Should the United States return to a Gold Standard monetary system?

Only if we want to destroy our economy and perhaps send the world into depression.

No, it doesn’t work and makes it hard to control the economy. A fixed money supply means it is very difficult for the economy to grow.

I’m not sure why we should return to something that didn’t work and expect a different result.

While there are some advantages to returning to a ____ standard currency, there are many disadvantages for a gold standard currency.

The first disadvantage is that the government would have to have a large enough amount of gold such that a large percentage of currency in circulation can be exchanged for gold for a fixed price. This limits the amount of money in circulation.

The second disadvantage (of any non-fiat currency) is that the value of the currency is directly tied to the value of gold through a fixed conversion rate. If the value of gold goes down, so will the value of money, and you have inflation. If the value of gold goes up, you will have deflation (all items will drop in price). Deflation in general is worse than inflation, since salaries drop, houses drop is price, and everything you own becomes worth less.

Right now, gold is a bubble. The value is climbing exponentially, and the bubble will soon pop, dropping gold way down in value. Fiat currencies only work when the target material is stable in value, and gold is anything but stable. Converting to a gold standard would destroy the economy.

A third disadvantage (of any non-fiat currency) is that the government no longer has much control over the value of money. Governments try to maintain a stable value for money, and they can accomplish this by printing more money and destroying it, creating and destroying value. With a currency whose value is linked to things out of the government’s control (such as the discovery of gold deposits, or the discovery of new uses for gold in electronics) inflation and deflation are out of the government’s control and cannot be prevented.

I think we should return to a barter system. I live on a micro-farm in the Sierra Nevada foothills. Trade ya an interior makeover on your home, a fat laying goose, 10 dozen hybrid morning glory seeds, 4 urns of exotic grasses and a dozen happy brownies for….? ;-)

^^ ....6 hours of gentle, deep body massage? ;-).

@Coloma; A haircut, an editing job, an essay, French lessons, seeds from lettuce leaf poppies, a painting by my grandmother, a painting by my mother, a painting by my sister, a hand-made quilt by me, and two quarts of gazpacho.(Sweet pea seeds were too withered..due to drought – to harvest.)

Probably, if it’s not too late. I’ve wondered if we could ever find a way to convert to some kind of currency based on “energy”. That is, horsepower, kilowatts, BTUs or any other way that we produce and consume energy. Granted, the “value” of energy changes over time, too, depending on how it is produced, stored, distributed and consumed. And it’s a thing that we both produce and consume, which would make it an unusual basis for a currency, to be sure. What we have now is going to fail on a massive scale, however. It’s just a question of when and how badly.

Fiat money has always failed in the past, and there’s no reason to think that it won’t fail again. When the US currency failure mode moves to hyperinflation (which is always one way out of some debts) the entire world will suffer and we will lose, probably forever, any position of world leadership that we ever aspired to. What’s worse, the long term bonds in our Social Security system will survive the hyperinflation period (since they can’t be paid off early), meaning that we can’t just inflate our way out of debt.

After we come out of the hyperinflation period (and so far, from what I’ve read, Brazil’s period of 20 years of hyperinflation was the worst ever in the modern world) the 75-year bonds in Social Security will still be there with their overhang and debt obligation. That’s when we’ll default, and carry the world into the pit with us. (That is, if the Europeans don’t pull us into the pit with them first. We’re sort of on a race to default with them.)

No one seems to understand money any more, on a macroeconomic scale. It’s surprising that the system hasn’t already failed, frankly.

Note that most of the people who advocate such a move also support other wacky notions, such as “Obama’s birth certificate is a forgery!”, and “Trickle-down economics works!”. That right there makes me skeptical without even getting into the issues it has caused in the past.

Maybe we should tether our currency to China’s their fixed exchange rate is 8.2 yuan to a dollar if remember right. so why not make ours 8.2 dollars to a yuan. It’s just of a good idea as returning to the gold standard.

FDR took the nation off the Gold standard in 1933 in order to deal with the Depression. Had we not been on the Gold Standard, the Depression could have been prevented by the Fed. Had we stayed on it, the Depression would have lasted longer and gone deeper—and we would have been almost powerless to fight Japan and Hitler after Pearl Harbor because we would not have been able to raise the deficit in order to fund rebuilding the destroyed Pacific Fleet. The drive for a return to the 1920s is driven by political hacks that could care less what happens to America so long as they get fat contributions from special interests that deal in precious metals and the dupes they are able to con into thinking that The entire world are idiots with the exception of the far-right extremists in the USA, and that the last 88 years of history never happened.

Anyone suggesting this is recommendable or even viable is a nutjob. ‘nuff said. (a nutjob and completly ignorant of basic economic principals.)

Here’s an article on why it is such a bad idea.