College Professor needing Help Understanding the Problem with Bi-metalismSubmitted by AtlantaIconoclast on Thu, 01/17/2013 - 21:28
I am an American Goverment instructor, and want to expose students to the real American history, the problems with fiat currency, and central banking. I don't want to force my beliefs on my students, but the textbook is so biased in favor of the pro-central banking Hamiltonian vision that I feel compelled to share the other side.
Here is the problem. In my research, I have discovered that populists in the late 19th century felt oppressed by the de facto gold standard after the Coinage Act of 1873 left silver at a deflated price. I think Ron Paul opposes bi-metallism, correct? Why does he oppose it? The populists of the time seemed correct in their belief that the de facto gold standard was a friend to the wealthy but not the masses. Furthermore, the Coinage Act that ended bi-metallism in America was part of the reason for a major depression in 1873. Perhaps greater liquidity via bi-metallism would have been a safer way (as opposed to the issuing of Greenbacks for example) to prevent over-deflation in the economy at that time?
I see that Milton Friedman actually argued that bi-metallism had a been a good thing for the American economy, by promoting price stability. The irony is that the populist of his time, William Jennings Bryan was pro-bi-metallism while the populist of our time, Ron Paul, is for a strict gold standard. Anyone care to explain why the gold standard was better than bi-mettalism given the pain it caused so many of those outside of the elite?
How would a gold standard not cause the same pain if our movement was able to get it passed? It seems to me that bi-metallism is truer to the concept of competing currencies and that it is superior cause it does not favor the rich over the masses.
Please share your views and please offer references to help me understand this phenomenon better. In addition, if you have seen Bill Still's The Secret of Oz, please share your opinion. I find the pro-Silver interpretation of the Wizard of Oz fascinating as well, and think it could serve as a great way of explaining the downside of allowing banks to monopolize money. It is too bad that he focuses so much energy on advocating for fiat currency. Then again, maybe he has a point when he says it is not what backs money that is key, but rather who decides how much of it there will be.