If we went to a gold standard...?

Question

Like all the conspiracy nuts (Ron Paul) want us to do, how do you increase the money supply for a growing population and economy?

Buy more gold, right. But I mean, WHAT do you purchase more gold with -- if every dollar is equal to a dollar's worth of gold? Know whatta mean?

Answer 1

The whole ideal behind the gold standard is not to increase the money supply. Prior to 1913 before the FED was created deflation was normal, so holding money produced a positive real rate of return, and made holding bonds very safe. People who want to return to the gold standard, for the most part , thinks this is desirable because it protects wealth with no risk. However some people just want to make government less powerful, and don't understand or care about it's effects on the economy. Ron Paul is certainly in favor of smaller government, but he may also believe the protecting non-productive wealth is important also.

Answer 2

I like the circular logic that you pointed out in your last sentence.

How to create a sufficient stock of gold is the least important concern that I have. The BIGGEST concern that I have is how to do prevent private interests from coopting the money supply by cornering the supply of gold. This idea is a VERY, VERY, VERY real possibility. We have seen it repeatedly for commodities other than gold. ALCOA did it with aluminum (or was it bauxite?) in the 1970s. The hunt brothers did it with silver in the 1980s, the Russian government is using its de facto control of Gazprom's resources to manipulate regional geopolitics, and DeBeers did it with diamonds for decades, etc. Oh yeah, and what happens if a hostile country decides to wage economic warfare by dumping large volumes of gold reserves on the open market to disrupt US monetary policy.

The other big problem that I have is that politicians can again take over their control of the money supply by inefficiently diverting fiscal resources to exploration for and developement of gold reserves to, among other things, support pork barrel spending.

Answer 3

I want my dollar to be backed up by something,
the economy is too large to be backed up by gold alone as the other person said

Answer 4

Us economy is to large to be backed by gold alone.

Answer 5

A little bit at a time you get as much as the governement can afford which may make the dollor go up in value at least

Our founding fathers started that and many older Presidents supported it

When they took away the gold standard inflation started happending.

Answer 6

See that ? Talk IS cheap !