Ron Paul lovers rejoice - the return to the gold standard is to officially become part of the republican platform. It will be interesting to see if it will spark a mainstream national debate on the role of the fed and monetary policy. The return to an inflexible monetary system would drastically affect the fed's ability to fight inflation and economic shocks.
The gold standard has returned to mainstream US politics for the first time in 30 years, with a “gold commission” set to become part of official Republican party policy.Drafts of the party platform, which it will adopt at a convention in Tampa Bay, Florida, next week, call for an audit of Federal Reserve monetary policy and a commission to look at restoring the link between the dollar and gold.
The move shows how five years of easy monetary policy – and the efforts of libertarian congressman Ron Paul – have made the once-fringe idea of returning to gold-as-money a legitimate part of Republican debate.
Is this all a campaign ploy to appease the fringe elements of the Republican party, or is there actually a legitimate chance we could return to the days of hyper-inflation / stagflation and effectively tie the fed's hands to combat both? And even if they wanted to, is restoring the link even possible?
http://www.ft.com/intl/cms/s/0/06ebfdaa-ed3f-11e1-83d1-00144feab49a.html#axzz24TzuNdXq
"The return to an inflexible monetary system would drastically affect the fed's ability to fight inflation and economic shocks."
Yeah because what the Fed is doing right now is fighting inflation or economic shock.
Greenspan himself said that a good Federal Reserve and fiat currency mimic a gold standard in its restraint. As we continue to debase the dollar and spend without restraint one can only hope we go back on a gold standard to force fiscal discipline onto our elected officials.
Hha, thats not happening anytime soon. The US government hasn't realized they can't keep printing money to pay off their bills. Federal gov has to start running like a private company and cut the massive amounts of fat they got. All those fed employees that sit around and facebook all day, and contribute nothing.
Legitimate rape, Gold Standard, geez....is the GOP trying to lose this election? It's an obsolete system, just like the old tape hard drives. Let it go.
gold standard =/= fiscally responsible ....point in case: British Empire. Rothbard neglects that portion of history.
Sounds like a cynical ploy to rape the rubes (again). My money's on Glenn Beck as head of the first "gold commission".
And @UFO: yeah, it sure seems like they're doing everything in their power to fuck this up. I wonder if the puppet masters have already ordained Obama re-elected, and Romney won't get his dog treats if he has too strong a showing in November. Only way I can think to explain this recent left field shit from the GOP.
Legitimate rape indeed.
Deficits are nothing new and were very common even in the period where our currency was linked to gold reserves:
http://www.davemanuel.com/charts2/surpluses_and_deficits_1940-2011.html
Obviously the fiscal situation needs to be fixed, but the fed is not causing the US govt to run a deficit. Our lazy politicians are the problem, Bernanke is just doing the best he can to stimulate growth with an congress unwilling to make hard decisions.
That would be like shutting down the pharmacy to keep kids from popping oxycodone... the kids will still find a way to get high.
Politicians will still find a way to get around making the hard decisions, fiat currency or not.
He's making it easier to borrow, giving businesses an incentive to buy more goods by making debt cheaper in an attempt to increase economic activity. It's not a panacea, obviously, but it is a tool that has been used to (arguably) help stave off a deeper recession in the face of a congress unwilling to act.
While they're at it, why doesn't the party just promote the abolition of the USD and the FDIC, and for private banks to start issuing their own currencies again?
Is no-one in the party a student of history?
haters gonna hate
Yeah, a Congressman confusing the term forcible rape as was attempted to be defined in a prior bill, of which a number of Democrats signed on to with the word legitimate means there are all nuts.
Talking about the gold standard is epic move by the Republicans and will hopefully bring the Ron Paul supports into the fold.
But naa, I want for more years of Barack "you didn't built that" Obama and his magic printing press that will obviously have no ramifications as our national debt hits over $16T and we run over a $1T deficit each year.
But hey, maybe we will have a token tax increase on the rich which will bring in $100B and make the proletariat feel better.
You must think Ron Paul supporters are really fucking stupid.
They're not.
This race just went from being a corporatist shootout (Obama/Romney) to being about actual ideas. Too bad those ideas are stupid.
Would be nice for some Democrats to grow a brain and see that Bernanke needs to go however.
Here's an interesting assessment from Cullen Roche that I don't entirely agree with, but he brings up a good point about the similarities between the Euro and the gold standard:
http://pragcap.com/on-the-gold-standard-the-federal-reserve
[quote=Edmundo Braverman]Here's an interesting assessment from Cullen Roche that I don't entirely agree with, but he brings up a good point about the similarities between the Euro and the gold standard:
http://pragcap.com/on-the-gold-standard-the-federal-reserve[/quote] Eddie, have you ever made an in-depth post about monetary policy, specifically what YOUR solution to fixing US and European monetary policy would be? I would be extremely interested to read anything like that coming from you.
To use a phrase being bandied about this thread, I've "tinkered around the edges" of it. Obviously, as a student of Austrian Economic Theory, I lean far more in favor a commodity-based currency than I do the current Keynesian paradigm. But a move to the gold standard comes with a host of problems too, not the least of which is our lackwit government which spends like a college kid on spring break.
We'd immediately suffer a competitive loss to those countries able to inflate their currency, and the only way I would see a move to the gold standard working initially would be for the US to take a far more isolationist stance (which I think it could do, but I'm not sure it would be worth it). Assuming the rest of the world fled to the quality of a gold-backed dollar, our exports would tank (something that is less of a concern with each passing decade). The only way to ensure that it would work would be to time the move to the gold standard with a major global famine (which would provide the ancillary benefit of reducing global overpopulation when countries with inflated currencies could no longer afford to import grains). That's where outspending the rest of the planet combined on a war machine comes in handy.
In short, I'd love to see it.
, and I'm not altogether convinced that he wasn't killed for it. But the reality of the situation is that the guys at the top (guys whose names we probably don't even know) will never stand for it. So it's an entirely academic argument.
Although I don't agree with just about anything our elected officials or fed reps do, If Washington or the FED can't get off the spending buzz or QE train then they should at least try something different. I would propose underwriting small and middle market business loans in stead of buying bonds in the open market. If you look at FED stats all of the excess money is just sitting in financial institution reserves and banks aren't lending like they want them to.
Dont' mean to get too OT, but has anyone ever looked into Bitcoins as being a viable currency? It seems to have bypassed a lot of problems that other electronic currencies have (counterfeiting, double spending, etc.). I'll admit that I'm no expert on the subject, but it seems like a it has good potential with more development of the network.
Can't say I have studied the effects of a gold standard on the economy since AP Macroeconomics in high school (8 years ago?!! Man, I'm getting old...).
However, I always think it would be strange, and would eff up whatever economic theories we are working right now at the federal level. Lets say 30 years from now, that our population has gone up 30%, and the consequent increase in the speed of money occurs. Is my fixed sum of cash worth 30% more now? I feel like a little inflation is a good motivator to keep people moving there money around, and keeping it in hard assets or at work (invested in business).
Hey!!
Who wants to trade gold contracts knowing that the government will be compelled to buy at any price?
I know a great broker-mention my name for a discount.
Actually, I don't think a gold standard would work for that very reason. Silver standard, perhaps. Plus there's historical precedence with silver certificates.
We need an electricity standard. One dollar should be worth 10 kwh of electricity from a delivery point established by the TVA.
And then we need to build more cheap, clean nuclear reactors.
inflation is already here. we just haven't hit the knee in the curve yet.
aside from the nominal prices going up, they are sneaking it in by cutting quantity and quality.
for instnace: 64oz OJ jugs coming down to 59z in the supermarkets.
and as most of you are consumers of dress shirts for the office: can you think of even ONE maker that makes anything cheaper than they did 8 years ago? are you seeing quality slip across the board for the same price point?
Coservatives are vehemently against QE when it benefits them through higher asset prices.
Liberals are passionately in favor while their base has no capital and no way to get it.
Oh the irony!
Truth seriously is stranger than fiction.
The question isn't whether the guys at the top would stand for it; the question is whether or not it's a good idea.
The gold standard would be a good idea if we were suffering hyperinflation, but we don't have that right now. "Gold standard" is simply a eupemism for "extremely contractionary monetary policy".
How about an alternative- a rates algorithm. Gets all of us untrustworthy human beings out of the equation without completely shutting down the economy.
What sort of algorithm would you propose? If I'm not mistaken, Milton Friedman was a fan of pegging the growth of the money supply to population growth. Do you feel that this still leaves too much variation in future rates, or is it viable?
It has been well documented that inflation does not go away just because of the gold standard, the United States in its early years saw many an inflationary period that the gold standard did not alleviate. All the gold standard would do is deprive the federal reserve of any power to react to economic shocks, also, I don't see how the United States retreating back to isolationism (which was a major cause of the great depression) leads us back to prosperity. Honestly, how can anyone with an ounce of knowledge regarding the history of monetary policy support the Gold Standard? This is just another ploy by the Republicans to get votes for Romney, its just like the whole Christian conservative deal and abortion/gay marriage. We will never get a constitutional amendment abolishing either, yet millions of poor Christians who would be better off supporting liberal fiscal policy vote republican anyway precisely over their beliefs in relation to those issues, which are irrelevant to pragmatic policy.
we should agree on common terminology.
inflation occurs when you expand the monetary supply. a price level rise in the consequence of inflation.
we can have rising general price levels on a gold standard, but that is the price mechanism at work: relative scarcity is being signaled.
i don't know that RR would be much better than O for the country but if you ask any poor bastard living on a fixed income he will tell you that the policy of permanent inflation is not making his life that much easier.
enriching wall street's masters at the expense of pensioners seems to me to be fundamentally grotesque.
Inflation is an increase in prices. Inflation is often a result of expansionary monetary policy but not a given result.
I'm probably the world's biggest opponent of the gold standard, but I don't have a problem with either political party saying that they support the concept of debating ideas, which the GOP is saying with the gold standard. A commission that studies the gold standard will come back with a report that would essentially say this--the negative consequences in the immediate future would be politically unviable and that to actually switch back to the gold standard from where we are now would be practically impossible.
Hopefully that would put the issue to rest for good.
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