Hafma
You did not give one single solitary reason why a return to gold would be beneficial. The silly 'don't get offended but' did not include any argument.
Ok, in simple terms.
Gold is extremely durable, extremely divisible, reasonably rare (actually it increase in supply at about 3% a year, coincidentally matching natural population growth)
There are several different types of Gold Standard, full backing, partial backing (historically a backing of 40% is sufficient), Gold exchange standard, etc...
The Gold Standard can be occasinally disruptive only when associated with the fraudolent practice of fractional reserve lending (the banking system we have today where banks create credit in multiples of their real reserves on hand), a legally authorized ponzi scheme which is destined to collapse regularly and it is the root cause of the economic cycle.
The Gold Standard works very well with full reserve lending.....even with the flawed fractinal reserve lending shceme, the classic Gold standard of the second half of the 19th century up to 1914, on the eve of WWI, worked almost perfectly, crisis were rare, painful at times and very short (fault of the fractional reserve banking), nobody got bailed out, we had mild deflation results which is the natural state of the economy with a robust and rising productivity.
Remember, countries that wanted to go to war, the first thing they did was suspending gold convertibility and imnposing price control and shortages on its citizens inflating the money supply.......people that are really for peace and an environmentally sustainable world should support the gold standard...it prevents overconsumption and out of control, frivolous military spending (sounds familiar??)
Gold as monetary medium with its limited supply "mimic" the limited availability of resources encouraging rational and productive use of them.
Forever expanding money suply first of all it's a mathematical impossibility in a finite world and it encourages waste, corruption, cronysm....nothing new, it has always been like that for centuries...fiat currencies are not the invention of the last 40 years.....Voltaire once famously said "Paper money always returns to its intrinsic value...zero"
The Gold Standard, especially coupled with full reserve banking, makes the financial sytem extremely stable and robust, crisis are extremely rare and brief, balance of payments unbalances between countries are impossible or short lived.
You know why you never heard of the depression of 1921?? (peak-to-through decline was worse than the great depression) Because within 18 months was all over, the the economy got back to full employment, nobody got bailed out, money supply was steady and the government balanced the budget.
Since the de-linking of gold in 1971, the world has seen financial crisis of increased frequency and magnitude and most of the income and wealth gains have been increasingly concentrated at the top.......and this has always been the case with fiat currency regimes in the history of the world.
Some of these "economists" will tell you that the gold standard would "choke" innovation....a bunch of bollocks, both under the classic Gold Standard of the 19th century and the Bretton Woods Gold exchange system (which lasted until 1971) the world as seen a burst of innovation never experienced before....airplanes, cars, electricity, electronics, computers, nuclear energy, the agriculture revolution, medicine, the space program, the internet, etc...the industrial revolution happened under the silver and gold standard.
I don't know of a single respectable academic economist (although, granted, that is not saying much), either a public figure or a professor I had, that believed that the benefits of a gold standard outweigh the costs.
Ok let's play the game...a little dose of reality here....just to mention few..
Recent study of the Bank of England, not some crazy gold bugs
"Reform of the International Monetary and Financial System"
http://www.bankofengland.co.uk/publications/Documents/fsr/fs_paper13.pdfSome quotes: "The incidence of banking crises in the non-gold-standard period is higher than the incidence in the two gold periods."
"Overall the gold standard appeared to perform reasonably well against its financial stability and allocative efficiency objectives,”
Robert Zoellick, former president of the World Bank....not your average nutcase
"Zoellick seeks Gold Standard debate"
http://www.ft.com/intl/cms/s/0/eda8f512-eaae-11df-b28d-00144feab49a.html#axzz2mYHYEpDp"“The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”
"“Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.”
Robert Barro, founder of new classical macroecononomics and Senior Fellow at the Stanford Hoover Institution
"Gold Returns" by Robert J. Barro and Sanjay P. Misra, National Bureau of Economic Research
http://www.nber.org/papers/w18759Not to mention a couple Nobel prize winners like Friedrich Hayek and Robert Mundell, father of the Euro
Robert Mundell "Gold Convertibility to save the Euro"
http://www.forbes.com/sites/ralphbenko/2011/06/13/the-emerging-new-monetarism-gold-convertibility-to-save-the-euro/...and I could go on and on....
Obviously if you follow only Keynesian economists and monetarist cranks that never see a bubble or a crisis even when it stares in their face, you will find a lot of hostility against gold...same for crony capitalist extraordinarie like Warren Buffet & Co which have all to gain from an "inflatable" money supply.
You may want to have a good laugh here watching this video where Krugman makes a fool of himself debating Ron Paul
http://www.youtube.com/watch?v=jEmKIRqz9AIOnce he lost so badly, he cried baby in his blog with a post titled "on the uselessness of debates"...what a crank..
Do some research on who pays the studies and research papers of many of these "economists".......and after that order a copy of "Currency Wars" by James Rickards, still a New York TImes best seller even after 2 years...that is a good starting point if you want to really learn about economics...once you are a bit "techied up" you can start read the blog
Zerohedge.com, hands down the best blog in finance.
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