Cool. I can see your points and points on the other side of the argument, and to be honest, I am not completely sold on my side of the debate. I am open to the idea of the gold standard, and realize that I could be wrong. However, I see some problems that haven't allowed me to move over to your side of the debate. In interest of time, I have broken up your post to subsequently respond (something I usually don't do, apologize in advance).
The gold standard would be a good thing to do for our country in the long run. We NEED to end fractional reserve banking and fiat money creation in order to have sound money and wealth creation. With the current system, the bankers can control the entire country, they can move all of our assets around, they can control the very direction that society moves.
What I see here is common with those in support of the gold standard; that is a distrust of the banking system and the appearance of no check/balance regarding our current banking environment. I can understand the distrust, however, the banking system is not just arbitrarily deciding how our currency is valued.
Currency is valued basically by goods and services, and is by itself a separate marketplace. This marketplace is regulated by governments monetary policies and production, of which countries are directly in competition with each other. This competition in and of itself acts as the check/balance system based on capitalistic principles. Going to a single standard worldwide, such as gold, would essentially create a worldwide currency, thus removing competition (the check and balance system) where whoever decides the valuation of gold and the currency to gold relationship would decide the value of currency. At best, it will only complicate the marketplace slightly; at worst it would lead to even more of a lack of check and balances then we currently have in the global markets.
Also, gold doesn't fluctuate in value. The dollar fluctuates in value based on the amount in circulation. A dollar that is backed by gold is trustworthy and a FAR more valuable trade medium. Having a dollar that is worth a known value now and in the future will actually DRAW business into our country.
Sorry man, but the idea that gold doesn't fluctuate is false. Gold is a commodity. Like Oil or wheat, it fluctuates due to supply/demand just as anthing else. Check this chart out:
http://www.financialsense.com/editorials/griess/2005/1202.html
This shows a gold index vs. the value of the dollar. Gold has fluctuated just as much as the dollar and has mirrored the dollar for the most part. Over a longer period of time you will find just about as much fluctuation in the gold market as our currency.
Lastly, I think it needs to be said, going to commodity money is not going to be an easy sell to the powers that be. We very well could see a world war perpetrated upon us for this very thing. Every country that has a central bank and fiat currency is secretly run by financial interests. The power to create money is the power to control everything.
Well, again, this "secret" stuff implies that there is some sort of sinister plan running our currency markets; a bold assumption that requires proof. This stuff isn't arbitrarily decided by evil rich people and banks; currencies are a function of production and assets, and there is a currency market where capitalistic competition becomes the regulator (or check/balance) system.
Going to a gold standard takes the power away from the banks and puts it into the hands of people. When value is measured in gold, people accumulate gold in order to have wealth. When wealth is created from nothing, the people who create the wealth control the whole game.
Our currency market determines wealth in a much fairer way then it would if the market went to a gold standard. Think of it like this; what if we went to an oil standard instead? Then those that could mine the most oil (middle eastern countries) would all of a sudden be the richest countries, despite their lower GDP. Fair? Not so much. At least this way our currencies are determined by a marketplace based on production and assets rather than an arbitrary commodity. The erroneous idea here is that wealth is created from "nothing," when it is in fact determined by assets and production values.
Also, if the worry is a small few deciding the valuation of currency and therefore "creating wealth," then basing currency off a commodity proposes a real problem. Because, who decides the value of gold? And who decides how much the dollar, yen, euro, dinar, or whatever is worth in relationship to whatever unit of gold? A small few perhaps? Yet, with a unified standard based off a commodity rather then assets and production, we might remove the capitalistic competition that is the very thing that protects the markets from being run by a small tyrannical few.
If the US went to a gold standard, the entire world would turn against us...
...for a short time. Then they would want to trade and the US would find a completely different society. A society that is more in line with what the Framers of the Constitution had in mind.
The framers of the constitution had the protection provided by capitalistic competition in mind, I would think. Yet, during their time period, a global marketplace as it exists today could not have been imagined. Those of us with a free society in mind understands that power shouldn't lie with a small few, and therefore healthy competition and diversity creates the proper checks and balances needed. Moving to a commodity based currency in favor of a currency based off production and assets might remove the competition needed to prevent a globalized facist takeover.
Also, there are countries that have "turned against us" now, and have in the past but now trade with us. This will continue to occur because the USD is still the default currency, and we are still the richest country in the world. If another country were to take that role over, hatred and reluctant trading would simply be redirected towards them.
conclusion: The push towards the gold standard in some circles has recently occured due to the dip in the US markets (all of them, currency, stocks, realestate, etc.), and where people see that the valuation of gold is now greater then the USD. This is a common occurence, and a fear response. When things are bad, we say, "Wow, we need to do something different... how 'bout this?" Keep in mind, we hit the great depression on the "gold standard," so this is no magic solution. Gold fluctuates like ANY market. Furthermore, just because gold is up, that doesn't mean that by equating our dollar to gold would mean our dollar would be more stable, or go up in relation to other currencies. Our dollar would be valued in accordance to a unit of gold, which would be based on our assets and production in relationship to other currencies. If gold was down instead, our dollar would simply be worth a higher amount of gold then if it was up. It arbitrarily accomplishes nothing because the valuation equates to assets and production anyway.
Right now, due to the backing of the Euro and the chinese currency, the dollar is down and people are scared. However, the USD is still the default currency for trade. But because it is down and gold is up, people think that the gold standard would help, and are willing to write about it. If the USD index was worth more then the gold index right now, then we wouldn't be having this discussion, most likely.
The bottom line is this: the case isn't compelling enough for me yet to agree with moving to a gold standard to determine USD value, rather then determining it based on assets/production in relationship to other countries/currencies. I don't like the current state of the US economy either, however I am not going to support a change simply because of that. The case has to be compelling enough to prove itself better; the gold standard has yet to do that, in my opinion.
Thanks for the stimulating discussion...
C.
