.

Yep.

After the conquistadors returned from the new world with ship loads of gold Spanish experienced 500% inflation.

Not exactly the symptoms of a stable money supply.

You can't.

That's why no nation is on a true gold standard.

No, we wouldn't have. Gresham's law. Cheap money drives out good money. That's why duel monetary systems don't work.

The world was forced off it when Nixon defaulted on the United State's obligations to tender gold for US Dollars. The nations of the world had backed all their currencies on the US Dollar, which we promised to keep as good as gold, because we had promised it would remain backed by gold.

Your dates are cherry picked. There were many wild fluctuation in assets values between 1800 and 1900.

And he took us off for the exact reasons in the above post.

that's it exactly. they among others have taught us how. i hope i've done gone on to the big reward before it happens here though.

Which is why the US should simply follow the US Constitution and not issue paper notes at all, but only mint gold and silver coins. The dollar, however, should be fixed to one or the other, not both. They can mint both, but fix the dollar to one and not both, and allow people to contract for either payment in silver or gold coins.

If private banks choose to issue gold and silver notes, hold them accountable for fraud when they issue more notes than they have gold or silver to back them.

If they would have hung the Federal Reserve bankers 87 years ago justice would have been served and defrauding the citizenry would have stopped. We are going to pay a terrible price for this fiat money system. Actually in a way we already have with our military adventures that have caused so much misery and death to our own citizens and abroad, with no benefit to anyone but the bankers.

Yep.

Fungible

1 Unit of work = ? units of: Gold / Silver / Fiat Paper Theft of 1 Unit of work

The above is what you are trading and what the value of a country is, the number of units of work it can produce.

The groid standard is crap.

Hey these arent my glasses......

Go to any major university and take economics.................it is keynesian economics.

Paul Krugman got the Nobel prize in econ

Paul Krugman: The Economic Fallout
By PAUL KRUGMAN

COMMENT
2016-11-09T00:42:44-05:0012:42 AM ET
It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover?

Frankly, I find it hard to care much, even though this is my specialty. The disaster for America and the world has so many aspects that the economic ramifications are way down my list of things to fear.

Still, I guess people want an answer: If the question is when markets will recover, a first-pass answer is never.


There is no science or knowledge there, just a Marxist meat grinder.

A big part of the Depression was that there was no money in circulation. I'm not enough an economist to know the whys of it but the common person couldn't lay his hands on any cash. My grandparents lost a farm because of it. Their mortgage was $200/yr. They had good crops in the barn but couldn't sell them for cash, only barter. Nobody had any cash to buy the stuff. They couldn't come up with the $200 and lost it.

Folks had cash, but were reluctant to spend it. The proof of this is that records from that time period show high rates of savings by Americans. This can be caused by a high rate of deflation, such that people see prices falling, so put off non-essential purchases till prices fall further, closer to what they believe is the price bottom, not wanting to feel ripped off after having paid X price for a product, and a month later discovering that prices had fallen significantly since their purchase. A seller might well interpret this as a shortage of cash in the system, but that would be false.

As someone who actually has a degree in Economics, what you say is just not true. Keynes General Theory's largely discredited, especially as applies by tax and spend democrats, and it was discredited by the use of science, by econometric evidence that it didn't work.

Yes. The problem wasn't too much money in circulation, the problem was not enough money.

Yet the FED has used the Keynesian model for decades, and still uses it.

If academia disproved Keynesian economic theory why do they still teach it?

I know politicians bastardized it and love it.

Why is academia not teaching Austrian economic theory?

When the depression was over who ended up with the real assets of the country, like land, buildings, stock,etc. Who had been able to get these assets at bargain 1930s prices?

What matters more is asking where all the liquid funds of the 20's went? How was money widely available, then suddenly disappeared? Who made the liquidity dry up? Who had the power to do so, that had not existed before 1913? Who was holding all the money when it did? Because yes, after the depression hit, then the "Dustbowl", a small number were able to swoop in and buy up family farms across the midwest, changing the economic demographics of the nation in a generation. In the 1920's, most people were engaged in farming as an occupation in the US. By the time the "dust" settled, and the war was over, a new economic model had emerged, with the majority of people now living in urban or suburban areas, and large corporate farms held a majority of the land farmed in the US.

It happened again in the 80's, after "Black Thursday", and a lot of the remaining family farmers lost their land to the banks, again to be auctioned off to large corporate farms and developers. This is a simplification and streamlining of the events, but it is not inaccurate.

When were you last in an Economics class room?

I was taught of both Keynes and the Austrian School. We performed the proof of Keynes General Theory because it's a great math exercise, but also to understand why it was incomplete.

As for the Austrian school, they have no proofs. It's more of a philosophy which rejects the use of scientific tools. They reject the use of Econometrics which is one of the primary tools of Modern Economics. in the eye's of the Austrian's, you can only determine the direction of change, never a degree or size of an effect, which is just not true. From an academic standpoint, they remain stuck in the 1800's.

In truth, Modern Economics is neither Austrian nor Keynes, but the politicians like Keynes because half of his General Theory is the perfect excuse for their vote buying. Of course they always seem to conveniently ignore the second half of his theory.

We should never have come off the gold standard but since we have it is impossible to go back.

Mostly because there's not enough gold on planet Earth to equal the value of our debts.

Never..... don't trust academics and certainly would never spend my hard earned money listening to their propaganda....
That is why I asked the question......

This makes no sense to me..... how about if gold was $1,000,000 an ounce?

Your statement is based on a fundamental misunderstanding of how these things work. When gold is legal money, it expands/contracts in value in relation to the total productivity of the planet, and that by the mere natural forces of supply and demand.

What does it matter if you need one gram of gold to buy a high end business suit or a half ounce? In both cases, gold is exactly as useful as a universal currency.

Thanks Ant. Sniper for the clarification...... academics think they have the answers but they have royally fuucked everything up.... and they are in bed with the politicians now.
Junk science....
I am a fan of the Austrian school, markets know more than eggheads.....

Exactly.

Exactly. Yes, there isnt enough gold to cover the value of things at $1900 an ounce.

I wonder what food would be worth if it were to have short supply?

Take gold from one hole in the ground, a mine, and put it in another hole in the ground, a vault, and issue paper against it....

The only difference with our current system is we are just skipping steps one and two.

I think some have figured about $80,000 an ounce would cover it. Iirc.

And if silver would return to it's historic value of 16 to 1 ratio with gold, metals could replace fiat as real money

Thats the plan.

And that is the problem with deflation, and why it kills economic growth.

Economies run on private debt. Deflation creates an incentive to save, but no incentive to lend or invest. With no lending there's no new businesses, no economic growth, and worse, existing businesses can not function without sufficient working capital and properly functioning capital markets.

Transitioning to a gold standard would cause a rapid, extreme, and short lived, period of deflation (in real terms), followed by a quick return to price stability.

0% interest creates an incentive to spend and not save..... so there is that... it also forces the traditional savers into the Wall street casino.... bubble and bust, cleans out the little guy

It's unlikely silver will ever return to that price level, and you can thank your cell phone for that. In ages past the most significant industrial use of silver was film production. Now thanks to digital photography that demand is gone. As a result, we annually produce 4 to 5 times as much silver as we consume.

They days of 16 to 1 are over.

With all, due respect this makes no sense.... you claim the economy runs on private debt.... yet with 0% interest rates who in their right mind will loan private money? hint.. nobody.
Now the Fed is happy to lend as it cost them nothing to create the money so if they get 1% that is pure profit

That ratio is natural only in the absence of legal tender laws supporting fiat currency. Repeal them, allow folks to contract for either payment in gold or silver instead of fiat paper, and you will see a return to that ratio quickly.

Do you know how the 16 to 1 ratio came about? it was that value throughout history until modern "economic " theory started monkeying with things.
The fact that it is consumed as a commodity means it will less available and the ratio could go to say... 10 to 1?

Solar panels consume huge amounts of silver

Hawkeye..... you explain things much better than I do. This is correct.
Precious metals are currently traded as a commodity and are subject to extreme manipulation in the commodity markets by such techniques as naked short selling etc....
The S.E.C. looks the other way because they condone such practices because metals as real money threaten their fiat Ponzi scheme

To be clear, as a matter of policy, I'm not in favor of 0% interest rates, or the even more destructive effects of negative rates. Unfortunately, too many country's used the BS excuse provided by the followers of Keynes to overspend (think Japan) and create a debt bubble so huge they had to resort to zero rates to prevent the detonation a debt bomb. This lead to the "Yen Carry Trade", when traders would borrow money at zero rates in Japanese Yen and use it to purchase U.S Treasuries at say, 4%. This increase in demand for our Treasuries pushed yields down, and hence, gives us lower rates weather we like it or not.

As some of you may recall, after his appointment as Fed Chair, Jerome Powell attempted to RAISE our interest rates to something more "sensible" for a proper growing economy. However, money markets are not local markets, but global markets, so there was no way he could do this in the global low rate environment without crashing the U.S. economy.

The irony of this, is this global low rate environment's the reason all you old retired anti-globalist still get your social security checks.

Interest payments on the debt have dropped from a high around 16% back to their historical 7-8% level, despite our current high debt levels, as a result of low global interest rates. This free's up cash for your social security and medicare payments that would not otherwise be available. Without further increases in our nations debt.

Not enough to balance out demand with production.

Re-read my post. LESS silver is being consumed as a result of the move away from the use of real film.

Less demand, price goes down.

Again, you are just factually wrong.

Here's a clue. the S in SEC stands for Securities, and the C does not stand for Commodities.

The SEC doesn't regulate commodities because they have no authority to do so, because they are not securities.

Now trade the GLD on the NYSE, and guess what? It's a security and must register with the SEC.

The gold standard would prevent politicians from abusing our money....

I’m not sure what will happen 🤷🏻‍♂️

Most likely govt will make it illegal for private citizens to own gold again. Turn it in for 2K an Oz. & watch the price go to 10-20K an Oz.

It’s widely believed we as a govt don’t have the gold we profess to own, otherwise they’d prolly audit the stuff in the last 60 years.

But Russia & China are stockpiling

They’re apt to force us back on some form of gold standard & a basket of other currencies including theirs

Things get a bit dicey then, losing the power of the reserve currency status will make things tough here at home, much tougher.

But that’s prolly a best case scenario. If govts go something like bitcoin, that they issue, there won’t be a sale or service they can’t tax, sold your old truck for $1500, pay the sales tax mofo 🤦🏼‍♂️ Paint your neighbors house for him, best barter if you don’t want taxed


Human nature being what it is there will likely become some form of black market currency 🤷🏻‍♂️ For a while bullets & bic lighters might become the coin of the realm

But if the US govt criminalizes the possession of pm’s it’s prolly not gonna be those that make the black market currency

No it wouldn't.

Politics is the practice of getting what you want with other people's money. The gold standard would not change that. If sure didn't hinder FDR, nor did it hinder our politicians post WWII, nor for that matter, did it prevent the Romans:

You are no fun to argue with........

That would mean $1m would be worth $1,810 (current Spot).

And a $854 Social security check would buy 4 ounces of milk.

This is Mach 200 inflation rate.

FORBES: June 5, 2020 Emerging Technologies To Drive Silver Demand

The price of silver soared in May, jumping more than 19 percent on safe haven demand as well as increased expectations of a swift economic recovery, given its many industrial applications.
Not only was this silver’s best month since 2011, but it also marked an impressive turnaround for the white metal that just recently plunged to a more-than 10-year low.
From March 18 through June 1 of this year, silver soared more than 52 percent, erasing all of its losses due to the coronavirus pandemic.

The question now is whether the rally can continue along with economic improvement, or whether it’s too late to start participating. I believe there’s still a lot of runway left, especially when you consider the growing need for silver in emerging technologies such as 5G wireless networks and photovoltaic (PV) cells, the building block of solar panels.
…
Like copper, nickel, lithium, cobalt and other metals, silver is set to become a major beneficiary of emerging industrial applications.
That includes sources of renewable energy, and solar specifically, which continues to ramp up around the globe in response to a combination of carbon emissions legislation and a rapid decrease in the cost of “green” electricity.
According to a recent report by CRU Consulting, solar power generation will increase to 1,053 terawatt hours (TWh) by 2025, close to double the amount that was generated in 2019.
Amazon alone is planning five major solar projects around the world, including its first in China, as the retail giant seeks to reach 80 percent renewable energy by 2024 and 100 percent by 2030.
Once completed, these five projects will generate 1.2 million megawatt hours (MWh) of energy every year, or enough to power 113,000 average U.S. homes, according to a press release.

The Romans eventually had to impose a death penalty for refusing payment in debased Roman coinage and insisting on payment in actual gold or silver specie.

Since gold coinage was first used, what percentage of empire’s or world reserve currencies lasted past 50 years after coming off the gold standard?

Each time it happened, what percentage of the next empire or world reserve currency started with a gold standard?

How many of them said “It’ll be different this time” when their economies where at the same point as ours?

The vast majority of roman trade was not conducted with gold or silver, but clay tokens. However taxes were required to be payed in Gold inflating the price of gold on the open market vs. proscribed rate of exchange. It's a prime example of the preciousness nature of the multiple currency system.

Here's a good synopsis on the gold standard. The conclusion, quoted below shows much of where the perceptions of those advocating for a hard gold standard are lacking:

https://www.investopedia.com/ask/answers/09/gold-standard.asp#:~:text=The%20gold%20standard%20is%20not,of%20the%20system%20in%201973.

The Bottom Line
While gold has fascinated humankind for 5,000 years, it hasn't always been the basis of the monetary system. A true international gold standard existed for less than 50 years—from 1871 to 1914—in a time of world peace and prosperity that coincided with a dramatic increase in the supply of gold. The gold standard was the symptom and not the cause of this peace and prosperity.

Though a lesser form of the gold standard continued until 1971, its death had started centuries before with the introduction of paper money—a more flexible instrument for our complex financial world. Today, the price of gold is determined by the demand for the metal, and although it is no longer used as a standard, it still serves an important function. Gold is a major financial asset for countries and central banks. It is also used by the banks as a way to hedge against loans made to their government and as an indicator of economic health.

Under a free-market system, gold should be viewed as a currency like the euro, yen or U.S. dollar. Gold has a long-standing relationship with the U.S. dollar, and, over the long term, gold will generally have an inverse relationship. With instability in the market, it is common to hear talk of creating another gold standard, but it is not a flawless system. Viewing gold as a currency and trading it as such can mitigate risks compared with paper currency and the economy, but there must be an awareness that gold is forward-looking. If one waits until disaster strikes, it may not provide an advantage if it has already moved to a price that reflects a slumping economy.

AS, your providing historical examples of economies suffering after the gold standard was outlawed by the state doesn't exactly bolster your position, does it?

As stated above, you are confusing cause and effect. Read the entire article. It doesn't help you position.

Besides, if you like gold as a store of value, in our current system, you can own all the gold you can afford.

Keep some in physical form, and for convince keep some as GLD in a brokerage account. Convert your gold, or GLD to dollars as your need for the common currency of the real dictates, and you have your personal gold standard.

You can have your gold standard, and I'll have my NDX supplemented with GLD standard, and everyone's happy.

When obuma spent $1T+ in 2009 on the stimulus.................we had learned that Keynesian econ did not work on the depression and it does not work now.
But liberals just want bigger gov with kickbacks.

https://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009

But, but, Schiff is a Jooooo:
Schiff was born to a middle-class Jewish family[3] in New Haven, Connecticut. His father, Irwin, the son of Jewish immigrants..

Hawkeye that is a funny video..... they missed their calling they should have been comedians...... seriously though that pretty much sums up why I think so little of academia.... and now that politics and academia are bedfellows it has really become a clown show!!!

Wow! Really??

I had no idea (sarcasm).

And, to think, I donated to his Senate campaign. Totally ruins the antisemitism meme about me. Drat!

Indeed.

OK AS, you have identified the addiction (which is the government tit) that will politically prevent a sound money policy that would get rid of the system now in place and a return to hard asset backed money. Please tell us where this policy of increasing the money supply out of thin air takes us. Where does this end? Does not there have to be a day of reckoning like the world has never before seen? The banks are not extending credit with no hope of return, are they? The deficit is running at mind boggling speed. I have never seen a bubble not burst. Gravity is still an irresistible force unless maybe you have a rocket ship. Isn't the whole world teetering on economic collapse?

Man Hastings I was hoping for some answers to your questions. Perhaps w Sunday night coming upon us, AS will have time to read them.


Want to say I so enjoy healthy debate that doesn’t resort to junior high “nanner, nanner boo boo “ nonsense

So big thanks to all the participants of this thread

Not enough gold? Has anyone walked through the remote mountains and wondered just how much has been prospected? How many mines were dug that missed the big vein? I'm betting that there's a vast amount of gold out there that hasn't been and never will be found.

Most of it is at the earth's core.

I think Sniper got up early and went to church. He will answer after awhile.

Hastings,

Another good question. Let me try to expand a bit for you.

Within the confines of the U.S. Government, the two adults in the room as the U.S. Military, and the Federal Reserve. This chart will not imbed, but take a look. Our inflation has not breached 4% since 1991. That's almost 30 years ago. And since 1997, it's spent most of it's time below 2.5%.

Think about that for a moment. Despite all the capital injections following the housing crash of 2008-2009, there was no inflationary bubble as measured by CPI. Why is that? Remember that video on the Great Depression? Well Bernanke was a Scholar of the great depression, with several published papers on the subject, and understood better then anyone the mistakes of the 30's and did not repeat any of them. After TARP was passed, much of the money was "repurposed" in the form of direct capital infusions into the banking system to replace the destroyed base money. As a result, even though some banks went under, there were no serious bank runs, and no American loss access to their money in any banking institution for more than 24 hours. This, coupled with the follow on low inflation tells us the Fed did a very good job, under very adverse conditions, properly gauging the size and nature of the capital injections needed. In this instance the "money out of thin air" replaced the destroyed capital, in order to maintain liquid markets and prevented the total freeze of financial markets experiences in the 1930's.

Perhaps the biggest irony of all of this, is that the market operations conducted by the Federal Reserve actually MADE MONEY for the U. S. Treasury. I suspect there will be a similar profit by The Fed during this current go round. After all, they were buying distressed assets at artificially low prices...

Despite all the monetary injections, if anything Money Supply, as measured by M3 is falling behind our economic growth. The general rule of thumb is M3 should approximate your GDP. As you can see from the following charts, that's largely been the case for the U.S. since WWII:

https://fred.stlouisfed.org/series/GDP

https://fred.stlouisfed.org/series/MABMM301USM189S

M1's been mostly coming down since the 1960's,
https://fred.stlouisfed.org/graph/?g=dQQ

But that's offset by a significant decrease in the velocity of money as less in held in passbook/CD type banking accounts, and more is held in the form of stock. Keep in mind, in genera, the reserve requirement for bank assets is 10%, but brokerage accounts is 50%, and 100% for retirement type accounts such as IRS's and 401K's:

https://fred.stlouisfed.org/series/M2V

That was a long winded way of saying, you are worrying about the wrong players. The Federal Reserve and their management of the money supply is not the primary risk, our bigger risks are political.

As Far as, "what goes up must come down", that's a fatalist vision of financial markets that's not necessarily true. The Dow Jones industrial average started at 100. Today it's over 26,000. Do you really believe, bases on some parallax to gravity, the Dow is going back to 800 (today equivalent to 100 adjusted for stock splits and dividends)? Of course not, so lets dispense with that fallacy.

So lets talk about where we are relative to traditional conditions for a "debt bomb" relative to the U.S Federal Debt.

The historical figure for national "financial trouble" is a Federal Debt in excess of 200%. Recently, Greece, Italy and Portugal reached these levels and their economies nearly blew up, but Japans currently over 240% and their economy isn't blowing up. Why, and how does this difference relate to the United States?

The 200% number assumes "normal" interest rates. When Greece's debt approached 200% of GDP they were paying 8 and 9 percent, if not more, on their debt. The current rate on Japan's 10 year is .01%. Even though Japans total debt is high, their interest rate is low enough that their debt burden retaliative to their GDP remains low.

The same applies to the U.S. Although our Federal Debts been increasing, we've continued to refinance at lower rates decreasing our interest to GDP ratio. In other words, in a world of 0.625% interest on our 10 year treasury, the 200% "rule" does not apply. If it was possible to maintain a true interest rate on our debt around 5/8th of a percent, we could take out a truly absurd amount of debt before it became unmanageable.

Of course, reality is not that simple, and something would have to give. At what point would something give? Unfortunately, such calculation are not simple linear relationships, and involve some real math and coding that I'm not willing to do unless I'm getting paid for it. You can see in just our casual conversation how many variable I've introduced, and a proper econometric evaluation could easily require 10 times that many providing we are just using previously derived variables and not conditioning our inputs. This is why when the Nobel Prize winning Econometricians were asked about their views of the current situation, their basis answer was "we would need to evaluate the data".

In general, the current data does not support the hypothesis that without an exogenous shock, in the short term, the U.S is on the verge of a total financial collapse, or as you call it, "A day of Reckoning".

If did see such a "Day of Reckoning", what are the likely catalysts, or series of catalyst that would precipitate such an event?

For this I draw your attention to the recent events in Argentina. After the election of a socialist government, their markets dropped 40% over night and interest rates spiked from 20 to a high of 80%. It was a similar right to left power transition in France that allowed George Soros to become a billionaire. He shorted the Franc following the election of socialist in France, and literally made a billion dollars of the crashing French currency.

Now, imagine if four months from now Joe Biden wins the election? Major brokerage houses are predicting a 12% fall in S&P earnings just as a result of his tax policy alone. Democrats already hold the house, and what about the Senate? Republicans will be defending 23 seats to the Dems 12. That difference is enough to potentially swing the Senate. If we extend the 12% decrease in earnings across our whole stock market, that would destroy in excess of 3 trillion of assets on a straight line valuation alone. Keep in mind stock prices are leverage to their growth rate. As growth rates shrink so do P/E ratios, so this 3 trillion could quickly grow to 6, or 9 trillion is losses. With Biden's stooges at the head of all the three letter agencies, most of Trumps regulation cuts would be undone, and every regulation is a tax, thus further impacting earnings and market losses. Just sleepy Joe's proposed ban on Fracking alone could reduce GDP by 3%, and turn us from a net energy exporter to an energy importer, and crash the high yield bond market which is currently dominated by issuance from frackers and other oil issuers. Now let's throw a few hundred trading algorithms on top of that, and well, things could get real interesting.

And, we all know what a democrat controlled government would do. There would be a "stimulus package". I can imagine it being on the scale of 10 to 20 TRILLION (20 trillion under Speaker Cortez) dollars, and the single biggest transfer of wealth in history. There would be no money for banks to rebuild our capital structure, but plenty of money for "historically marginalized communities" and the like.

Twenty trillion for people to drink beer, smoke pot, and not work (i.e. stay unemployed), and that's not including the use of the crisis to pass "Universal Health Care", and in the process not only increase spending, but destroy a significant portion of our insurance industry, and their role in our capital structures.

So then what? Well, the Fed can't really cut interest rates, because they are already approaching zero. If we cut too close to Japan's rates, we loose the benefit of the previously explained "carry trade". A large source of demand for our treasuries would dry up overnight. So who's left to buy this 20 trillion in debt. Sleepy Joe's New Fed.

So, Trillions of market cap destroyed. We'd be in a recession, especially after the destruction of our oil and health insurance industries, and the Federal Reserve would be the only buyer for trillion in new debt, all of which would be wasted, and provide no real long term benefit for the economy.

While this is going on, lets defund the police, especially the FBI's domestic terrorist investigators. No assets of any energy or timber, or other resource company would be safe anywhere in any Blue State. Even in Red states you can imagine the FBI's civil rights division going after prosecutors for prosecuting eco-terrorist for "civil rights" violations.

I'm not sure how much of this the Americian people would tolerate, but that's what a politically created short sellers opportunity would look like.

Thanks, It will take me a little while to digest this. You see I'm only a high school graduate, pretty good at arithmetic and reading comprehension but I admit my unwashed plebeian condition.

That's ok.

It took me awhile to write it. In the process, it gave me a lot to thing about as well.

Start watching at 21:00.

That was good. Thanks.

And gold's best use is for bribing border guards.

Amazing, as if you had an inside track with the money changers.

Silver in 1916 was $16/ ounce
104 years later....
Silver in 2020 is $16/ounce

Sounds like we got much better at mining it.

Silver, in 1916 was about one dollar per ounce. But that dollar could feed you three good meals.

https://www.macrotrends.net/1470/historical-silver-prices-100-year-chart

It looks like $16 /ounce in 1916 on this web site

And which has returned more over the long term, gold or stocks?

https://www.macrotrends.net/2608/gold-price-vs-stock-market-100-year-chart

My rule of thumb is:
Gold, Guitars, and Guns yield 3%, which is background inflation.
Real estate does 6%.
Stocks do 9%.


Lots of exceptions:
Colt Pythons do 6%
Seattle real estate does 8%
NFLX, AMZN, and MSFT have done better.

In
In 1916, you could take a US paper dollar to any bank and exchange it for a silver dollar containing just under one ounce of silver.