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And what would be the difference under the gold standard?
They would declare that that $1 paper bill was worth the same as 1/42th of .999 gold could buy...

The only difference that I see is right now the free market setting the rate; while under the GS, government setting the rate.

Quote from: 10stateswithnh on October 08, 2011, 08:48:19 pm

Quote from: John Edward Mercier on October 08, 2011, 07:28:37 am

Quote from: B.D. Ross on October 07, 2011, 10:09:00 pm

Quote from: John Edward Mercier on October 07, 2011, 08:46:51 pm

So you support the US Congress decreeing (fiat) a gold standard?

A "gold standard" is not fiat. Why, it's quite the opposite of fiat.

How is it the opposite? Its a decreed relative value between a commodity and proxy. The 'decree' can change at any time, and did.

You're using the word "fiat" differently than those who talk about a gold standard instead of fiat money. They mean money with nothing backing it, you mean money where government decrees the exchange rate of money that IS backed by gold. Personally, I want money where the free market sets the value, so it's not fiat by either definition.

Actually the value of the metal in the coin is 'backing' it in either case.

By the way... antistate never answered.

The problem is simply estimates of US gold holdings are not large enough to cover even the interest on the debt... and no where near the debt... without substancial devaluation of the USD.

I was talking about how the standard would work, I don't know how the transitional period would work.

Setting the value of a dollar in terms of gold is not what I'm referring to when I say fiat. I mean, the currency should be fixed in terms of each unit meaning so much gold, and then it should never be changed, then the market will determine how much the currency is actually worth. A two-metal system with gold and silver could work, but unlike the early US economy, there wouldn't be a fixed ratio between gold and silver, those would be set by the free market too. But the paper has to be freely exchangeable for the gold in order for the paper to have any worth - no artificial acceptance because of a legal tender law.

Personally, I think we should have one ounce of silver as a dollar, and some new unit that means one ounce of gold, no fixed ratio between the two, and stop using fractional amounts (EDIT: I mean fractional amounts for the metal to currency ratios, not that using fractional ounces of metal is bad) - that just encourages government to fiddle with the amounts.

Quote from: John Edward Mercier on October 09, 2011, 12:48:26 am

Quote from: 10stateswithnh on October 08, 2011, 08:48:19 pm

Quote from: John Edward Mercier on October 08, 2011, 07:28:37 am

Quote from: B.D. Ross on October 07, 2011, 10:09:00 pm

Quote from: John Edward Mercier on October 07, 2011, 08:46:51 pm

So you support the US Congress decreeing (fiat) a gold standard?

A "gold standard" is not fiat. Why, it's quite the opposite of fiat.

How is it the opposite? Its a decreed relative value between a commodity and proxy. The 'decree' can change at any time, and did.

Actually the value of the metal in the coin is 'backing' it in either case.

Not under our current fiat (pure paper money) system, where no paper money anywhere is backed by anything except the issuing government's ability to continue collecting taxes (full faith and credit - what does that really mean?). Okay, other countries using the US dollar as a reserve are backing their currency with the US dollar, which is backed by exactly nothing. Just because the US government has gold reserves, doesn't mean there is actually any connection between the value of the dollar and the amount of gold, as you just pointed out in a previous post. That's what I mean by backing, not sure if you mean something other than just the fact that the US government HAS some when you say the dollar is backed by gold.

Right now, the free market is (mostly) setting the value of gold (there were hints of some manipulation by big banks selling more paper equivalents than they actually had, to keep the price of gold down, this was a couple of years ago I think), but it's because our dollar is not tied to gold and therefore worthless! I don't want free market gold at the expense of my whole cash savings being something the government can print out of existence, I want both free market gold and money that holds its value, is that something that you see as possible under any conceivable scenario? Seems to me, making the gold the money is the only way to do that. That's what I mean when I say a gold standard.

The value of the metal in the coin is not backing the value of the paper bills. Maybe it's partially backing it - is the metal in a quarter worth 25 cents? Maybe if you exchange everything to pennies, but there's no way there's enough metal out there to make this kind of exchange practical. But it's only the legal tender law that makes 1 dollar bill equal to 4 quarters, or 100 pennies, without that arbitrary government "decree" the paper bills are all worth $0. The gold standard money was worth something without government force being involved.

EDIT - I mean that there was a certain amount of force in "decreeing" how much gold was equal to a dollar, and in financing the minting of the coins, but the value of the metal, not force was what caused the money to have its value. I don't get your argument about current money being back by metal, while at the same time you point out that there isn't enough gold to redeem all the paper bills - don't those two statements contradict each other?

I'm also wondering, when did the US government ever change the dollar-to-gold ratios before the confiscation of gold in 1933? My understanding was the dollar's value was very stable until after the Federal Reserve Act in 1913, and the 1800's even had a long-term trend of slight price deflation. Yes, there were some problems and panics (some caused by states not honoring their pledges to redeem notes, others by the response of the market to the artificially fixed ratio between gold and silver, and others caused by banks issuing paper notes in a fractional reserve manner, this was what led the banks to sneak the Federal Reserve Act in and disguise it as a financial regulation that would rein in the banks, when it in fact created a "lender of last resort" to cover them when they messed up and did more fractional reserve lending than the market would bear, in other words it made fractional reserve banking something that each bank no longer had to be careful about, this was the real purpose of the act. Holding the value of the dollar stable was something they promised to get it through Congress but there is no mechanism to achieve this in the Federal Reserve System, all the incentives are toward constant inflation.

So when did the value get adjusted, before the government started dealing with paper money and meddling with the value of the money in many other ways as well?

Then your not using a 'standard'.
The US isn't on a 'pure paper money' system.
And not hardly...

Banks didn't sneak the system in...
Only a certain number of prominent bankers were involved in laying out the plan for the FED... as these bankers had participated in the Morgan Plan. And they're initial plan called for a private central bank.

Quote from: antistate1190 on October 06, 2011, 10:00:24 pm

We need to be careful. Only reach out to the real libertarians.

I wasn't a real libertarian when I stumbled on this FSP site by accident a few years ago. I had natural libertarian leanings, but no real understanding about libertarian philosophy or Austrian economics. Nearly everything I learned in my journey to becoming a libertarian, started with the connections I made through the FSP.

People are waking up to the fact that the system is broken, corrupt and failing. They are looking for answers. Some of the Occupy protesters are probably open to the idea that the best solutions are based in liberty.

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