Pro & Con Quotes: Should the United States Return to a Gold Standard?

“Why gold today? I’ll confidently speak for others who broadly share my opinions on money when I say that no serious gold-standard advocate is rigid in his or her need for a return to gold-defined money. Where we’re rigid is in our belief that money of ever-changing value deprives money to varying degrees of its singular purpose as a medium of exchange that enables individual specialization. I’ll add that floating money also slows progress that is always and everywhere a consequence of investment. Why put dollars to work if the value of dollar is wildly uncertain such that any returns could be eviscerated by money the value of which is changing all the time?

Stated simply, supporters of a gold standard, commodity standard, or currency stability more broadly seek just that given our view that it elevates money to its highest purpose as a facilitator of the exchange and investment that pushes people and physical resources to their highest use. There’s also a compassionate angle to this: Americans earn dollars, and a lack of currency stability has meant that Americans have suffered periodic devaluations that have amounted to a not-so-stealth shrinking of the value of their work. Translated, we work for dollars because dollars are exchangeable for goods and services. When the dollar is devalued, the fruits of our labor are logically shrunk.”

“[T]he sooner we throw out fiat currencies, the sooner we can revert to sound money, which is gold… [G]iven the shutting down of China’s economy by the coronavirus. The yuan, surely, will be the first to suffer in the foreign exchanges, a process that appears to be starting. But this might galvanise the People’s Bank into positive action to stabilise the currency, which it can do by tying it to gold. In doing so, it would do humanity a favour by leading the way early towards a sound money solution to the unfolding financial and economic crisis, which with the coronavirus threatens to be potentially much worse than anything recorded in modern times…

To the extent the coronavirus has had a hand in the forthcoming destruction of fiat currencies and Keynesian mythology, we can take some comfort that it will have brought forward the eventual reintroduction of gold and gold standards. The path is not straightforward. There will be destruction of financial asset values and the economic consequences for ordinary people will be dire. We can expect widespread civil unrest and political instability.

Western governments and their advisers are not familiar with the arguments in favour of gold, having spent half a century dismissing it. This fact favours the new economies which have not discarded gold, which include Russia, China, and many other Asian nations. Some governments, such as India, might attempt to confiscate their citizens’ gold, but in general the collapse of western economic fallacies could lead to Asia’s economic superiority.

It will be a rough ride for the rest of us.”

“As the gold standard was serially abandoned, international trade succumbed to the vicissitudes of unpredictable changes in exchange rates and retaliatory tariffs. Global depression had followed…

The United States is the world’s largest holder of official gold reserves. Comprising 8,311.5 tonnes or 261 million troy ounces, those reserves are carried at a book value of roughly $11 billion. Notably, the market value is significantly higher at $345 billion (based on the London Gold Fixing for September 30, 2016) as cited in the Treasury’s report filed June 30, 2017…

In proposing a new international monetary system linked in some way to gold, America has an opportunity to secure continued prominence in global monetary affairs while also promoting genuine free trade based on a solid monetary foundation. Gold has historically provided a common denominator for measuring value; widely accepted at all income levels of society, it is universally acknowledged as a monetary surrogate with intrinsic value.”

“I view gold as the primary global currency… Today, going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today we would not have reached the situation in which we now find ourselves. We cannot afford to spend on infrastructure in the way that we should. The US sorely needs it, and it would pay for itself eventually in the form of a better economic environment (infrastructure). But few of such benefits would be reflected in private cash flow to repay debt.

Much such infrastructure would have to be funded with government debt. We are already in danger of seeing the ratio of federal debt to GDP edging toward triple digits. We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line.”

“Bringing back the gold standard would be very hard to do, but boy would it be wonderful. We’d have a standard on which to base our money.”

“Why is gold good money? Because it possesses all the monetary properties that the market demands: it is divisible, portable, recognizable and, most importantly, scarce – making it a stable store of value. It is all things the market needs good money to be and has been recognized as such throughout history. Gold rose to nearly $1800 an ounce after the Fed’s most recent round of quantitative easing because the people know that gold is money when fiat money fails…

Fiat money is not good money because it can be issued without limit and therefore cannot act as a stable store of value. A fiat monetary system gives complete discretion to those who run the printing press, allowing governments to spend money without having to suffer the political consequences of raising taxes. Fiat money benefits those who create it and receive it first, enriching government and its cronies. And the negative effects of fiat money are disguised so that people do not realize that money the Fed creates today is the reason for the busts, rising prices and unemployment, and diminished standard of living tomorrow…

As the fiat money pyramid crumbles, gold retains its luster. Rather than being the barbarous relic Keynesians have tried to lead us to believe it is, gold is, as the Bundesbank president put it, ‘a timeless classic.’ The defamation of gold wrought by central banks and governments is because gold exposes the devaluation of fiat currencies and the flawed policies of government.”

“Gold, a fundamental, metallic element of the earth’s constitution, exhibits unique properties that enabled it, during two millennia of market testing, to emerge as a universally accepted store of value and medium of exchange, not least because it could sustain purchasing power over the long run against a standard assortment of goods and services…

To choose or to reject the true gold standard is to decide between two fundamental options: on the one hand, a free, just, stable, and objective monetary order; and on the other, manipulated, inconvertible paper money, the fundamental cause of a casino culture of speculation and crony capitalism, and the incipient financial anarchy and inequality it engenders.

Restoration of a dollar convertible to gold would rebuild a necessary financial incentive for real, long-term, economic growth by encouraging saving, investment, entrepreneurial innovation, and capital allocation in productive facilities…

In a free market and its banking system, grounded by the rule of convertibility to gold, new money and credit may be prudently issued only against new production or additional supply for the market, thus maintaining equilibrium between total demand and total supply. Inflation is thereby ruled out.”

“A new gold standard is crucial. The disasters that the Federal Reserve and other central banks are inflicting on us with their funny-money policies are enormous and underappreciated. An unstable dollar is wreaking havoc on our capital markets, depriving us of money for productive enterprises and future enterprises while subsidizing government debt on a scale never before seen in U.S. history. The zero-interest-rate policy destroys capital by punishing savers and enabling the central bank to allocate where capital goes…

What the Fed is doing through its binge buying of bonds is enabling Washington to consume our national wealth. Instead of creating new wealth we are beginning to destroy that which exists. No wonder tens of millions of people feel – rightly – that their real incomes are declining and their financial situations are coming under more pressure. In real terms the stock market is lower today than it was in the late 1990s, and even in absolute terms it still isn’t where it was in 2007.

Can we move forward on a gold standard before a real catastrophe à la the 1930s results?…

Currently the federal government wages a virtual jihad against any attempt by individuals or companies to create gold-based monetary instruments for commercial transactions…

The combination of getting a serious debate on the gold standard going and sweeping away our legal tender laws barring competitive domestic currency would hasten the day that we’ll once again have a gold-based currency like that which did our country so much measurable good for 180 years.”

“Monetary policy reform is a rapidly rising issue. ‘Good money’ is important for generating a climate of equitable prosperity. The empirical data show the classical gold standard to be the ‘gold standard’ of monetary policy. The Bank of England, in 2011, issued Financial Stability Paper No. 13. The Bank of England found that the fiduciary dollar standard badly underperforms in every major category, including economic growth, inflation, recessions, and banking crises.

Some still labor under the mistaken impression that the gold standard is a recipe for austerity and caused the Great Depression. This ignores the fact that there was no gold standard in 1929!

The classical gold standard was invented by two icons of science: Copernicus and Newton. Their work in astronomy and physics still stands the test of time. So does their monetary work. There is abundant evidence that attaining 4% growth, generating millions of new and better jobs as well as expanding the tax base and bringing in trillions of dollars of new revenue with which to balance the federal budget, can best, perhaps only, be achieved by adopting a 21st century gold standard.

Time for a fresh look at gold.”

“A dollar should be defined – as it was prior to 1971 under the postwar Bretton Woods system – as a fixed quantity of gold.

However imperfect a gold standard may be, it remains the best among all alternatives. The empirical data for both the classical gold standard, which I favor – and even the flawed ‘gold-exchange’ standard, as we had under the Bretton Woods system – are impressive. Economic growth was stronger, unemployment rates lower, the price level more stable, and recessions less frequent and less severe than under the present system.

I realize the Washington establishment goes ballistic at this suggestion. Gold is kryptonite to big-spending politicians. It is to the moochers and looters in government what sunlight and garlic are to vampires. The American people are another story. Nearly half (44%) support a return to a gold standard, according to an October 2011 Rasmussen Report. That support soars to 57% when respondents know it will ‘dramatically reduce the powers of bankers and the political class to steer the economy.’…

The political establishment will fight this idea viciously, because gold convertibility strips them of power and places the trump card over monetary policy with the people. If you thought the establishment attacked me over 9-9-9, wait until you see how they react to a classic gold standard. The vampires will be out in full force.

The debate over sound money has moved from whether we need it to how we get there. The pieces are moving in the right direction, and we have an opportunity to make the dollar once again as good as gold.”