US Bill to define the dollar as a fixed weight of gold
congress.gov
congress.gov
Putting America on the gold standard will fundamentally change how the world economy operates. The dollar-based currency operates on a debt system, which almost nobody buying and selling in this system even understands. So, some will insist that this is a political issue, but it isn't. It's about who gets to say what currency is used for trade between nations.
Right now, oil, as a chief energy source for every country on earth, is the most reliable store of value. We trade oil in dollars. If we switched to trading oil in gold, then moving to a gold standard would make sense. Until then, talk about a gold standard is more political gamesmanship.
Insisting on a fixed money supply is insane and destructive.
Mooney is a long-term gold bug [1] and election denier [2]. Given his lack of accomplishments before politics, I’m going with dumb.
[1] https://www.wsj.com/articles/steel-and-aluminum-lets-talk-ab...
[2] https://wchstv.com/news/local/west-virginia-congressional-de...
I would argue an infinite money supply is the thing that is insane and destructive. Infinitely growing rollover debt is somehow is a feature of this system, not a bug.
Having money based on a scarcity is how our human economies functioned over the last thousands of years since the creation of money.
Well, yes, but did they function particularly well?
For example, if you tie your money to an economically scarce good, if technological or political developments result in a massive influx of that scarce good, the economy will suffer inflation until the influx either stops, or a different form of money is switched to.
This isn't a hypothetical -- it was seen in Europe when Spain's conquest and extraction of gold and silver in the Americas set off ~150 years of consistent inflation (about 1.5% year compounded from about 1500 to 1650.) Prices in gold coins were about 5x higher in 1600 than in 1500.
If we went back to gold and then figured out how to cheaply extract gold from seawater or something, there would not be a lot of policy options. Switch to oil? Basket of goods? Ban the mining of gold? With fiat money there are a lot more levers to pull when facing unwanted inflation, like to stop printing money for a while.
I’m all for debating the appropriate rate of expansion, or setting algorithms for expansion. But a fixed supply in a growing population in economy is necessarily deflationary, which is bad.
Europe's population growth is already -0.2%. Money supply growth, in the tightest central bank environment in at least a decade, is 3%.
I'm pretty sure -0.2% would currently cause a disaster in the EU economy.
The gold supply isn't fixed. Total supply has inflated at roughly 1.5-2% every year for the last 100 years.
A problem I see with gold as a solution is the total supply is hard to audit.
https://www.federalreservehistory.org/essays/gold-convertibi...
Maybe a better way of looking at it was that various countries were accepting dollars from the US for goods of various kinds. In other words they were accepting colored pieces of paper in exchange for real things like cheeses or cars, or aircraft.
So when they wanted to reduce the number of dollars they were holding on hand, they went to exchange those excess dollars for gold. Nixon refused. He had to, otherwise the US would have been forced to default on its debts. From then onwards, the US Dollar has lost roughly 98% of its value in those 50 years. Gold used to be worth $35 an ounce till Nixon's default. An ounce of gold is now just on $2000. $35 as a percentage of $2000 is 1.75%, so the USD has lost 98.25% of its value. A Rolex Oyster watch in 1970 was $210 dollars, its cost is now somewhere around $10,000.