OK, so you decide to bring up Section 10 of the Constitution.
Fine.. then file suit with the Fed gov't and all of those other countries who went off the gold standard, devalued their currencies, sold their goods cheaply into the US and then drained the US gold reserves by converting their accumulated dollars to gold. (... deep breath...)
Personally, I think we should have set up catastrophic tariffs on some of these bastages... However, given the fact that we were in the middle of a "cold war", recovering from vast expenditures in Vietnam and the social burdens of the Great Society, I don't think we had much choice.
As for Fiat currencies going to Zero, that usually accompanies the respective gov't going to Zero as well, (ie: conquest or overthrow).
In that case, currency backed by gold would be worthless anyway as the rule of law breaks down and with that, the ability to pursue legal claims against those who are obligated to exchange your currency for gold.
As for your general concepts about the gold standard, if what you say is true about unlimited opportunity for expansion under it, why the h*ll have so many govt's left it?
Why has there been such financial chaos under the gold standard, such as the The Great Deflation, a myriad of banking panics throughout its history, ESPECIALLY the Great Panic of 1907, when the Federal Gov't had to step in and bail the banking system out, and the constant inability to wage war under such financial constraints??
Countries have fled the Gold standard when involved in periods of conflict, and while it would be nice to have gold bring the end of warfare, we know that is not a practical solution.
So after a war AND the inevitable inflation of the economy, why isn't the currency pegged to the average price of gold at that time??
And then when the next war is fought they'll have a new standard to reject after being forced to inflate again to fight the new conflict... and then they can again peg the currency to the approximate price of gold after that conflict is over.... etc.. etc... etc.
And while your statistics may be correct about the dollar devaluation since the '50s, I think most of us can attest that we have alot to show for it economically and technically. But then again, you had the ability to turn those dollars into gold if you wished. (Hope you did so...:0) I personally haven't felt that inflation, except in equities... <VBG>.
Btw, would you contest the statistic that corrected for inflation, that the price of oil is cheaper than it was during the '60s??
And finally, you claim that new technology should be financed based upon its profitability. hmmm.... I can think of many technologies that require(d) substantial capital, both VC and debt, as well as gov't subsidization in their infancy.
Semiconductors, Rocket science, Jet Airliners, satelite communications, medical research... etc were all developed under conditions where short-term oriented corporations were unwilling to commit long-term investment capital to these programs when the risk/reward equation didn't fit their business plan.
There is a place for gov't, just as there is a place for the private sector creating economic expansion.
But the root of the debate is still that so many of you have blinders on about the true value of a gold standard. If it had been so GREAT in the first place for all involved, ESPECIALLY THE FINANCIERS, they would have remained on it.
The Gold standard is a myth... It may be a useful myth for it to retain some value in the eyes of inflation conscience investors and as a means of forcing restraint on Fed Governors and politicians, but it is still a myth.
It's history is as stained by inflation/deflation, bank runs, and currency collapses as Fiat money has.
The key element in any financial system is that there exist IN THE MINDS OF PEOPLE that there is a standard, physical or mental, that will provide them some means of comparing and analyzing the appreciation or depreciation of their real assets as proxied by currency.
Those suffering inflation in Asia and Latin America are fleeing to a safe harbor and it ain't gold. It's the dollar. And with the dollar gaining strength (regardless of equity prices), it will remain the final safe harbor until economic contagion overtakes us or a financial shock to the system occurs (such as a short squeeze in gold).
This money flying into the US is taking the diversified form of investments in equities and bonds and possibly real estate. Were the dollar's value to be destroyed, that diversified portfolio would be reduced and the only option would be gold, which would result in a gold bubble.
With this, I'm calling a truce in this debate. The Carpal Tunnel Syndrome is acting up again...
And I'm sure there are many others who wish to spend time discussing their thoughts.
Regards,
Ron
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