Return to gold standard?

cheesybanana · Nov 19, 2007

Okay, I am not convinced that this would be a good idea. The Fed certainly isn't perfect, but I really don't think the GS is any better.

I need to leave for a while tonight. I just wanted to throw this out there for people to comment on. I will get back on later and post my thoughts on it.

TheCustomer99 · Nov 19, 2007

Well, I'm in a Monetary Policy course here at Northern Illinois University, so I'm a bit familiar with the gold standard. I know the basics and that it was abandoned in the middle of the 20th century in favor of Federal Reserve notes. I don't know enough about it to give a definitive opinion on it, but I'll say that our current monetary system is superior to it. People have criticized the Fed for making the great depression worse and so on, so I can see why people would want a natural system to keep them in check, but the Fed has also learned a lot since then. We have one of the best (possibly THE BEST) banking systems on the entire planet, so I don't see why we'd want to change that.

Here's a quick fun fact that you can use to impress your friends: Our nation is one of a very few nations on the planet that has never defaulted on its debts. We ALWAYS pay our debts back. Not many countries can say that. (Please don't bring up our current national debt, as a percentage of GDP it isn't anywhere near a record high.)

Also, I think Bernanke is doing an incredible job as chairman and history will treat him well. So, I'll say right now that the gold standard would not be a good thing to bring back. It was a bottleneck on our economy and Federal Reserve notes seem to be the better option. Like I said, we have a great system in place right now so there's no need to shake things up, no matter what Ron Paul says.

Can you all tell that I'm in the middle of writing a paper on the Fed right now? It's on why the FOMC held the Fed Funds rate at 5.25% at their June 2007 meeting. And yes, it is as fun as it sounds. I'm really having a blast.

fleurya · Nov 20, 2007

It's been a few years since my economics class in college, but I had a professor that has been working in economics for 30 years and basically a genius on the subject, doing many studies and authoring many papers and books. We spent 2 weeks on the gold standard learning what was good about it and why it was terrible for the growing economy of the time and absolutely ridiculous for today's economy. I can't remember the details, but I knew he was absolutely right.

I don't know anything about Ron Paul, but if he knows anything about economics, I'm sure it's not as much as my professor, plus he's a politician, so that's an immediate negative in my book. I can see how such a thing would seem enticing with the dollar so weak and how it would be a good target for a politician who is trying to win votes, but it's just an insane proposition for anyone who knows anything about economics. Unfortunately, most of the public doesn't know anything, which also makes it a good talking point for a politician.

schweb · Nov 20, 2007

Ron Paul and almost everyone who identifies as Libertarian doesn't understand economics or the realities of modern society.

Whenever I hear Ron Paul utter some garbage from his mouth, I wonder if he, or his supporters, actually realize what would happen if some of his ideas actually happened.

As far as the gold standard, there isn't enough gold in the world to back the currency of a muti-trillion dollar economy.

TheCustomer99 · Nov 20, 2007

schweb said:
Ron Paul and almost everyone who identifies as Libertarian doesn't understand economics or the realities of modern society.

Well, I'll say the hard-core libertarians. The ones who basically want anarcho-capitalism are insane. The ones who just say that they're socially liberal and economically conservative (aka. economically liberal anywhere else on earth) aren't crazy. I mean you can be a progressive who believes in capitalism without being some nut-job. I'll take your argument one step further and say that anyone who identifies with the extremes of any political persuasion doesn't understand economics and the complexities of any society.

Whenever I hear Ron Paul utter some garbage from his mouth, I wonder if he, or his supporters, actually realize what would happen if some of his ideas actually happened.

This is pretty much the reason why I don't support him anymore. The more I found out about him the crazier he became.

As far as the gold standard, there isn't enough gold in the world to back the currency of a muti-trillion dollar economy.

Good point.

cheesybanana · Nov 20, 2007

Cool. I was hoping you would reply to this TC99. Do you, or anyone, have any suggestions for further reading on the subject? I don't really care about the gold standard, as the more I researched and read about it, the more I realized it doesn't work. I am more interested in the complexities of the fiat system we use now. I am familiar with economics and know all of the basics. I just want a REALLY in-depth look.

Suggestions?

Thanks

cheesybanana · Nov 20, 2007

schweb said:
Ron Paul and almost everyone who identifies as Libertarian doesn't understand economics or the realities of modern society.

Don't judge us by the Digg-loving internet teens out there!

TheCustomer99 · Nov 21, 2007

cheesybanana said:
Cool. I was hoping you would reply to this TC99. Do you, or anyone, have any suggestions for further reading on the subject? I don't really care about the gold standard, as the more I researched and read about it, the more I realized it doesn't work. I am more interested in the complexities of the fiat system we use now. I am familiar with economics and know all of the basics. I just want a REALLY in-depth look.

Suggestions?

Thanks

Well, I was the first to reply to this thread. But yeah, you can check out Greenspan's new book. I know he goes over a ton of monetary policy stuff. I bought it, but I've yet to read it because I'm finishing up another book that I started earlier. Also, since I think I remember you saying you are also an econ major, take a monetary policy course while you're in college. It is some interesting stuff. If you've taken intermediate macroeconomics, then the class will be a breeze and you'll learn about the Fed and all things monetary policy.

Kash · Nov 21, 2007

schweb said:
As far as the gold standard, there isn't enough gold in the world to back the currency of a muti-trillion dollar economy.

Forget the world, there isn't enough gold to back the US economy. Worldwide stock is hovering somewhere in the region of $2.5 trillion, which wouldn't nearly cover the $7 trillion or so in circulation, at least not without significantly inflating the price of gold. This would, of course, completely nullify the reason behind the gold standard, that being to control inflation.

cheesybanana · Nov 21, 2007

TheCustomer99 said:
Well, I was the first to reply to this thread. But yeah, you can check out Greenspan's new book. I know he goes over a ton of monetary policy stuff. I bought it, but I've yet to read it because I'm finishing up another book that I started earlier. Also, since I think I remember you saying you are also an econ major, take a monetary policy course while you're in college. It is some interesting stuff. If you've taken intermediate macroeconomics, then the class will be a breeze and you'll learn about the Fed and all things monetary policy.

I'm trying to get into some, but it will have to wait until next year. The classes are either full or not even being offered. I'm pretty upset at the lack of Econ classes here...I'm applying to the University of Chicago as a transfer next year. I hope I get into that, for obvious reasons

But yeah, I actually have Greenspans new book next to my bed, but Anna Karenina is taking me so long to finish. I know for a fact that if I start reading another book, I will just never go back to it $:\$

TheCustomer99 · Nov 21, 2007

cheesybanana said:
I'm applying to the University of Chicago as a transfer next year. I hope I get into that, for obvious reasons

University of Chicago? Wow. I'd love to go there. It's one of the most prestigious economics universities there are after MIT. They've had a few nobel economists there, including the great Milton Friedman. I'm going to Northern Illinois University right now. I don't want to stay here when I go for my Master's (and hopefully Ph.D.). It isn't a very big name for economics, but one of my profs has a Ph.D. from Princeton and he was a TA for Ben Bernanke. He's really nerdy and he tells really unfunny jokes, but he's a genius and he knows a ton about econ.

cheesybanana · Nov 21, 2007

TheCustomer99 said:
University of Chicago? Wow. I'd love to go there. It's one of the most prestigious economics universities there are after MIT. They've had a few nobel economists there, including the great Milton Friedman. I'm going to Northern Illinois University right now. I don't want to stay here when I go for my Master's (and hopefully Ph.D.). It isn't a very big name for economics, but one of my profs has a Ph.D. from Princeton and he was a TA for Ben Bernanke. He's really nerdy and he tells really unfunny jokes, but he's a genius and he knows a ton about econ.

Ah! That is amazing. My econ professors are...not very good so far. KSU isn't exactly known for its econ department $:\$

baggss · Nov 21, 2007

cheesybanana said:
But yeah, I actually have Greenspans new book next to my bed, but Anna Karenina is taking me so long to finish. I know for a fact that if I start reading another book, I will just never go back to it $:\$

That is one of those books I could never finish reading.

I have started on Greenspans book, so far so good.