Piezoe,
1. I kindly ask you to list 3 major arguments why currency backed by gold or by gold AND other physical assets is NOT possible or effective today. I want all these arguments to be based on facts logic and common sense.
2. I do not advocate solely for gold backed currency. I think legal tenders could also be backed by silver, copper deposits (underground), REITs or equity ETFs like S&P500 , Russell 2000, basket of 9000 global stocks. Currently however, we can own ETFs but we cannot send them to other specific people like we send fiat currencies, we can only do it via centralized exchanges. THere are no technological obstacles to make stocks, ETFs or REITS peer-to-peer.
3. Please show us links to latest audits of Fort Knox from the year 2019, 2020? By at least 3 major auditors like KPMG.
4. Please indicate who exactly are the ultimate owners of Fed, BIS and IMF? If you will say "cartel of the banks" then list who are the major owners of these banks. If major shareholders happen to be BlackRock, Vanguard , StateStreet etc, list who are major shareholders of these funds?
5. Lastly, describe exactly why fiat currency system does not create gigantic advantage to people close to "printing press" or close to governments who distribute vast quantities of newly created currency? Also known as "Cantillon Effect". Again, be specific and describe it in 5 to 10 sentences.
I will address your first demand because you might have some difficulty with that one, since to get the total picture you'd end up, probably, having to consult several sources. (This is a topic on which I am fairly expert, but if I slip up on minor details then you still have the literature to fall back on.)
I am not inclined to bother with the other of your demands because most, probably all, of your other demands you can be quickly satisfied with a quick probing of the various relevant .Gov sites. As you are aware, I have given suggestions for further reading. . You'll need to do that first, before we can have much of a dialog. I will, nevertheless, from time to time speak up when I see something posted here that simply demands to be corrected before it can mislead others, such as your bizarre claim that our federal agencies are not audited...
Since you seem interested in the Fed, why not start your reading with Joseph Wang's wonderful book just out. Wang was(is?) a trader on the NY Fed's Bond Desk. His book is right up to date and his writing is clear and to the point.
Now for the question of why the U.S. was forced to go off the gold standard in 1971. ( For background I suggest
https://www.federalreservehistory.org/essays/gold-reserve-act )
In the opinion of Fed Governor Eugene Meyer (1930-33) it was Roosevelt's gold program that took the U.S. off its then existing gold standard -- an absolute necessity in my opinion!. Roosevelt's program was formalized in 1934 with the signing of the Gold Reserve Act -- it actually began to be implemented in 1933. This Act is relevant to your interests. It was the 1934 Act, plus other banking acts passed in the 1930's, that wrested control of the Federal Reserve System from the private banks and placed it where it had always belonged with the Federal Government. It is true, that as originally enacted by Congress in 1913 -- a reincarnation, as it were, of previous short-lived U.S, "Central Banks" -- the Federal Reserve System, always a creature of Congress, was "private". However that arrangement ended with Roosevelt. Today's Hybrid Fed Structure is thoroughly under Federal Control via the Fed's appointed Board of Governors, and the Board's FOMC,
Federal Open Market Committee. (Note carefully the underlining!) On the Board of Governors website, Federal Reserve.Gov, you'll find the Federal Reserve System described as having a "Hybrid Structure." Bankers drawn from Private Banks manage the day to day running of the Fed's Branch Banks, which are relics of the old private Fed and have .ORG net addresses. Any profits, however, generated in the Fed system flow back to the U.S. Treasury;
not to Private banks.
Now to your question, or should I say, demand!. In 1944 the allied powers met and decided on a mechanism to establish currency exchange rates. The system eventually settled on was one in which nations would deposit their gold with the U.S. Treasury and the U.S. would agree to redeem U.S. Dollars held by foreign Central Banks at $35.00 per Oz. All the other currencies would be valued relative to the U.S. Dollar according to an agreed upon mechanism. (This $35 value was the same dollar vs. Gold value established in the 1934 Gold Act that devalued the previous Gold Standard dollar, preferred by the private banks of the day, by ~60%.) To carry out Roosevelt's New Deal it was essential to unleash the dollar from the absurd confines of the gold standard. Thus the 1934 Gold Act necessarily took away the private, for profit banks power over the old Federal Reserve. Had this not been done, private bank control over the Fed would have locked the country into a depression for the foreseeable future without any light at the end of the tunnel.
A gold standard like that
re-adopted at Bretton Woods in 1944 requires that the quantity of gold backing dollars be adjusted according to the number of dollars issued; every additional 35 dollars supplied required that an additional oz of gold be either encumbered or acquired. But where will additional gold come from. If dollars are printed without additional gold being acquired the dollars purchasing power will decline. If no dollars are printed and the demand for dollars increases, as it must over time because of the growth of populations and economies, then the dollars purchasing power will appreciate, prices will deflate, and real interest rates will rise.
In principle, more gold can come from the printing of gold certificates and the use of these certificates to purchase the gold. Now there are more dollars in the form of certificates in circulation and sufficient gold backing them. But those dollars enter the economy in the hands of the suppliers of gold and it will be some time before they circulate, according to their velocity, in the general economy ; a cumbersome, impractical and unsatisfactory mechanism. And if the the gold certificate is redeemed rather than circulated, the process is reversed. Alternatively, this problem can be circumvented by purchasing gold with newly printed, non-redeemable dollars. But even then the problem of the money not arriving directly where it is needed remains. And what if there is an insufficient supply of gold to satisfy the demand for more dollars? Could we expect to always go on acquiring more gold at a constant $35/Oz.? Hardly! (As a practical matter the price of gold has to be discounted as there are costs associated with carrying out the overall scheme including the printing and distribution of money.) Furthermore, the U.S. under the Bretton Woods arrangement was obligated to supply other countries with enough dollars to carry on international trade; trade that was growing rapidly.
It was less than 13 years after Bretton woods was fully implemented in 1958 (I believe)-- an insanely archaic and impractical system for any economy running on fractional reserve banking and credit -- that the entire system began to collapse, exactly as Keynes, in 1944, predicted it would. By 1971 the French Central Bank was redeeming dollars for gold at $35/Oz like hot cakes at the U.S. Treasury while elsewhere gold was selling for $40/Oz. Yikes! Of course the U.S. had no choice but to let the dollar float and stop redeeming at below market rates.
Today no one has since been able to propose a practical commodity based currency that can meet the requirements of a modern credit based economy. Fiat money eliminates the problems associated with commodity linked money. It is flexible and
it is fundamentally backed by the sovereign issuer's power to tax and the productivity of its linked economy. These are the fundamental factors which undergird open market demand for a sovereign's currency. Of course, just as with a commodity linked currency, there are real constraints that must be paid attention. But these constraints are no where near as debilitating to an economy as the constraints that attend archaic, commodity based currencies.
Central banks do not own much real estate or means of production.... so why the hell most of them do NOT own 100% fiat currencies but put that damn gold in their vaults? It is costly to guard and protect..... Why German central bank has over 70% of its reserves in gold? Why not zero %? 