Why is going back to the gold standard so crazy?

Tnu1138

Art. I Sec. 8 Cl. 5
[Congress shall have Power ...] To coin Money, regulate the Value thereof, and of foreign Coin, ...;
Art. I Sec. 10 Cl. 1
[No State shall ...] make any Thing but gold and silver Coin a Tender in Payment of Debts; ...

I've been pondering this recently spying on the OTC thread concerning Ron Paul's Scouting Party or whatever it is for presidency. I don't get why everybody has such a negative reaction to this it is the only authorized means of doing so barring a constitutional amendment and it creates a stable economy with little probability of abuse by corporations such as The Federal Reserve creating inflation since Gold and Silver unless more is dug up is fairly fixed money does not work in such a way that you should be able to print it out of thin air. All currency has to be backed by something.

snowbull

There isn't that much gold. Fiat currency is backed by government lead.

Hatter

[No State shall ...] make any Thing but gold and silver Coin a Tender in Payment of Debts; ...

So, no paper money. No electronic currency, either.

You realize that the vast majority of the world's currency in circulation is in electronic or paper form, right? If this bill were to pass, that currency would be worthless. For those of us who have moved to debit and credit cards, this would mean we'd instantly lose all of our money.

Additionally, even if this bill were to somehow make it so that the dollar would not instantly become worthless, the fluctuation in the dollar's value - and the effect it would have on the global market - would be catastrophic.

Tnu1138

i'm not saying no paper money or electronic currency but it has to be backed by something other then the government sayign that it's money it has to be backed by some sort of commodity in order to have value.

EDIT: Also i'm not quoting a new bill that is waiting to be passed I'm quoting the U.S. Constitution on this one

TheMightyAnonym

The gold standard wouldn't mean that we would have to give up paper money; it would mean that the government cannot produce more currency than it actually has.

This in mind, America is way overdrawn, so converting back to the standard would be nigh unto impossible.

glennmagusharvey

Tell me if I'm wrong, but the way I read it is that gold and silver and other precious metals backing for currency is basically "just in case everything goes bust I still have my money".

Well, if society does go bust to the point where you need to take your money and run, (1) you have a lot more problems to deal with than just your money, and (2) you're kinda a douchebag for not staying and helping.

Noimporta

The global economy and the financial market are just too big to be properly backed by gold/silver reserves.

CommandoDude

^ This.

Basically, any transition to the gold standard would really only change one thing, the price of gold. It would be a fiat system under the charade of a gold standard.

That's why you see people like Glenn Beck advocating for the gold standard. They don't honestly believe it would make the economy any better. They just want their gold stocks to get more valuable.

glennmagusharvey

Yeah, prices don't exist outside of how much people are willing to pay to get something or to get for selling it.