Given the current state of affairs I thought this debate may be somewhat long over-due. The American dollar has been steadily declining in value on the overseas market for some time now and I was wondering what today would be like had Nixon not eliminated the Gold Standard back in '71. So without further ado...



What is the Gold System?:




















Sources:

http://en.wikipedia.org/wiki/Gold_standard

http://economics.about.com/cs/money/a/gold_standard_2.htm


An inflation calculator:

http://minneapolisfed.org/Research/data/us/calc/index.cfm



Now with all that said...


Questions for debate:

If you were Nixon in '71 would you have chosen to take America off the gold system? Why or why not?

Should America be reintroduced to the Gold Standard to help eliminate the potential for a complete economic disaster? Why or why not?

Do actions taken in 1933 have a direct impact on the current decline of the American dollar? How or how not?

Do you agree with the Gold Standard? What would you do in favor of replacing/reenacting it if you do not agree with it? Explain.

If you were Nixon in '71 would you have chosen to take America off the gold system? Why or why not?

Absolutely. A gold standard subjects a country to the vagaries of the gold-market, is generally deflationary, and encourages mercantilism.

Gold prices are no more stable than US currency, and are heavily influenced by folks with little or no electoral accountability - even less than the Fed. Deflation is generally more harmful to general prosperity than inflation, and truly favors old wealth over new wealth. Mercantilism is an inefficient and exploitave form of commerce - it destroys the benefits of comparative advantage, and if it were good for a nation, why is it not good for a state within a nation.

Should America be reintroduced to the Gold Standard to help eliminate the potential for a complete economic disaster? Why or why not?

Absolutely not. If a monetary change were to be made, we should get off of a credit-backed fiat money system to a straight fiat money system: Our current system creates new money by incurring new Federal debt, but does not create the money to pay the interest on that debt.

A better system would be (see the quote from T.A.Edison in my tagline) to issue the money directly, with an eye on some broad index of prices: if the index goes above 1, burn money, if it goes below 1 print money. This provides for stable prices, while allowing the gov't to make expenditures without taxation.

Do actions taken in 1933 have a direct impact on the current decline of the American dollar? How or how not?

Yeah, but not the gold standard. I think creeping socialism has had a larger deleterious effect. Of course when it's done by the republicans it's called something else. We've had artificially low interest rates (thanks fed) for quite some time, expanding budget deficits, and no end in sight. We could be in for quite a nasty shock if the Euro becomes the standard for trading oil.

Do you agree with the Gold Standard? What would you do in favor of replacing/ reenacting it if you do not agree with it? Explain.

What i'd do would be detailed on this page: http://www.themoneymasters.com/monetary.htm , the site's a bit on the conspiracy theory side, but from what research I've done it's feasible, but would require an end to interest-bearing bank accounts. It would also require restraint on the part of the government, but then so does our current system, and so would a metallic system.


Interesting link: www.monetary.org

If you were Nixon in '71 would you have chosen to take America off the gold system? Why or why not?


Yes, but I would not have done it the way he did it. From what I understand, his middle of the night changeover hurt the economies of a lot of countries in the Middle East. They weren't happy about it. In fact, they showed their displeasure by creating OPEC. We're still paying for Nixon's sneaky uncoupling.



Should America be reintroduced to the Gold Standard to help eliminate the potential for a complete economic disaster? Why or why not?


No, I agree with SWM28WDC on the lack of accountability issue.



Do actions taken in 1933 have a direct impact on the current decline of the American dollar? How or how not?


No, I don't think so, and I don't think Socialism does, either. I think our trade deficit is the cause, and the reason we have the deficit we do is refusal to find innovative ways to be more self-sufficient and most of all, our refusal to rein in corporate greed. They outsourced everything, and now America pays China's weapons 'n' warfare bills with the purchase of cheap plastic toys, shirts, and shoes. Dumb idea. We're in debt to the most dangerous government on earth. Aside from our own, that is.


Do you agree with the Gold Standard? What would you do in favor of replacing/reenacting it if you do not agree with it? Explain.


No, I don't agree with the gold standard. I would like to see our outsourcing managed better. Gold is a symbol in this context, just as paper is, or numbers in a computer. It's a symbol for time, effort, skill, and resources. If we want to solve the falling dollar problem, we'll solve the skyrocketing deficit problem. And there are only two ways to do that: Go to war to take what we want in cheap labor and resources, or start outsourcing more than we import. We have the resources, we have the workforce (one of the most productive in the world), it's not too late to salvage the knowledge base. But first the corporations have to be leashed. Now, how do we bell that cat, when the cat pays the campaign costs of the head mice?

Bringing back the Gold standard in the US is an excellent idea... for all those who hate the US. It should be brought back only as long as you wish to see the US tumble into financial ruin.

The USSR collapsed not because of Reagan or SDI, but because it had an economy largely driven by the exports of commodities, chiefly Oil and Gold. When the prices of both of these tumbled in 1983, the USSR lost about a quarter of its GDP in one fell swoop. Economic collapse was pretty much inevitable.

Gold was 46$ an ounce in 1971
Gold was 620$ an ounce in 1978
Gold was 315$ an ounce in 1983
Gold was 380$ an ounce in 1995
Gold was 280$ an ounce in 1998.
Gold is 432$ an ounce at the moment.

This is what you want to fix your currency to?

Keep in mind while you are discussing this silly idea that at the moment, the US dollar IS the world Gold standard, nations measure their currency against it, many nations even peg their curencies against it. Until Bush HJr. came along and decided to bankrupt your country, it was the most stable currency the world has ever seen.

Prior to Bush Jr, the US dollar was significantly MORE stable then the price of gold. Now that the US has gone from the biggest real dollar surplus in US history to the biggest real dollar deficit in US history in 6 years (and thats not even including the Iraq money which is not formally 'on the books') this reality might change, but at the moment fixing the US dollar to the gold standard is a bad idea.

If you were Nixon in '71 would you have chosen to take America off the gold system? Why or why not?

I don't think there was much of a choice. The US economy was heading into rough waters with high inflation and extended resessions. Nixon tried wage and price controls, but those didn't work. You see, back in 1971 unions were still strong. Vietnam was still going on. Taxes were still high at the top rates (75% if I remember right). It was a terrible economic time with more hits to come.

Would I have done it? Probably. Why tie currency with a commodity? It makes as much sense as tying currency to the price of corn, and unless that's all an economy is based upon, it's not a good way to go.

Should America be reintroduced to the Gold Standard to help eliminate the potential for a complete economic disaster? Why or why not?

No, and I don't think the potential for a complete economic disaster would go away even if we did tie currency to one commodity.

Do actions taken in 1933 have a direct impact on the current decline of the American dollar? How or how not?

The USD rises and falls by the global economic realities. This isn't tied to what was done in 1933. It is tied to what is currently being done.

Do you agree with the Gold Standard? What would you do in favor of replacing/reenacting it if you do not agree with it? Explain.

The gold standard, as explained, is tying the value of currency to the value of a commodity. This does not make any sense in a complex global economy. The US produces raw materials, finished goods, and a wide range of services that combine raw materials and finished goods. This is a complex economy, even more so with the global economy to consider. The gold standard has no place here.

I do know that Argentina has tied its currency to the dollar, which is to say it props its currency value up with the value of the USD. Does this make sense either? I don't think so, except for short-term reinforcement. What makes a currency valuable is the strength of the actual economic production.

Instead of trying to roll back the clock 30-70 years, it'd be better for our economy to look ahead and get truly productive, rather than cooking books or ringing up debt. President Bush recently declaired that we ought to be developing alternative energy sources. He also said we should have been doing this a long time ago.

Finally! It's too bad President Bush has been more interested in the ME than in the US. Ah well, can't turn that clock back either, but we can focus on the future and lead the world in alternative energy technologies. That will bring up the value of the USD.