If the u.s. scrapped the FED, ended the empire, brought the level of government down to its constitutional level, how could we go back on the gold standard.(I don’t have any problem with free banking, it should be allowed, but for simplicity, I want to stick to a government gold standard).
How would we define a dollar? If an ounce of gold is going for $925, would the government define a dollar as 1/925 of an ounce of gold, or would the government divide the total money supply by the number of gold ounces it has. If they money supply is $14 trillion and in Ft. Knox there is 147 million ounces of gold, each one ounce gold coin would be worth $95,238, or would the dollar be defined as 1/95,238 of an ounce of gold? How could your average person afford a gold coin thats $95,238? The u.s. has a polulation thats 300 million people and only 147 million ounces of gold. Assuming that the government melts down the bullion and makes 147 million one ounce gold coins, there is not physically enough of gold coins to change hands and circulate in a country that has a population of 300 million people.
Almost all of the money supply has been fraudulently created through inflationary monetary policy. Simply dividing dollars by gold stock won’t get you a satisfactory answer, because all the same people (and institutions) which claim possession over fiat money would receive the lion’s share of the converted gold. Establishing a conversion rate by fiat would not be much better than having a fiat monetary system.
Anyone who has an ounce of gold should be able to exchange it for what? $100,000 paper dollars that nobody values more than toiletpaper? How many sheets of toiletpaper would be the fair equivalent of a single ounce of gold? How many automobiles? Apples?
The point is that wealth is not embodied in banknotes, but in real goods and services which almost everyone possesses or is capable of providing.
If you scrap the dollar, then so too do you scrap all debts that are dollar-denominated. Bye-bye, banking cartel. Bye-bye, warfare state. Bye-bye, corporate welfare. Nobody would have any debt, and at the same time they would have a valid claim to almost all property in their possession, including their houses, their cars, their personal affects, etc.
So, what do you do with the 147 million ounces of gold in Fort Knox (some people say Fort Knox is empty!)? Well, the only equitable solution would be to give it to the people, in what precise proportion, I’m not entirely sure. You could give the same amount to everyone, or you could prorate it based on last year’s taxes paid, or some other solution.
What they do with it from there, and whatever rate of exchange prevails on the market between gold and other goods/services, is really rather inconsequential.
The fairest way to return to a gold standard is to repeal all the taxes and regulations preventing people from using gold as money. This would be the functional equivalent as a default on the dollar. Subject to true free market competition, why would anyone use paper over tangible goods?
Forcing people to use gold as money is as silly as forbidding people to use gold as money. People may use whatever they please as money, although the free market selected gold and silver as money before the State was strong enough to force people to use unbacked paper.
I’m not forcing you to abandon the paper dollar. You’re entitled to your fantasies about the fairness of fiat debt-based money. I’m saying I should be able to boycott the Federal Reserve and use sound money, if I want to.
The bad guys are not going to voluntarily give up their scam. A complete collapse of the State is more likely than meaningful reform.
It just occurred to me that the Framers of the US Constitution could have really screwed things up if they had specified that the federal government could only pay debts and expenses in Gold or Silver.
How about we try something like this: let’s assume that the state will exist. And that there will be taxes, therefore we need some form of collecting them. Moreover we have to think about people that will be hurt by the reform. We wouldn’t want a run on the banks. What should we do in order to get rid of fiat money and credit-induced business cycles, without getting ourselves in a bit of a monetary massacre?
All they have to do is remove all the stuff that gives them a de facto monopoly on the issuance of money and everything would take care of itself.
It’s not like the whole system would fall apart if private companies were able to mint coins and people could use them in commerce legally, people would still use greenbacks as well and they would still have value to others so they would accept them in trade.
Eventually people would realize what a bad deal they were getting by accepting non-commodity backed currency and would start to not accept it any more and as a result it would start to lose its monetary value. There’s really no way to tell how long this would take as it would take time to get specie into circulation as well as getting a critical mass of people willing to accept that coinage.
One thing you can be certain of is that the banks would try to make it as painfull as possible for the people to cut down their magic bean tree so probably wouldn’t accept anything but government notes for debt payments as would the State by requiring them to be used to pay taxes. And even if they did give up their monopoly I’m sure they would also try to take action against any business that didn’t accept greenbacks under the ‘this note is good for all debts, public and private’ clause up until the time of the critical mass when there would be nothing they could do short of making them illegal again.
It is kind of ironic that American eagles have face value on them. The 1 ounce has a face value of $50 even though the u.s mint is selling it at over $1,000. I thought I read somewhere that Ron Paul disliked the idea of having face values on them, it is sort of a distraction, we need to drop the term “dollar” and talk about weight. I appreciate the insight of the founders when they wrote “fix the standard of weights and measures”. With 1 , 1/2, 1/4 and 1/10 ounce gold coins, people can really define what the content of their currency is, gold coins have value themselves and you can measure the weight of the coins, 1/2 > 1/10 oz. Federal reserve note just have their face values printed on them they have no weight or intrinsic value. We all know two $5 notes equals 1 $10 bill,its the same quality and weight of paper, just the government stamp on it tells you what its worth.
You can’t have American eagle gold coins have a legal tender value based on the spot price of gold, instead of the fiat price. If that were true, then people would use American eagles not use fiat money at all. People would use American eagles to protect themselves from inflation.
Currently, you can’t legally use gold coins as money because of the capital gains taxes you would owe. If you use gold as money, it counts as a barter transaction, which is taxed much higher.
That sounds like a simple and fair reform to make, but it would totally wreck the Federal Reserve and financial industry’s monetary monopoly.
Once you accept government and taxes, you’re a slave. If someone can use violence to steal from me, then I’m effectively their slave.
The first quote is potentially misleading - is the author referring to the adverse effects of putting a halt on credit expansion, or what? The second bit is more or less correct.
The author suggests that all fiat money actually represent the debt people owe to the banks and that the gov’t creates fiat money out of thin air through banks who lend out a piece of paper (credit) even more than it does by printing money (only a tiny ammount of all the money in an economy is actually printed banknotes).
Come on, we’re supposed to be the crême de la crême among economists, and thats the best we can do? I’m talking about serious problems, saying, that the market will take care of it is not good enough. Just think about fractional reserves, what would happen if we stop supporting them with the whole legal tender aparatus? Wouldn’t there be a massive run on the banks, with a whole lot of winners and losers, depending on how fast can they run? If we won’t have an idea what to do with situations like that, people won’t be taking as serious.
The best solution I’ve read about is agorism, although I haven’t personally tried it yet. That is, to a certain extent, the market taking care of itself. A lot of trolls here say that agorism won’t work.
Via the income tax, the inflation tax, and other taxes, the State directly confiscates more than half of my labor. For every $1 I earn, the bad guys get more than $1. A freedom activist accomplishes nothing if he follows the corrupt laws.