Gold System vs. Fiat Money

[achilles28]

Quote from gnome:


There isn't any genuine NEED for a currency to be backed by gold.. it's just that gold holds the evil doers' "feet to the fire" so to speak.

About 25 years ago on Wall Street Week, I heard Milton Friedman decry the Fed and say, "The Fed should be abolished and be replaced with a computer... one which increases the money supply at the same rate as the population growth... about 2% per year".

If we had such a plan and could rely upon its honesty... PLUS the Federal Government were forbidden from spending in deficit, there would be no need for our currency to be backed by anything other than the government's tax-levy authority.

You got it.

But like I told the OP earlier, such a system will always be corruptible and Bankers will find a way to rig the money supply.

A constitutional amendment? Don't think so.

There would never be enough voters in the Country who could understand its necessity.

Further, if it passed, Wallstreet would find a way to corrupt the Bureau of Labor and Statistics to cook fake numbers (they do it already on their own accord) to ramp booms and busts.

Like Gnome said, the problem is not an economic one. But a human one. Human nature to be precise.

So whats the best system?

Commodity-backed, I think. Its the only currency that cant conjured.

 

[Lobster]

Quote from jucesar2005:

However, after the development of the industrial nations there has been a slow process that took us to fiat money.

International banking is older than industrialization. The U.S. broke free from the Bank of England, but eventually it was incorporated back into the empire. The term "slow process," while accurate, seems insufficiently explicit. There seems to be a common misconception that a growing economy or technological progress or a complex financial system necessitates fractional reserve banking or "naturally" brings with it inflation. The simple truth is, there is a scam, the greatest one known to (some) men, perpetrated by certain families in order to control the world. It is called fractional reserve banking. It exists for one reason only: because those families want it to, so that they may have power over the rest of humanity. Its consequences are inflation, excessive taxes, excessive wars. Technically "fiat currencies" are also simply a consequence of the same scam: First you create paper that represents gold, then you create 10 times more paper than you can actually pay out in gold, then you keep the paper and change the word "certificate" to "note." Most people can't read or write anyway, so at that point, it makes no difference to them.

 

[flyingiguana]

Quote from gnome:

Really can't answer that question until you define "growth and wealth". The Gummint measures it in "prices paid for finished goods and services"... but that's really more a measure of money-pump inflation.

There isn't any genuine NEED for a currency to be backed by gold.. it's just that gold holds the evil doers' "feet to the fire" so to speak.

About 25 years ago on Wall Street Week, I heard Milton Friedman decry the Fed and say, "The Fed should be abolished and be replaced with a computer... one which increases the money supply at the same rate as the population growth... about 2% per year".

If we had such a plan and could rely upon its honesty... PLUS the Federal Government were forbidden from spending in deficit, there would be no need for our currency to be backed by anything other than the government's tax-levy authority.

AND THERE WOULD BE NO INFLATION!! NO LOSS OF PURCHASING POWER. NO DECLINE IN THE STANDARD OF LIVING. NO CURRENCY DESTRUCTION.

All of which are staring us in the face right now.

or they could have a group of monkey's throwing darts to pick interest rates. compared to the current monkeys at the fed this could be a better solution.

on a serious note, the fed should be concerned with controlling money supply growth and risk spreads.