RP's thing for Gold. What's the story?

Gold (or other "Limiting" factor) is needed to stop manipulation of the money supply -- by manipulation one means inflation and hyperinflation.

And inflation does NOT mean simply "increase in prices" -- that is the consequence of inflation, NOT the cause. Inflation is actually the insertion into the economy of a significant amount of additional "money units" (thus decreasing the relative value of the previously existing money units -- hence an increase in prices.

As to the "Gold Standard" -- unfortunately the rather illiterate media (and many "experts" who durn well know better) -- portray it as a "19th Century Anachronism" (much as they portray the Constitution as a "piece of paper", rather than the governing contract between the people & states and the Federal government.)

The FACT of the matter is that the dollar WAS backed by gold for nearly 3/4 of the TWENTIETH century. For 34 years, from 1900 thru 1933 an ounce of gold = $20, and $20 = 1 ounce of gold, period.

In 1933, FDR confiscated gold coins from American citizens via an Executive Order (http://en.wikipedia.org/wiki/Executive_Order_6102) -- and shortly AFTER doing so (i.e. after giving people a paper $20 bill in exchange for each ounce of gold they turned in) -- he DEVAULED the dollar to be $35 per ounce of gold {essentially an instant 41% tax on the cash savings of American citizens} -- and issued subsequent "orders" that made it effectively illegal for citizens to obtain or keep gold coins.

Gold remained at $35 per ounce for the next 39 years, until 1972. But, American citizens basically were NOT (and are not) aware of this because WE were not allowed to make this "exchange" of dollars for gold. BUT, foreign citizens, companies and countries WERE allowed to "turn in" US paper dollars and receive gold.

THAT ended in late 1971, we went OFF the Gold standard -- with the "Nixon Shock" (http://en.wikipedia.org/wiki/Nixon_shock) when Nixon issued another "Executive Order" that "temporarily" suspended such redemptions of dollars for gold by foreigners -- effectively declaring "bankruptcy" by a unilateral decree, and that the dollar would "float".

So, from 1900 thru effectively 1972, the US dollar was backed by gold. That is 73% or virtually 3/4 of the 20th century.

In the 1970's, after Nixon did this little remembered dirty trick -- the ACTUAL value of people's savings of cash dollars began to decrease dramatically (not quite as dramatically than when FDR performed his 41% Devaluation/Tax) -- this resulted in massive economic problems in the US, everything from the mid-70's "Energy Crisis" (which was really a natural consequence of the "dollar devaluation" policy); to the runaway policies of government "deficit" spending; to the decline of American manufacturing; and our present problems.

Changing back to a gold standard does NOT mean that we would all have to walk around with bags of heavy gold coins. What it WOULD mean is that the Government would no longer be able to simply "print" limitless volumes of money and thus "suck" the life-blood from people's paychecks and savings accounts to pay for runaway deficit spending. It would mean that there would now be a REASON to save money, rather than to buy everything on credit -- because $100 saved now would NOT lose its "value" during a year or even a decade, and as a "guarantee" of that, individuals who chose to save in terms of actual gold could simply do so. It wouldn't be necessary to "earn interest" by keeping the cash in the bank.

This would require a dramatic change in most people's daily "economic" lives, to be sure, and it might be painful for a year or two, but eventually the benefits would be phenomenally improved economy, a controlled (and significantly reduced) government, and most probably a vast reduction in the corruption by bureaucrats.

Without writing a whole book, that is the jist of why Gold is important, and while "Tricky Dick" Nixon really screwed us all back in 1971 (although it can be argued that it was really LBJ's policies and 1960's Federal Reserve inflation that forced Nixon's hand).

Hope that helps.

Dr. Ron Paul advocates competition among money issuers:

"It is not really my position to close the Fed down. It would require too much adjustment to do that overnight. I advocate competing currencies--to legalize another currency that we can work in. That means repealing legal tender laws and repealing all taxes on gold and silver. If people want to use another money, then they can, and if not they can use paper." -- Ron Paul

Source: "Can We Bank on the Federal Reserve?"
http://www.reason.com/news/show/38384.html
(quite interesting, BTW - the experts are Milton Friedman, Ron Paul, James Grant, Bryan Caplan, Jeff Saut)

It is important to differentiate between Ron Paul's proposal and the gold standard - here's why:

"Golden Straw Man"
http://cafehayek.typepad.com/hayek/2007/03/golden_straw_ma.html

Here are various sources on this and related topics in general:

"Hayek's Plan for Private Money"
http://www.mises.org/story/1854

"Hayek and the Revival of Free Banking"
[Word Document] http://www.tau.ac.il/~june/Hayek.doc

"Currency Competition: Some Options Considered"
http://www.libertarian.co.uk/lapubs/econn/econn059.pdf

"The Failure of State Money and the Case for Monetary Individualism"
http://www.libertarian.co.uk/lapubs/econn/econn035.pdf

"Monetary Policy and the Free Market"
http://www.mises.org/story/1341

"Denationalisation of Money. Friedrich Hayek's seminal work on Competing Private Currencies."
http://www.maxmore.com/hayek.htm

"Free Banking"
http://iang.org/free_banking/

"Laissez-faire Money or Free Banking"
http://www.ccsindia.org/ccsindia/images/first_chapter_mmm.pdf

"Who Cares About Digital Money?"
http://www.chyp.com/PubWebFiles/DigMoney/3_2000/birch.pdf

"What Has Government Done to Our Money?"
http://www.mises.org/money.asp

It's a book he co-wrote in the early 80's

Mike
Ron Paul is my HERO!!!

If you have time read this. It really helped my understanding of gold, money, and the Federal Reserve system. Unfortunatly it depressed the hell out of me.

http://www.mises.org/Books/mysteryofbanking.pdf

I came across this article while searching "gold-backed world currencies." I think the Swiss franc is the only one ,now. If anyone can expand on this, then great.

http://www.gold-eagle.com/editorials_02/parks101402.html

Central banks, banks and the war

When the gold standard was abandoned, central banks were the last barrier to rampant money creation as long as they were able to maintain their independence. However, in the meantime we have learned from bitter experience just how ineffective these so-called keepers of stability were. An excellent example for this is the U.S. Federal Reserve in 1913. This fateful institution was founded even before the war. Since, the dollar has plummeted to about five per�cent of its former value. Central bank independence was not what it was cut out to be. Central banks became compliant pawns of governments and their constituent banks. In today�s non-system, it is precisely central banks that, in conjunction with banks, make financing of wars of adventure possible by means of unlimited credit formation. There are no brakes anymore.

In his book Jenseits von Angebot und Nachfrage (The Social Crisis of Our Time) economist Wilhelm R�pke said: �One can venture the claim that governments very rarely had complete control over their currency without abusing it.� In today�s age of the welfare state, the probability of such an abuse is greater than ever before.

Canada Loves Ron Paul

I maybe incorrect but didnt ron get a bill through already upon request of the treasury they can mint as many gold and silver coins as requested?

I think there is about 400 billion in hard assets for the US on record.

i believe this gets into metals(gold, silver, etc), oil, land, and a few other items who value is completely a supply/demand side model.

Too bad we didnt put all of Soc Security onto this std today.

With such a hybrid system the buying power of the seniors would go up and up and the system would be secure forever.

We could then do as paul stated and throw out the income tax once the 2009 budget were cut back to a sain plan