What is the strongest case for gold? That it would end inflation and the business cycle? Those are benefits but not the main one. The gold standard would dramatically restrain the state, which is the essence of freedom. It would force the political class to come to us and ask for tax increases whenever it wanted to expand, and thereupon the population would likely say no. This is the reason politicians hate gold.
– Lew Rockwell in “Easy Money, Easy Lies“
This is exactly the case. Allowing the Federal Fraudulent Reserve to print and coin money at will in order to “jump start” the economy ends up costing the average US citizen money and wealth at the expense of whatever group happens to get the newly printed money first. Think about it this way … in January, the price of gold was roughly $600/ounce. Now it is roughly $800/ounce. The truth of the matter (as a friend of mine who deals rare coins in Wake Forest, NC once explained to me) isn’t that the price of gold has gone up, it’s that the purchasing price of the US dollar has decreased. How many of you have gotten a 33% raise in your salary to compensate for dramatic loss of purchasing power of the dollar? I’d wager not many. So, the Federal Government has taken money from you … in essence, a hidden tax.
As I said to a friend earlier today … it doesn’t take a genius to realize that an economic policy that jump-starts the economy by keeping interest rates artificially low and printing money willy-nilly to try to encourage people to keep spending and borrowing (”business as usual!”) is nothing more than a house of cards built on the beach in the face of an approaching hurricane. There is no way that we collectively can ever pay off the debt load our nation has without a massive increase in dollars and an corresponding drop in their purchasing price.
Take heed, people, because a serious economic collapse is inevitable. The question is whether we as a nation are bright enough to buckle down and take sound money seriously, and mitigate the effects of the crack-up, bad as they will be … or if we’re going to keep our head in the sand and continue encouraging people to borrow money as if nothing was wrong, until enough people get wise to the charade and start bank runs. When the government steps in and allows the banks to refuse to allow people to withdraw their deposits as they first did during the war of 1812 (and they government has show again and again that they’ll do whatever they can to prevent the banks from failing as a result of their reckless business practices), then the real breakdown will have started.
And that, my friends, is why “mountebanks” is an especially apt term for the folks in charge of our economic policy.
Value is created by rarity. Money flooding the market would destabilize the economy because it will destroy the value of the money. Gold is one of the rarest metals therefore it has a higher value than silver, a more common metal. Too much money will make the dollar more common and less valuable. I am not good at economics and even I recognize this. The cure for America’s problem’s should be a reduction of money in circulation. It would drive up the value of the dollar and restore trading power in the world. The problem is governement officials want to flood overseas markets with cheap American goods but a strong dollar doesn’t help that. It is a balancing act that we may be tipping too far in one direction.
Exactly! I don’t see how anybody can miss the fact that more money in the market increases the supply, meaning a decrease in the spending value of the dollar!
Actually in my opinion, just reducing the amount of money out on the market won’t completely solve the problem. At the least going to a true gold standard (not the quasi-gold standard we were on earlier in the first 2/3 of the 20th century) would mean that the government would be constrained in its ability to issue money … it would just be a bad idea to print up way more money than the government had the ability to redeem in gold, because it would (theoretically) present the change of the Federal Reserve going bankrupt if it tried to redeem all of that. Of course, the problem is that a gold standard alone doesn’t fix things, because the government can always try nasty tricks like making it illegal for private citizens to own gold (outside of jewelry and high-value coins), which would effectively emasculate the concept of a gold standard in the first place. But the government would NEVER do anything like that, now would they?