Not everything the founding fathers believed in is correct. The very reason why we don’t have a silver and/or gold standard is because their value is so volatile, and so it’s almost impossible to control inflationary bubbles and depressions. The reason why money is so awesome is that its value AND supply can be controlled.
Lets say the country is headed for another great depression (say like the one we narrowly escaped) and liquidity is near zero. The Fed can simply print out more money. So the correct quantity of money is dependent of whether we’re heading to a boom or a fall. Sure there are limitations to these tools (LOL @ Russia during WWII) but the ability to be able to have some control over the economy is extremely valuable. The main arguments against using fiat money is that it causes overinflationary bubbles caused by idiots buying on credit. Sure that is correct, but it can easily be fixed by some regulation of silly things like the buying/selling of derivatives, CDOs, etc.
Another reason why the gold standard is terrible is that it makes it such that all of the possible wealth in the world analogous to a giant pie. If one nation gains more of the pie, there is less of the pie for you to get. Thus it is a zero-sum game; if one nation gains wealth, all other nations lose as the value of gold drops (or pie i guess in my analogy).
Also, just because “gold” might be the standard unit of account, doesn’t mean that gold is all the wealth in the world. Wealth is an abundance of goods and services, gold just circulates. If one nation gains gold, it has necessarily lost other things which they could’ve consumed for their enjoyment.
Let’s not forget to mention that different metals, or even commodities can form as currencies. If the market feels the supply of money is inadequate, they can always mine more. If that isn’t the option, then you add, or switch monies.
The value of gold, silver, platinum, palladium, rhodium, etc. have all been stable when compared to each other and other commodities. Only when compared to fiat currencies are they at all variable. It is the fiat currencies that are unstable.
Yes, that has worked so well in the 1930s and today.
In all honesty, there was no such thing as an economic depression before central banks.
There are always those that want to control other people. That does not make it morally right. Or even wise.
Right. All our economic regulation has done wonders for our economy…
This does not even come close to making sense. If a certain group/individual hoards all the gold for instance, people will switch to another commodity for use as money. They’ll switch to silver, platinum, palladium, rhodium, or something else.
False. The government of the United States of America forced us off the gold standard because gold could not be inflated the same way that paper money could. Thus, making the value of gold very stable.
False. The government of the United States of America (via the Fed) could control “inflationary bubbles and depressions” by not creating them.
False. The Fed has NEVER gotten it right. What is an “overinflationary bubble”? There already is regulation concerning that, and regulation fails.
False. Gold is dug up everyday, thus, expanding the supply of gold.