PK it’s perhaps off-topic but as someone who has been pushing the gold standard for well over 5 years now (Ron Paul has been doing so for over 20 years) I have to speak up regarding this distorted view:
That doesn’t change the fact that gold has little practical value, which doesn’t justify its price. You seem to be suggesting that gold should have a high value because it has had a high value in the past, without suggesting an actual basis for that value. For almost all other goods, the price is determined by a demand fueled by an actual need for the good. That is not the case for gold.
Firstly it IS the case for gold, it’s value is indeed determined by the market like any other commodity. In fact gold is one of the very few things that governments and central banks often HAVE tried to manipulate the value of, which poor results. You can’t argue with the market.
I find it amusing that people immediately bring up this “Well in the event of a crash you can’t eat gold” idea. That is true but you cannot eat federal reserve notes either can you?
Can you?
No, you cannot. With gold however you can continue to use it as “money”. What is “money”? Money is simply the most exchangable commodity, ie that which is most easily exchanged for goods and services, be it beads, pearls, copper strips, cows, sheep, paper printed by some bank - or gold.
Basing the value of the global economy on the mining of a specific mineral, and therefore fixing the growth of the global economy to the amount of the mineral which can be mined, makes no sense. It forces the economy to grow when there is no growth and limits the economy’s growth when there would otherwise be a high growth rate.
What you suggest in itself makes no sense. Why would an economy “not grow” just because the value of the currency increases? Stop and think about it - the value of the currency, in this case gold, increasing IS THE DEFINITION OF A GROWING ECONOMY!
A “grown” economy does not simply mean more people or more shops or whatever, it means more is made available from the same number of people, the same raw resources and so on. There are no more natural resources on this planet than there were 300 years ago but 300 years ago people could not afford or obtain the goodies, services and lifestyle we have today.
That we have these things is the result of market forces in action, not because the US government printed bits of paper.
An economy needs “the most exchangeable commodity”, ie currency. When that currency is paper, being printed from nothing, it devalues that commodity and is a DRAG on the economy, not a help. Sure, in the short term you get “boom”, which will always lead to “bust”. Right now we are facing an extra-large bust because the world’s reserve currency is going bust. Did you not notice Zimabwe’s currency already went bust? Or any of the dozens of other national paper currencies that have gone bust over the last 200 years, the most famous being the hyperinflation in Germany?
Paper currencies with no backing never last for long, just long enough for politicians and well-connected cronies to make a killing and retire perhaps but not in terms of history. The American dollar has already lost more than 95% of it’s value since going off the gold standard, yet you say:
The paper standard is excellent, as it can be easily regulated. It isn’t tied to anything, and can therefore be adjusted to suit the economy’s need, rather than trying to cram the economy into factors over which noone has any real control.
Why should anyone need to “control” the economy? Did you learn nothing from the collapse of the Soviet Union and every other controlled economy in history?
While it can be abused in theory, so can the gold standard. If noone but the central banks controls the amount of gold held, then the central banks have the same freedom as they do now.
Sure, which is why the American government actually outlawed gold, literally confiscating that owned by Americans and banning the sale of gold.
In America.
That made the depression much worse but didn’t stop gold being valuable everywhere else on the planet. Despite the government’s best efforts to do so, they could not kill gold as a currency.
Governments hate gold, as it tells the truth and draws attention to government lies and printing of money. When the price of gold rises quickly people ask “Why?” and governments hate them finding out the answer - “Because government is printing a lot of money as an inflation tax, meaning the paper notes are going down in value”
Those who first get the new paper today can spend it at yesterday’s prices, those who get the paper tomorrow pay tomorrow’s price.
If you bury $100 in gold and $100 in paper notes, then dig it up in 10 years time, not only will the paper have rotted but it would be worth very little. The gold however would still be worth what it was when you buried it. It is a true “store of value”. Paper notes are not, they lose some percentage of their value continously. They ARE currently the most exchangable commodity, simply because A. government force, such as confiscating gold and “legal tender” laws, B. because that’s who the banking system is currently set up, ie based on nothing and as usual for a fiat paper currency, heading for a collapse.
The problem is that as the Western world recovered from WW2, the American dollar became the world’s reserve currency, meaning this bubble was slower but bigger, in fact the biggest ever. When it pops…
D.