Top Ten Reasons to Return to the Gold StandardA small amount of politicians, mainly libertarians and hard-core Republicans, wish to abolish the Federal Reserve and return the U.S. to the Gold Standard, which we had operated on leading up to the Great Depression. A gold standard is where the dollar is linked to gold, and can be exchanged for it. Most economists are against returning to the gold standard, claiming that it would cause deflation which will put the already fragile economy into a recession. However, gold standard activists do have several good major points, and their ideas are gradually gaining more and more supporters. Here are ten good reasons why the U.S. should return to the gold standard.
The Top Ten
Right now, we are around 20 trillion dollars in debt, and it's still going up. Economists are saying that we are approaching the danger levels of debt, and if we continue to borrow, we could face financial collapse in the near future, just like Greece did. However, it will take forever to pay off the debt. If we had a budget surplus of one hundred billion dollars a year, it would currently take around two hundred years to pay off the debt, not accounting for inflation. We might not even be a country anymore by that time. One economist stated that the only realistic way that we could pay off the debt is to deliberately inflate our currency, and this could bring harm to our economy. The main reason our government can borrow so much money is that they are able to print money at will. While paying off the debt is going to be a challenge, and may even be impossible, returning to the gold standard will ensure that the government can no longer go into debt at will.
The main benefit of a gold standard is that it would prevent inflation. Governments can no longer print money at will. Inflation acts as a reverse Robin Hood. It steals from the poor, and gives to the rich. The poor get their small amount of savings eaten up by inflation, while the stocks and investments of the rich rise in artificial value, making the rich even richer. Under a gold standard, this would, hopefully, end.
If the government can't print money at will, which is a form of a hidden tax, then they have to spend more conservatively. A lot of Libertarians support this because the government would have to trim its military spending and stop interfering in world affairs. Republicans love this because entitlement programs must be made more efficient.
Right now, we live in an oligarchy. A few people, who are unelected, by the way, can completely control our money supply. They could bring us onto a depression next week if they wanted to. They have the power to do that. The sad thing is, they kind of have. The Great Depression was caused by the Federal Reserve. The Fed kept interest rates artificially low for most of the 1920s, which helped create a bubble. Once the recession of 1929 happened, instead of lowering interest rates like the Fed is supposed to do, they hiked interest rates, which sent the economy into a depression. Under a gold standard, this would no longer happen, because the money supply would be altered by the free market, which means that everyone will have a say in how our monetary supply is managed.
Bubbles, like in the 1920s and the 2000s are mainly caused by artificially low interest rates by the Fed. Under a gold standard, we would still have recessions just like any other economy, but they would be a lot less harsh than the ones in 1929 and 2008.
Bank bailouts heavily distort markets and reward bad behavior, yet it's a favorite hobby by the government. The main way the government raises the funds to do this is to print more money. Under a GS, this practice would go extinct.
Inflation discourages savings and rewards consumption. When the banks failed in 2008, most politicians' solutions were something like this. "SPEND SPEND SPEND! YOU'VE ALREADY GOT A MICROWAVE? IT'S OKAY, BUY ANOTHER! CAN'T AFFORD IT? GO INTO DEBT! FORGET SAVING AND INVESTMENT, WE NEED TO SPEND OUR WAY OUT OF THIS! " Instead of looking at what caused the recession, which was a bubble, interest rates are lower than ever, and consumption is on the rise because of inflation. These are the precise things that cause bubbles. Under a GS, savings would not be penalized like they are today.
The constitution does not give any authority for an independent agency to print money. It gives the federal government that power. Article I, Section 8 of the Constitution specifically gives Congress the power to borrow money and also power to coin money and regulate the value of both U.S. and foreign coins. By returning to the gold standard, we could eliminate an unconstitutional agency.
Some lawmakers have proposed bills to audit the Fed, in order to know who the bank gives money to. The Fed have constantly lobbied against this, stating that it would violate its independence. Therefore, we have no idea who the bank gives money to. If it scares you that a government agency can actively operate in secret without the will of the people, it should.
"I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men." That quote is said to be by Woodrow Wilson, the president who signed the Federal Reserve onto law. Kind of makes you think, doesn't it? While the origin of the quote is unknown, and many claim that it was fabricated, it's not uncommon for presidents to admit that they made a mistake. Harry Truman apologized for creating the CIA years after he gave up the Presidency. Kennedy apologized for the Bay of Pigs fiasco and Reagan ...more