-32 votes

Why gold and silver is not the answer

First off I respect Ron Paul. I would vote for him if I had the chance but I have reservations about going back to the gold standard. If anyone can explain to me why it would be better than having our elected government issue debt free money then I am more than willing to listen. Please back up your claims by facts instead of just saying gold is better.

Here are some of my main concerns.

1. Our nation imports more than it exports. What would stop other countries from simply hoarding our gold back dollars and then eventually remitting those dollars for gold? Eventually we would have no money or gold.

2. A gold back currency would encourage saving over spending. However, most people in this country have loans. New money has to be issued(borrowed)into circulation at a constant rate to stave off an economic collapse. If a gold standard came into play where would new money come from to pay off these loans?

3. Does the government even own any gold to remit dollars for gold?

4. If no other country goes to a gold standard how would the United States fair out in a global economy? The Chinese could in theory devalue the currency further and flood our markets with cheap imports and simply take the gold.

5. I have read comments on here how the government forces us to accept federal reserve money. Is there a law that states you must use FRN in trade. I believe people can still barter and you can store your wealth in gold, silver, real estate, or what ever you wish.

6. A private corporation in theory could mine gold. What if they found a deposit that equaled what the federal government has to remit gold? Would they not control half the wealth in this country?

Please do not bash me. I do not believe gold is the answer at this time, but a solid argument could sway me to support it.



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Gold and Silver is the answer

You answered your own question/statement. If currency is not backed by objects of intrinsic value and limited supply the currency doesn't hold any real value. You stated that the US imports more than it exports, why do you think it should not go broke. If you spent more out of your personal account than you earned you would not be surprised that you would eventually have no wealth, what makes you think that printing more money without backing is sustainable. Once your creditors become suspicious that you can't back the debt why shouldn't they foreclose. The US is lucky it has it's military?

I think any kind of currency

I think any kind of currency has issues.

The issue you raise over China being able to flood the market with exports is a concern. The added pain on borrowers (because of deflationary pressure, your loan is increasing with interest and with deflation), the fixed money supply, the uncertainty in supply, etc. are all issues.

Gold prices have also historically been very volatile, another negative for the economy since it creates a TON of uncertainty.

In any case, the government could manipulate the value of gold as it manipulates the value of the dollar. Perhaps more subtly, but it could very easily do it.

Even other ideas have issues. Competitive currency can lead to a hole host of problems, including economic disharmony, currency bubbles, etc.

Ultimately, whether it is the current system or the gold standard or whatever, it isn't going to be perfect. There are going to be issues either way, and we have to pick our poison.

Plan for eliminating the national debt in 10-20 years:

Overview: http://rolexian.wordpress.com/2010/09/12/my-plan-for-reducin...

Specific cuts; defense spending: http://rolexian.wordpress.com/2011/01/03/more-detailed-look-a

tasmlab's picture

The answers are out there and well-articulated

If you have a genuine appetite to learn about these topics, there's loads of high quality and very enjoyable information on mises.org. Rothbard's "What has government done to our money" is superb and very concise and easy read. Paul's "end the fed" is an easy and interesting read as well on fiat money.

I believe some of the economic calamity you cite WOULD occur, but that isn't because of the gold as money but the consequences of the fiat currency i.e., the worries you have in items 1., 2., are likely to happen with the fiat money.

I digress, but I've been reading Mises explain how even gold as money can still afford governments and banks a lot of monkey business through fiduciary media and fractional reserves. I think private money would be preferable to a nationally mandated/controlled gold standard.

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Quick answers

1. As the gold supply diminished, so would our prices, so our products would become more competitive and we would export more. Supply and demand.
2. Debt is the problem. A gold based system would prevent the easy money policies that got us all in debt. Depressions don't happen because people ran out of money to pay their debts, they happen because debt was so easy to take on in the first place.
3. Need to audit the gold to answer this question. That hasn't been done since the 1950's.
4. As gold flowed out, it would become more scarce and thus more valuable, giving people the incentive to stop spending. The Chinese, on the other hand, would suffer from terrible inflation that would ruin their economy. Gold would flow out of their country because their currency would no longer be useful in purchasing anything.
5. The law says FRN's are legal tender for all debts public and private. You must pay your taxes in FRN's. You can be forced to settle your debts in FRN's. For all practical purposes, we must acquire FRN's to function in this economy.
6. Fantasy. While your scenario is 'possible,' it is not probable. Gold is valuable because it is scarce. Small amounts of gold are found all over the world, but it is highly doubtful that there is a 'mother lode' that could substantially change the over all supply. Besides, if gold became more abundant, the prices of everything would go up just as they do today with paper money, and for the same reasons. Gold makes good money precisely because it CAN'T be created out of thin air. (Your scenario actually happened to Europe, Spain in particular, with the discovery of gold in Central and South America in the 1500's. It ruined their economy because it allowed the Spanish to purchase things from other countries without producing themselves...very similar to the situation in the U.S. for the past 40 years.)

Dr. Paul advocates for

Dr. Paul advocates for competing currencies. So, while he would like a gold standard it would just be one of however many that the people decide to use.

In a system of competing currencies the people would have the freedom to choose whichever currency works best for them. If you prefer fiat currency with no backing, then you could go that route. If you preferred gold or oil backed currency then you could go those routes.

...

Gold and silver are "money"; an FRN is an IOU.

WHO should should possess this country's money, the people or a group of unelected bankers?

Ron Paul doesn't favor a gold-"backed" currency.

He personally favors gold and silver coin because paper can be manipulated. But, as president, he would end legal tender laws. Without force, people will generally choose valuable metals as currency.

Fiat currency can only work at the local level if people have direct control of their government. A republican form of government cannot control fiat currency because the banksters always corrupt the representatives.

He absolutely DOES favor a gold backed currency

Not trying to be rude, but "generally"?!?!?

If competing currencies were legalized that's the end of fiat currency.

Fiat currency depends on the monopoly status they currently have, and enforce.

Look at the raid on the Liberty Dollar in 2007. The guy running it was branded a terrorist.

The free-for-all of exchanging the rapidly devaluing paper dollar for gold / gold back money will be a frenzy but the only fair way to implement the change. Also the only constitutional way as it is our fundamental right to own and exchange money in any form we choose.

But every gold backed dollar will be debt free from that time forward. Imagine that.

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Regardless of what you believe....

Gold was in the $800 region when Obama took power, now it's teasing $1900, if gold is a barometer of the buying power of fiat currency I'd have to assume America lost over half it's value under Obama's reign. If America is serious about fiscal policy then everyone other than RP has to be sent marching orders. Myself I'm not american, I'm Canadian. If that asset isn't physical I'm not interested. It's sad to see people not even notice the implosion of their buying power. Unfortunately the only ones that see it are too busy trying to get food for another day and you won't see them at the polls.

SteveMT's picture

Solid evidence.

Watch this for awhile, and tell me what you think?

http://www.usdebtclock.org/

The numbers never get better and only worsen by the second. What does that tell you about the future prices of gold, silver, or any commodity for that matter? Would you want to be holding dollars? What would you buy?

Elastic evidence. See first sentence of Fed Reserve Act, 1913.

Federal Reserve Notes fill in every dancing box. The Debt Clock & its counterparts measure ever increasing debt in Federal Reserve Notes... Promissory Notes.

What else could be expected? Try as we might, we cannot retire a debt by buying debt to pay for it. We cannot spend ourselves into paying National Debt with money that represents our National Debt.

I am resigned to buying what I need. I do not save Federal Reserve notes for a liquidity storm or any other variant of a rainy day. You could gather this without me saying. Just hope others are listening. Regards.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

Read "What Has Government

Read "What Has Government Done to Our Money" - by Murray Rothbard

Click here for the free audiobook version

This book answers all your concerns (and more) in an extremely eloquent and logical manner.

Don't miss "Creature from Jekyll Island" either

I'm on chapter 7... WOW!
Isn't there a YouTube of the author giving a talk?
Here... http://www.youtube.com/results?search_query=creature+from+je...

Watch the documentary, "The

Watch the documentary, "The Money Masters." It is great. It also states that we cannot go back on the gold standard, because, primarily, England and the Fed through the years has stole all our gold!

If you walk blindly through life, you will run into a lot of walls.

The Fed & the Bank of England; yet, they confess they have none.

... This little piggy had none. And this little piggy cried, "Wee, wee, wee..." all the way home.
Fed Reserve Bank has no Gold 06/03/2011

Central Banks Officially Suppressed Gold Price for Over 50 Years. 07/25/2011

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

OK Ben Bernanke please

tell us again that gold is not money, goldnottheanswer if
you believe what you write then go sell all your gold
and silver.

"Freedom is a right that can never be won in war,only by each individual "

Can't understand why Bernanke

Can't understand why Bernanke would say this....why else would they has stolen all of America's gold then? He's a pompous twit.

If you walk blindly through life, you will run into a lot of walls.

i thought negative votes buried ingorant posts

or does ignorance on negative votes promote them? ;-)

RP would never GO BACK to the gold std, because he knew

the Gold Standard had it's flaws by anchoring the price of gold to silver as a bi-metal system. INSTEAD Ron Paul would simply allow people to use competing currencies. Therefore under Ron Paul if you wanted to use:

Federal Reserve Notes? okay;
Euro's? go ahead;
gold? fine;
silver? sure;
seashells? if anyone accepts them, then why not.

Ultimately, Ron Paul will allow the seller and buyer to make that mutual decision. No govt force. Hope that clears up the misunderstanding. Ron Paul will not make you use gold.

Bi-Metalism wasn't a big problem

because people just hoarded gold and naturally spent their silver when the market ratio was greater than 1:15.

The problem was fraudulent gold-"backed" notes issued by private banks under the encouragement of the federal government to buy Treasury Notes.

GSR still varies quite a bit.

Good point. Though you should look at the GSR. It's volatility stretches quite a bit.

Obviously paper money was the biggest fraud, and even in the 1830's it was denounced by the mighty bank slayer, Andrew Jackson.

perfect

good answer

Give me liberty or give me death.

Gold:Independent Money

Short (3 min) animation video on independence of gold as money (why central banks and governments abhor it): http://www.youtube.com/watch?v=RvL_Dm2d99A

Let it not be said that we did nothing.-Ron Paul
Stand up for what you believe in, even if you stand alone.-Sophia Magdalena Scholl

Excellent use of 3 minutes. Why gold? Gold is independent.

Your 3 minute film encapsulates Gold & Gold Standard. Take this golden opportunity get a century full of perspective paid in gold. Here is a quick way to explain to the woebegone. Want to be above average? Not woebegone? Be above average like all the kids in Lake Lake Wobegon? Hold 1/2 troy ounce of gold. We will be going above average.

Lot of paper cash; small amount of gold. Appreciated what appreciations. Thx.

Disclaimer: Mark Twain (1835-1910-To be continued) is unlicensed. His river pilot's license went delinquent in 1862. Caution advised. Daily Paul

All of your concerns can be addressed here.

I would strongly recommend that you read the following free online material:

What Has Government Done to Our Money?
by Murray N. Rothbard

http://mises.org/money.asp

The Case for Gold:
(A Minority Report of the US Gold Commission 1982)
by Ron Paul and Lewish Lehrman

http://mises.org/resources/603/Case-for-Gold-The

If you take the time to read these two books I feel sure that you will be swayed.

metals might not be the answer exactly BUT

We can't go around printing paper ASSuming that, that will fix anything either. It has been PROVEN to NOT work, the gold standard was proven to WORK.

Does it mean that at some point we have to STOP PRINTING unless it is BACKED by something? you bet and that is how it is SUPPOSED to be.

I don't think we need to run around taking gold bullion to walmart BUT to have a currency at least BACKED by SOMETHING makes more sense than NOT.

Man people seem to BASH anyone with a differing view here pretty bad. Remember folks it isn't ron paul's way or the highway.

Not everyone simply KNOWS why this or that will or won't work and please let's stop pretending like WE know everything ourselves.

Who here has actually LIVED during a gold backed currency? Pretty sure not many, SO stop pretending like you know better than others.

We are ALL still learning this and need to learn more and help others LEARN MORE instead of just bashing the shit out of anyone with a differing view.

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"Backed" currency is bad

because it is paper controlled by politicians.

No, you shouldn't take your gold to Walmart. Instead, you should take your silver.

I agree

it isn't the perfect system but at least BACKING it by SOMETHING is better than nothing. If anything get people going TOWARDS the end goal if anything.

I personally love the barter system. For instance meds here in cali are a GREAT currency alternative and you can trade meds for anything from cars to smaller items and everything in between.

I am not saying any PAPER is good but before people go to a silver/gold/barter I think there will be some form of a "note" unless they try and go 100% electronic which freaks me out even more than paper.

I know you can take silver into a walmart and that making sense BUT at the same time I see plenty of pawn style shops opening up and big ol 'trade show' where everyone swaps and trades with each other.

BTW my silver would never end up at walmart lol but more of a conversation piece than anything. I HATE walmart lol. Actually works there in my younger years.

http://shelfsufficient.com - My site on getting my little family prepped for whatever might come our way.

http://growing-elite-marijuana.com - My site on growing marijuana