Couple questions on central banks & gold standard.

[KnowNothing]

Firstly, if there is a thread that was started and has discussion on these topics, by all means, share. I searched archives but searching something specific about gold standard becomes very overwhelming on this forum, and to find a particular response is difficult.

1) How would the US's current situation differ if all aspects of dropping the gold standard and any related events remained the same, but there never was a central bank? Or simply where would we be if congress was in charge of our fiat currency? That obviously is a bit contradicting since the Constitution says "no bills of credit", but there clearly are five-hundred other things that we do that are prohibited by the Constitution.

2) The biggest argument I ever tend to hear against the gold standard usually is something along the lines of "a gold standard can burden growth when it runs short (in the sense that there will be demand but no supply)" or something like "well then South Africa will have control over the US's wealth by controlling the gold supply." How do you argue against that? I personally find it difficult to argue since intuitively both statements make sense, but I think such issues are unrealistic. So would the availability of gold actually burden growth (excluding the idea that it'll never run out - in this particular question)?

[DonShimoda]

Firstly, if there is a thread that was started and has discussion on these topics, by all means, share. I searched archives but searching something specific about gold standard becomes very overwhelming on this forum, and to find a particular response is difficult.

1) How would the US's current situation differ if all aspects of dropping the gold standard and any related events remained the same, but there never was a central bank? Or simply where would we be if congress was in charge of our fiat currency? That obviously is a bit contradicting since the Constitution says "no bills of credit", but there clearly are five-hundred other things that we do that are prohibited by the Constitution.

2) The biggest argument I ever tend to hear against the gold standard usually is something along the lines of "a gold standard can burden growth when it runs short (in the sense that there will be demand but no supply)" or something like "well then South Africa will have control over the US's wealth by controlling the gold supply." How do you argue against that? I personally find it difficult to argue since intuitively both statements make sense, but I think such issues are unrealistic. So would the availability of gold actually burden growth (excluding the idea that it'll never run out - in this particular question)?

It doesn't matter how much gold there is...it's value will be adjusted accordingly to supply/demand and velocity

[Goldhedge]

1) How would the US's current situation differ if all aspects of dropping the gold standard and any related events remained the same, but there never was a central bank? Or simply where would we be if congress was in charge of our fiat currency? That obviously is a bit contradicting since the Constitution says "no bills of credit", but there clearly are five-hundred other things that we do that are prohibited by the Constitution.
If I understand the question: No gold standard, No central bank?

The Federal government would issue it's own script just like Lincoln did. It wouldn't use a 'private bank' to issue and control the nations credit (and charge interest without actually printing the interest). It would be it's own central bank issuing bonds. Any interest it charged would go back to the government.

The 'gold' part of the equation - gold was used by all nations to back up their money.

Article 1 Section. 10. of the Constitution says "No State shall... emit Bills of Credit" Doesn't say anything about the Federal government.



2) The biggest argument I ever tend to hear against the gold standard usually is something along the lines of "a gold standard can burden growth when it runs short (in the sense that there will be demand but no supply)" or something like "well then South Africa will have control over the US's wealth by controlling the gold supply." How do you argue against that? I personally find it difficult to argue since intuitively both statements make sense, but I think such issues are unrealistic. So would the availability of gold actually burden growth (excluding the idea that it'll never run out - in this particular question)?

SA won't have control over US wealth. We will probably never go back to the gold standard.



It sounds as if you need to do some reading. Explaining it here is, it's bigger than a few paragraphs.

I suggest getting "The Creature From Jekyll Island" by G. Edward Griffin for starters? It's an in depth study on the Federal Reserve that also goes into what you are asking about.

There are some articles in the Beginner's Forum that also might shed some light. You'll have to poke around to find them.

[KnowNothing]

If I understand the question: No gold standard, No central bank?


For the first part, I guess what I meant is with the expansion of our federal gov't and all the entitlements of today's age and all the spending, would we have just as much debt considering that if a central bank wasn't around to provide the money, we'd just print it ourselves (the fed gov't)? I mean we'd have the same amount of debt in the end but interest free as you mentioned. Obviously I am having issues understanding certain things but the way I look at it is that regardless of whether the central bank printed the money, or the gov't, there would still be abuse of a fiat currency and we still would be in a very similar financial situation regardless of the source.


I suggest getting "The Creature From Jekyll Island" by G. Edward Griffin for starters? It's an in depth study on the Federal Reserve that also goes into what you are asking about.

Well in that case I should just be patient. . . did not get there yet apparently. Just finished up the fourth chapter. Still reading it currently. . .

[EO 11110]

it would not need to be debt

fed gov just print and spend

mucho better than the current fubarcracy

[Goldhedge]

For the first part, I guess what I meant is with the expansion of our federal gov't and all the entitlements of today's age and all the spending, would we have just as much debt considering that if a central bank wasn't around to provide the money, we'd just print it ourselves (the fed gov't)? I mean we'd have the same amount of debt in the end but interest free as you mentioned. Obviously I am having issues understanding certain things but the way I look at it is that regardless of whether the central bank printed the money, or the gov't, there would still be abuse of a fiat currency and we still would be in a very similar financial situation regardless of the source.


If the government didn't have the Federal Reserve in the first place, chances are likely that we wouldn't have drifted so far from the Constitution and all the social programs et al we currently have wouldn't exist.

[KnowNothing]

So in that case can someone infer that since we have drifted this far that even by eliminating the federal reserve we would still be "morally contaminated" and continue to do what we are doing? Obviously all the financial instability created by Federal Reserve but cease, but I don't see why congress would agree to make vast changes to social programs. I agree that the Reserve led to nearly everything that is flawed today, but would it's riddance really cure those things?

The way I see it is fiat is fiat and it will be used the same way regardless of the source. If the Reserve is abolished, we will take that roll, and continue the process. Seems like a gold standard would be the ONLY thing to cease spending on social programs considering the dependance and lack of "infinite availability" so to say.