if we were to go back on the gold standard , does anyone know how that would work?
Posted May 25th, 2008 by Jdayh
output
I mean there are trillions of Fed. Res. Notes out there, and last I checked we don't have enough gold in fort Knox to cover that , in fact according to an article on gold the current conversion of what the US government has in reserves, would be like $35,000 per ounce. So can someone explain how we could transition into a gold standard once again??? I have many people ask how Ron Paul would be able to do this as a President. And I can't seem to find out the details on his website.
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Sure - First the gommint makes it illegal to own gold (again)
then they pay everybody $1500 / oz to turn it in. When the get all they are going to get, they revaluate gold @ $35,000 / oz. and remove all cash from circulation (cashless society), so even if you had kept some gold you couldn't sell it. A cashless society means that you need de facto permission to conduct any transaction. If you try to buy/sell gold and have credits transfered to/from your account (remember: no cash), then the little terminal displays the message: ****Authorization Denied*****
Digital Gold
The groundwork is being laid for a digital gold standard...that is, if the government doesn't criminalize it first.
http://www.resourceinvest...
http://gata.org/node/6317
http://www.gdcaonline.org...
But no matter how this all turns out in 10-15-20 years, I think it will still be prudent to have some physical coins/bullion in your possession.
http://www.spielbauer.com... (make it go viral)
www.ronpaulmoneybomb.com = $25/week to the Paul campaign
1983: Ron Paul Debates Federal Reserve Governor 2of7
http://www.youtube.com/wa...
Doesn't have to be a gold standard.
It could be a food standard as well. Would make a lot more sense to have Fort Knox filled with food supplies, beans, grains excetera than gold. Gold is useless unless you hold on to it and someone wants it. If stranded on an island with nothing but gold in your pockets, the man that has beans in his pockets survives and could control you if that was his game. The Roman Empire was brought to it's knees, because their food line was destroyed, remember this.
grant
All we have to do is add
All we have to do is add another currency. I've been working on a video about this and it's been quite interesting. For much of our history there were several forms of currency in circulation concurrently. For example, in 1900, you could have silver/gold coinage, silver/gold certificates, US notes, or a Bank notes. Needless to say, I wasn't alive in 1900 so I can only assume that your currency choice was purpose driven.
The difference is in the wording on the bill. A certificate "certifies" that the face value HAS BEEN DEPOSITED in the US Treasury, payable to the bearer on demand in silver or gold coin. US Notes were also payable on demand, but lack the "has been deposited" phrase - thus it is a promissory note (or loan!) and not a certificate of deposit. Bank notes, and later Federal Reserve notes, were the same - payable on demand but not deposit certificates. Over time, the payable on demand phrase was removed, and we were left with our current Federal Reserve Note - a note that promises nothing and means nothing - a worthless and meaningless piece of paper!
We had silver coinage from 1794 through 1964. This provided a solid foundation for everything. Even if you had a $20 bank note, you could convert that to 20 silver dollars. The simple fact that the coinage was silver provided a stabilizing force on all currency regardless of the form - in part due to the "payable in coin on demand" phrase. So ultimately, that's what we need to get back to.
So the first steps would be to return the silver coinage to the 1792 standards. To go by the letter of the law, it would have a different design than we now have - a Liberty bust instead of a president. This would make it easy to tell the difference between the old and the new.
Getting out ahead of the release of the new coinage, there should be a conversion system so retailers will be able to accurately adjust prices. Once the coinage is released, we have two prices for everything - $FR and $US. After the coinage comes paper currency - first US Notes that do not certify a deposit, then later as treasury inventories rise, we would begin re-issuing silver and gold certificates. Over a period of time we would phase out the FRN's. I'm not sure how long it took for the Euro, but I would guess a few years or so and the transition would be complete.
By the way, I'm marching into Minneapolis with Dr. Paul for the Republican National Convention. I sincerely hope many many many of my fellow patriots will join us. For sound money, for peace, and for liberty!
But one who looks intently at the perfect law, the law of liberty, and abides by it, not having become a forgetful hearer but an effectual doer, this man will be blessed in what he does. - James 1:25
Thanks for the history lesson.
It was very interesting, especially about moving back to a silver/gold standard.
Watch "The Money masters"
Then you will understand that the Lincoln greenback is the best way.
Gold is just another way to control everything and everyone.
If you are serious about an answer, then you will watch the youtube.
T
GreenBacks NO!!!
I beg to differ. Lincoln didn't authorize the greenback just to finance the war, but also to quell a public outcry fro consistency in paper money. Up until that time (and after, actually!), paper money was a myriad of bank notes that may or may not be redeemable everywhere all the time.
The Greenback drove the value of the dollar down dramatically. In response to the crisis, the US Treasury started issuing Silver and Gold Certificates. As these began to circulate, the value of the dollar rose to previous levels, and stabilized until the central bankers starting monkeying with the system in the early 1900's.
Remember any paper money is a legal document in order to have value. Words like "note", "certificate" "has been deposited" are all legal terms that are there for a reason. The greenback was a note in that it paid silver coin on demand but made no certification of a deposit. Therefore it was a loan. On the back of a "greenback" it stipulates that the note is legal tender for all debts EXCEPT interest on the national debt and import duties. Curious that. Maybe it's because at the time the governments creditors would only accept "lawful money" - that is 371 grains of silver per dollar.
The basis for sound money is asset coinage. You can print whatever you want, but in order to be sound and honest money, it needs to be directly tied to a hard asset - like the 371 grains silver George Washington signed into law creating and defining the dollar. The only reasonable way to do that is silver and gold coinage.
This ultimately goes back to following the law. When you have trouble, and you're not obeying the law, you can kill yourself thinking of wild solutions to your problems - not unlike Mr Bernacke is doing today. But your problems will not be solved until you start obeying the law.
The law mandates that only Congress shall have the authority to COIN money and regulate the value thereof. They did that in 1792. The solution is simply a matter of mandating that the law be obeyed.
But one who looks intently at the perfect law, the law of liberty, and abides by it, not having become a forgetful hearer but an effectual doer, this man will be blessed in what he does. - James 1:25
Not just in Fort Knox
There isn't enough gold on the face of the earth to back up all of the dollars out there. It would be impossible to back them up at current gold prices.
It will not be an easy or quick transition to return to honest money. There is a nearly 100 year old system in place that needs to be disassembled and reworked to make banking and economics more honest.
Dr. Paul is not claiming to be able to return us to the gold standard overnight, or even in 8 years...but it's time we took steps to returning us to honest money that this generation must take.
Some very easy and careful steps we must take now...First, we must allow for competing currencies based on precious metals. What should be illegal about keeping a certificate worth a fixed amount of precious metal, when it is 100% backed and guaranteed to be exchanged for a printed amount of metal.
Another step to take, before we can eliminate the Federal Reserve entirely is to rein them in...that is to limit the production of new money to a fixed amount, Dr. Paul has suggested the GDP growth, since it will slow the inflation to a slow crawl.
Eventually, we must find a way to get rid of the fed entirely and return to an honest form of money without the hidden inflation tax...but it's a lifetime of work ahead of us. We have to be ready to take the first steps on a journey to make our system of economics a moral one for the world to look up to.
The dollar is defined to be 371.25 grains of .999 fine silver
by, I believe, the Coinage Act of 1792. As President, RP could issue US Treasury dollars (not private Fed Res notes!) which the government could pay into circulation, as Lincoln did with US Treasury greenbacks during the War Between the States. The notes collect no interest.
The present Fed Res note is currently worth about 1/12 lawful silver coins. This is shown by the price of 90% silver pre-1964 junk silver coins. A $1000 face value bucket is now going for $12-13000. So, a new RP Treasury dollar would be worth about $12 in FRNs.
It would seem that the US Treasury could get back into issuing redeemable money. It would only require a few billion in silver to cover panics, which would be much less likely with non-inflatable money.
Famous Quote from Justice William O. Douglas
"The Constitution is not neutral.
It was designed to take the government
off the backs of people."
Boycott Fox.
Here's the Legal Definitions of money
"DOLLAR, money. A silver coin of the United States of the value of one hundred cents, or tenth part of an eagle."
"EAGLE, money. A gold coin of the United States, of the value of ten dollars. It weighs two hundred and fifty-eight grains. Of one thousand parts, nine hundred are of pure gold, and one hundred of alloy."
"MONEY. Gold, silver, and some other less precious metals, in the progress of civilization and commerce, have become the common standards of value; in order to avoid the delay and inconvenience of regulating their weight and quality whenever passed, the governments of the civilized world have caused them to be manufactured in certain portions, and marked with a Stamp which attests their value; this is called money."
- Bouvier's Law Dictionary 1856
But one who looks intently at the perfect law, the law of liberty, and abides by it, not having become a forgetful hearer but an effectual doer, this man will be blessed in what he does. - James 1:25
Here is the actual law
Written by the 2nd Congress over which John Adams presided, and James Madison was a member. It was signed into law by George Washington.
". . . 3. The constitution of the United States has vested in congress the power "to coin money, and regulate the value thereof." Art. 1, s. 8.
4. By virtue of this constitutional authority, the following provisions have been enacted by congress.
1. Act of April 2, 1792, 1 Story's L. U. S. 229.
1. 9. That there shall be from time to time, struck and coined at the said mint, coins of gold, silver, and copper, of the following denominations, values, and descriptions, viz: Eagles; each to be of the value of ten dollars, or units, and to contain two hundred and forty-seven grains and four-eighths of a grain of pure, or two hundred and seventy grains of standard, gold. Half eagles; each to be of the value of five dollars, and to contain one hundred and twenty-three grains and six-eighths of a pure, or one hundred and thirty-five grains of standard gold. Quarter eagles; each to be of the value of two dollars and a half dollar, and to contain sixty-one grains and seven-eighths of a grain of pure, or sixty-seven grains and four-eighths of a grain of standard gold. Dollars, or units; each to be of the value of a Spanish milled dollar, as the same is now current, and to contain three hundred and seventy-one grains and four-sixteenth parts of a grain of pure, or four hundred and sixteen grains of standard silver. Half dollars; each to be of half the value of the dollar or unit, and to contain one hundred and eighty-five grains and ten-sixteenth parts of a grain of pure, or two hundred and eight grains of standard, silver. Quarter dollars; each to be of one-fourth the value of the dollar, or unit, and to contain ninety-two grains and thirteen-sixteenth parts of a grain of pure, or one hundred and four grains of standard, silver. Dimes; each to be of the value of one-tenth of a dollar, or unit, and to contain thirty-seven grains and two sixteenth parts of a grain of pure, or forty-one grains and three-fifth parts of a grain of standard, silver. Half dimes; each to be of the value of one-twentieth of dollar, and to contain eighteen grains and nine-sixteenth parts of a grain of pure, or twenty grains and four-fifth parts of a grain of standard, silver. Cents; each to be of the value of the one-hundredth part of a dollar, and to contain eleven pennyweights of copper. Half cents; each to be of the value of half a cent, and to contain five pennyweights and, a half a pennyweight of copper.
5. - 10. That upon the said coins, respectively, there shall be the following devises and legends, namely: Upon one side of each of the said coins there shall be an impression emblematic of liberty, with an inscription of the word liberty, and the year of the coinage; and, upon the reverse of each of the gold and silver coins, there shall be the figure or representation of an eagle, with this inscription, "United States of America:" and, upon the reverse of each of the copper coins there shall be an inscription which shall express the denomination of the piece, namely, cent or half cent, as the case may require.
6. - 11. That the proportional value of gold to silver in all coins which shall, by law, be current as money within the United States, shall be as fifteen to one, according to quantity in weight, of pure gold or pure silver; that is to say, every fifteen pounds weight of pure silver shall be of equal value in all payments, with one pound weight of pure gold; and so in proportion, as to any greater or less quantities of the respective metals.
7. - 12. That the standard for all gold coins of the United States, shall be eleven parts fine to one part alloy: and accordingly, that eleven parts in twelve, of the entire weight of each of the said coins, shall consist of pure gold, and the remaining one-twelfth part of alloy; and the said alloy shall be composed of silver and copper in such proportions, not exceeding one-half silver, as shall be found convenient; to be regulated by the director of the mint for the time being, With the approbation of the president of the United States, until further provision shall be made by law. And to the end that the necessary information may be had in order to the making of such further provision, it shall be the duty of the director of the mint, at the expiration of a year after commencing the operations of the said mint, to report to congress the practice thereof during the said year, touching the composition of the alloy of the said gold coins, the reasons for such practice, and the experiments and observations which shall have been made concerning the effects of different proportions of silver and copper in the said alloy.
8. - 13. That the standard for all silver coins of the United States, shall be one thousand four hundred and eighty-five parts fine to one hundred and seventy-nine parts alloy; and, accordingly, that one thousand four hundred and eighty-five parts in one thousand six hundred and sixty-four parts, of the entire weight of each of the said coins, shall consist of pure silver, and the remaining one hundred and seventy nine parts of alloy, which alloy shall be wholly of copper.
9. - 2. Act of June 28, 1834, 4 Sharsw. Cont. of Story's Laws U. S. 2376. 1. That the gold coins of the United States shall contain the following quantities of metal, that is to say: each eagle shall contain two hundred and thirty-two grains of pure gold, and two hundred and fifty-eight grains of standard gold; each half-eagle, one hundred and sixteen grains of pure gold, and one hundred and twenty-nine grains of standard gold; each quarter eagle shall contain fifty-eight grains of pure gold, and sixty-four and a half grains of standard gold; every such eagle shall be of the value of ten dollars; every such half eagle shall be of the value of five dollars; and every such quarter eagle shall be of the value of two dollars and fifty cents; and the said gold coins shall be receivable in all payments, when of full weight, according to their respective values; and when of less than full weight, at less values, proportioned to their respective actual weights. ... "
But one who looks intently at the perfect law, the law of liberty, and abides by it, not having become a forgetful hearer but an effectual doer, this man will be blessed in what he does. - James 1:25
A few billion in silver
If you read Ted Butler's newsletter, that's where the problem comes in. There's simply less silver than gold above ground. Hence, silver (since it's also used for modern industrial applications) is actually worth more than gold, or should be... lol.
Gold would be a more viable alternative than silver for returning to a precious metals type or based economy. I say this keeping in mind that the price of gold is more of an illusion than reality. I like to think about this the same way diamonds are priced. They aren't rare yet they cost way more than said VALUE. It's perception vs. reality.
Competing currencies
RP wouldn't do away with the Fed. Reserves right away he would open up compitition, letting them compete with gold and silver. No longer would the reservs have a monopoly.
Good question.
This seems to be a point of confusion for many RP supporters.
See the excellent reply by "thewhitewhale" below (one of the best posts I've seen on the DailyPaul in a long time BTW).
The 'dollar' has no tie to
The 'dollar' has no tie to gold anymore. It has no fixed definition. All U.S. Federal government debt is denominated in Federal Reserve Note 'dollars'. ... why bother trying to reestablish redeemability to Federal Reserve Notes, just side step them.
A gold standard can be introduced as a competing currency, as Ron Paul has indicated, by repealing sales and capital gains taxes on gold sales and gold bonds respectively. The repeal of legal tender requirements for Federal Reserve Notes should follow. If this is done, viola, you have a concurrently circulating, redeemable, gold backed currency in the form of gold bonds. The key to sound money is that the unit of account is a specific weight of a specific commodity. In this way inflation will be precluded...no matter what you do, you cannot change the definition of 1 oz. of gold to mean anything but 1 oz. of gold....something you can unfortunately do with a term 'dollar'.
Worries about the circulation of money being limited and thereby affecting growth rates, IMO, are surmountable. In the 1880s, a period in U.S. history where financial institutions were their closest they've ever been to a 'gold standard' monetary system, saw growth of approximately 3.8% (pretty robust) with gently falling bond yields. In fact, during the 1880 period average GDP per annum almost doubled over the previous decade from $11.6 billion to $21.2 billion. (see Friedman & Schwartz A Monetary History of the United States 1867-1960).
In a sound money system, the purchasing power of the unit of account will adjust to account for gains in production and necessities of circulation. The key is, a sound money system will not work properly outside a truly free market, where all prices are allowed to float, including your wages.
This is the difference between a 'gold standard' and what we have now. The Fed's mandate is for 'maximum employment', 'stable prices', and 'moderate long term interest rates', all these things however are predicated on a financial unit of account that is stable, something that is difficult to achieve alongside the Fed's other mandate of providing 'monetary elasticity' aka inflationary monetary policy. Fulfilling these mandates necessitates price controls on everything from wages to milk...now you have central economic planning.
The market can decide which currency they want to use. Someone will be left holding the bag, that is for sure, but with the repeal of legal tender, and specific taxes, it provides a way out for those who recognize, and want it.
The gold leases mentioned by other posters are particularly troublesome, gold advocate Gary North has an article on the web where he asserts these gold 'leases' by bullion banks are in reality gold sales, and that the gold has long since been gone. His article discusses the price pressures that will be seen should these bullion banks be called upon to repay their gold shorts.
Also, somewhat of an aside, a great lecture by Dr. Edwin Vieira points that the 'dollar' mentioned in U.S. Constitution referred to the predominant circulating currency at the time, the Spanish Silver Dollar. It is pointed out that Congress has no more authority to redefine what constitutes a 'dollar' to suit their spending habits than they have the authority to redefine how many revolutions around the sun constitute a 'year' thereby bypassing term limits.
Gold Standard or Real Money Means MUCH less affluency.
Because in fractional reserve banking all moneys are created out of the money flows; money must keep flowing and growing to keep the money stable.
Some people think that an annual compounded growth of 3% is the perfect ratio, to keep up with the moneys that must be created to cover most of the growing interests.
Knowing the magic of compound interests, it means that we must keep on consuming, and plundering, to maintain the stability of this system based on loans. At an alarming and ever increasing pace. It is just unsustainable.
The argument the establishment makes about abolishing the fractional reserve system, is that we would be unable to maintain our current level of long term investment. They are saying the truth.
The real issue is that we are eating away at our natural reserves for the sake of growth... growth... growth.... The result is the building and manufacturing of the many superfluous things we don't even need.
If solid money, such as the gold standard, were to be used, our standard of living would go down to logical and sustainable levels. The focus of production would return to food items, transportation and infrastructure.
Boris in Miami
PS; Above is an opinion based on limited understanding. But believed to be true by me. :0)~
Good Question
First, treasury department (Fort Knox) and federal reserve (vault) U.S. citizen inventories have been called into question by Gata.Org in a freedom of information request for true accounting records. The point being that citizens don't know how much gold we really own today collectively.
The question is: has accounting been performed per gold bar by registration stamp?
The suspicion is that both treasury and fed have been leasing-out gold owned by citizens to bullion bankers (Goldman-Sachs, et al) so they can sell it and take back paper iou derivatives in return. The risk to citizens is that the gold leased out will never be returned.
Despite widely accepted "common wisdom" expressed by news articles and the government, the bottom line is we don't know whether we still own any of the gold in Fort Knox.
It wouldn't surprise me if it turns out that citizens own no gold in Fort Knox and, instead, own paper lease agreement iou's issued by Wall Street bankers.
The fed is responding to Gata's request. The treasury dept is not.
Second, among the arguments for a return to the gold standard is that price inflation - normally induced by fiat creation - would be more stable.
Yes, it may reign in spendthrift Congresses, help prevent wars, and even result in more social stability. But Hamilton asserts that "even if we were on a gold standard with no fiat-paper inflation whatsoever, commodities prices would still have to rise tremendously".
http://www.gold-eagle.com...
Third, a long-time advocate of returning his country to a monetized silver coin in circulation, Hugo Salinas Price offers arguments about how replacing fiat with real value can benefit society as a whole. This concept can be applied to returning the U.S. to a monetized gold (standard) coin too.
http://www.financialsense...
How to Transition to Gold
There are several possible paths to gold that economists have proposed. Here's George Reisman, professor emeritus at Pepperdine University's business school: http://mises.org/multimed...
Murray Rothbard has some preliminary thoughts here (see the section called "The Road Ahead"): http://mises.org/story/18...
Well Well A Legitimate Question But
you answered it yourself.Your math was just a little off. First you need to disregard the hyper-inflated wall street pricing just like oil of which there is no supply problem or shortage.
Set the price of gold at a fixed rate of $35.00 oz.
Print an entire series of new paper dollars, old ones to be turned in at a 10/1 ratio.
No more speculative investing artificially driving prices up.
Paper Ballots,Hand Counted At The Precinct Or Bust
allow competing currencies
First, remove any hindrance to competing currencies.
Then let the market decide which it prefers to use!
More info here http://www.newswithviews....
bingo
pajama
bump
freedumb is not free!good question.