To put it charitably, this article is a disappointment. If I had the time that
Mr. Samuelson has to write something like this, I'd love to offer a
rebuttal. Given time and space constraints (I have fewer words allowed and I
have to work), I'll just say that Mr. Samuelson was too lazy to research
the topic beyond reading what anti-gold, Keynesian banksters handed him. Every
objection he raises (and some he doesn't) has been refuted by economists
and historians who have made the gold standard a field of research. Those
refutations can be found on the Mises Institute website. Anyone really
interested in honestly understanding the arguments should go there.Mr. Samuelson also overlooks the fact that Ron Paul has no illusion that the
gold standard could be implemented under current circumstances. Although he is
an advocate, he's bright enough to understand that implementation right now
is impossible. What he asks, however, is that government allow citizens to use
currencies other than Federal Bank Notes in payment of debts if they so choose.
The current system is a bankster monopoly that benefits themselves more than any
other group (outside of the government itself).
Mr. Samuelson is correct.To my knowledge there is NO modern,
industrialized economy that uses a gold standard. Going to a gold standard now
would be subjecting our economy to what is (in the modern world) an untried and
untested system.The world's leading economy should not be the
guinea pig for someone's economic musings. Also, if it is such a good
idea, there would be other countries trying it. Not happening.Gold
was abandoned for good reasons. And those reasons are not related to the
Rothschilds (conspiracy theories not withstanding).
SEY has written everything I was going to say, only much better. I just wanted
to give a hearty amen to his/her comments.
Here is why the gold standard would be difficult for the U.S.We
import oil and pay for it in dollars. If we run short of dollarswe simply
manufacture more. So far this has worked for us.While we have an
unlimited supply of dollars we don't have anunlimited supply of gold.
It was unconvincing for the writer to argue that the gold standard made the
Great Depression more severe while admitting that FDR effectively ended the gold
standard domestically in 1933. Most of the Great Depression was then still to
come. It had not ended in 1941 when America entered WW2, and didn't
exactly end then either.Then, when the writer talks of coinage
being bulky to carry, I'm not sure that would be true for most of us. So
far as gold is concerned, considering an ounce of gold is worth about $1,650
currently, gold coinage per $100 would require only one sixteenth ounce coin;
perhaps it might have been better to argue that you might lose gold coins being
so small. Smaller silver coins (silver about $30 an ounce)would do for most of
your small change.For larger transactions bank notes were used
anyway, though there is always a problem that banking institutions might take
advantage, in various nefarious ways, of the fact that a large proportion of
their notes were never cashed in but continued to circulate. Exchanging some of
that residual stock for personal gain they effectively inflated other
The argument over whether to implement the gold standard is really a side issue.
The reason for the gold standard is twofold: 1) to minimize sudden shocks to the
money supply, and 2) to restrain banks from issuing excessive credit. If it were
possible to accomplish both goals without a gold standard, you'd find me in
favor of it. It wouldn't be as good because I think it makes sense to make
currency redeemable for something of value like gold, but that's another
issue.Panics, recessions and depressions are invariably caused by
shocks to the money supply and/or banks extending excessive credit. Certainly
the current economic malaise was caused by both of these situations. The Federal
Reserve created a whole lot of money in a very short time during the run-up to
the crash by making it possible for banks to extend excessive credit to anyone
with a pulse. That is simply unsustainable. Deregulation (or, better said,
non-enforcement of current laws) accelerated the whole process.A
gold standard creates conditions that are sustainable as long as government
upholds the law. Failures during gold standard times occurred because the
government suspended gold standard laws.
SEY, I'm adding my kudos along with David King's. The high caliber of
your comments reflect a clear understanding of the true cause of the economic
shambles we find ourselves in. The points you are making about stabilizing the
money supply and putting the reins on banks issuing excessive credit are
rejected by current economic thought and are therefore difficult to find in MSM.
By speaking out as you have, arguing for economic solutions we should be seeking
to cure our economic woes, you have provided not only a common-sense alternative
but an education. Thank you.
SEY,First, when we were under the gold standard, we had plenty of
shocks. Second, your basic argument seens to come down to if govt.
would do what it is supposed to do then gold would have worked. But then, if
govt. were to do that, ANY system would work well.The legistlative
branch makes and the executive branch enforces law. If they think there needs
to be an expansion or a contraction, they can agree to either change laws or
enforce them selectively. A gold standard would not change that (and you
indicate that history shows that govt. did just that). So, they could still do
what they want. It would just be messier.My question then is,
understanding that govt. will not abide the restrictions of the gold standard,
why would it benefit us? Cui bono?