First time poster. I am caught up in a debate over returning to a gold standard and was presented with some questions that I don’t know how to answer. Would anybody with a better knowledge of economics be able to help me out? Thanks in advance!
Here are the specific questions (how all these would be accomplished):
Acquire all the gold in the world that would be necessary to back even a small part of our economy.
How do you go about devaluing our economy enough to fit your “Gold Standard” fairytale.
Explain what happens when our economy grows beyond the valuation and physical limits of this particular natural resource.
Explain how we would overcome the SIGNIFICANT disadvantage American companies and banks would face when competing against others backed by fiat currency and fractional reserve banking methods… Specifiacally international trade and anything that involves the exchange of monies or letters of credit.
Oh and here is the best part from my opponent on a football discussion board:
“Oh and by the way, I would put my financial and economic knowledge up against “Thomas Woods” (and his 1 book on the subject) any day.” (We were also debating whether the FED should be abolished)
As pointed out most of these are fallacies but i’ll address them anyway. Most of his arguments are exercising the wrong kind of thinking. His big error is that he seems to think you’d need to represent the entire economy with gold. We don’t do that today with dollars why would we with gold? All 4 points make this assertion in some way.
Why would you need too? Gold is already priced on Comex and Forex. If we took the fed out, and allowed free competition in currency things like the American Liberty dollar and gold grams, or other entrepreneurial free market ideas would replace the dollar.
Why would we need to, he takes the assumption that we would need to as true without any explanation or defense of why we would need to. It’s just supposed to be accepted as fact so you would have to counter with How you could devalue it, rather then why you wouldn’t have to. You wouldn’t have to because of the above. Competition in currency and end the printing press fed.
Again he assumes something into existance (growth beyond the value of gold) as true, to get you to address a moot point instead of the real error in his question: The economy won’t grow beyond the “value” of gold because value is subjective, and it’s subject to the supply of gold available. Again gold is ALREADY priced in todays economy, making it legal tenders in free competition for currency would just REVALUE existing gold. It would ALWAYS be revalued, and it will always change hands as money. This argument is like saying the economy could grow beyond the valuation of Rice, or wheat, or oil. It can’t.
Again we assume the disadvantage is true and attempt to argue how you would overcome it. No such disadvantage exists. American companies do the traiding and they don’t have to accept anything they don’t want.
Does he really mean to argue that walmart would be at a disadvantage because they have to trade gold to china? Absurd. but to illistrate the absurdity, walmart does business all over the world, they can use euro in europe, yuan in china, etc, They’re not currently capitalized by one currency, why would they under the gold system? More over, american businesses can either refuse, or reuse fiat currencies in places that accept them. BMW Dealerships can pay for BMW’s with euro and sell them for gold. Other companies can refuse euro and only accept payment in gold or silver.
