Top Pro & Con Arguments
Gold retains a value that has been recognized across the globe throughout history, and a gold standard self-regulates to match the supply of money to the need for it.
American paper money is a “fiat” currency that can be printed without limit and has no real value – its value is only maintained by the “full faith and credit” of the government. Gold has real value due to its beauty, usefulness, and scarcity. Humanity has recognized the value of gold as a medium of exchange dating back to 550 BC, when the King of Lydia (modern day Turkey) began minting gold coins.Steve Forbes, Editor-in-Chief of Forbes, stated gold “retains an intrinsic, stable value better than anything else.”
Since gold is a finite natural material and must be mined and processed at a significant cost, it tends to be produced at levels consistent with demand. Under a gold standard, creating more currency requires obtaining more gold, which raises gold’s market price and stimulates increased mining. More gold is then used to back more money until a point when currency levels are adequate, the price of gold levels out, and mining is scaled back accordingly.It is a self-regulating system. Under a fiat money system the production of money has no natural self-regulation mechanism.
Over the 179 years the United States was on some form of a gold or metallic standard (1792-1971), the economy grew an average of 3.9% each year. Since 1971, under a fiat money standard not backed by gold in any way, economic growth has averaged 2.8% per year.This lower growth rate translates into an economy that is about $8 trillion dollars smaller than it would have been had the gold standard not been abandoned in 1971. Read More