The Best Way Back to a Gold Standard

[Karlis]

In his Forbes magazine article published Thursday, Nathan Lewis makes it sound easy to get back to a gold standard. After all, it has been accomplished numerous times in history around the world, including in America following the Civil War. Read more...

[+DieChecker]

The easiest way to get back on the Gold Standard is to re-develop the ancient art of Alchemy. Transform base metals into Gold.

Otherwise there is not enough Gold in the entire world to support the US economy. The US right now has 8,000 tons of gold. That is around a half Billion dollars at current rates. While the Gross Domestic Product (GDP) of the US is around 15 Trillion dollars. Or... gold would have to be 30 times more valuable in order to match the US GDP. Or, we'd need to capture all the gold in the world and merely double the price of gold. And... That is just for one year. If we try to value all currency and all credit/investments/savings, ect... it would cost a LOT more. Net worth of the US is estimated at 75 Trillion dollars.

The total value of all gold ever mined is about 9.3 Trillion dollars.

So either you need to greatly inflate the price of gold, or you need to greatly decrease the value of everything else. Otherwise a gold standard cannot work.

Sure maybe a combined backing system might work, using all the natural resources the US can bring to bear to be used as surities, but then we'd not be able to use those resources, as they would be held, as gold used to have to be, to prevent the currency from loosing its value.

And then of course the rest of the world will keep right on ticking and they'll just take our gold back with them. Or maybe sell it back to us at an inflated price, thus ruining our economy and strengthening their own position.

So then would we simply stop foreign trade, or... allow everyone else in the world to get rich off us, while our people get progressively poorer?

Edited November 13, 2011 by DieChecker

[questionmark]

And then of course the rest of the world will keep right on ticking and they'll just take our gold back with them. Or maybe sell it back to us at an inflated price, thus ruining our economy and strengthening their own position.

As happened before. People always ignore that Nixon did not abolish the gold standard because of a whim but because deGaulle was depleting Fort Knox... legally.

[Caesar]

The easiest way to get back on the Gold Standard is to re-develop the ancient art of Alchemy. Transform base metals into Gold.

Otherwise there is not enough Gold in the entire world to support the US economy. The US right now has 8,000 tons of gold. That is around a half Billion dollars at current rates. While the Gross Domestic Product (GDP) of the US is around 15 Trillion dollars. Or... gold would have to be 30 times more valuable in order to match the US GDP. Or, we'd need to capture all the gold in the world and merely double the price of gold. And... That is just for one year. If we try to value all currency and all credit/investments/savings, ect... it would cost a LOT more. Net worth of the US is estimated at 75 Trillion dollars.

The total value of all gold ever mined is about 9.3 Trillion dollars.

So either you need to greatly inflate the price of gold, or you need to greatly decrease the value of everything else. Otherwise a gold standard cannot work.

Sure maybe a combined backing system might work, using all the natural resources the US can bring to bear to be used as surities, but then we'd not be able to use those resources, as they would be held, as gold used to have to be, to prevent the currency from loosing its value.

And then of course the rest of the world will keep right on ticking and they'll just take our gold back with them. Or maybe sell it back to us at an inflated price, thus ruining our economy and strengthening their own position.

So then would we simply stop foreign trade, or... allow everyone else in the world to get rich off us, while our people get progressively poorer?

Yes, thats right. I could name other reasons like gold production would dictate monetary policy, you could also see inflation/deflation depending on how much gold is added or taken out or hoarding of gold when there is a recession.

[+DieChecker]

That is around a half Billion dollars at current rates. While the Gross Domestic Product (GDP) of the US is around 15 Trillion dollars. Or... gold would have to be 30 times more valuable in order to match the US GDP. Or, we'd need to capture all the gold in the world and merely double the price of gold. And... That is just for one year. If we try to value all currency and all credit/investments/savings, ect... it would cost a LOT more. Net worth of the US is estimated at 75 Trillion dollars.

The total value of all gold ever mined is about 9.3 Trillion dollars.

Crap. A half billion goes into 15 trillion like 30,000 times, not 30. Doh!

Long story short... gold alone will not work.

[Paracelse]

As happened before. People always ignore that Nixon did not abolish the gold standard because of a whim but because deGaulle was depleting Fort Knox... legally.

People our age remember that but I don't know if read UM too much.