The Gold Standard: What Is It & Who Cares?

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If you’re like me, you know that “they” say America needs to be on “the gold standard” and not print money like it was toilet paper. I barely understand what exactly the all important “the gold standard” is, to be frank.

It was nicely summed up in this article from The Week.

Nutshell: Because the gold supply grows slowly, being on the gold standard would theoretically keep governments from over-spending and inflation would be in check. Back in 1879, you could take an ounce of gold and receive $20.67. Now, with the “fiat” (there’s one of those terms again: defined here) money system we operate by, your dollar is not linked to any asset. Quite literally, the paper money we use is useless. (Though I disagree with their complete disregard for what they claim to be simply a “wish for simpler times.”)

Furthermore, when the government can print money at will, it’s morally identical to the counterfeiter who illegally prints currency. Fiat money polices especially hurt savers and those on fixed incomes, who find the value of their dollars steadily eroded by the Fed’s printing presses. (Source here)

Essentially, the more money you save, the less it’s worth. The harder you work, the less you have to show for your efforts.

If our money were backed by gold and silver, people couldn’t just sit in some fancy building and push a button to create new money. They would have to engage in honest trade with another party that already has some gold in their possession. Alternatively, they would have to risk their lives and assets to find a suitable spot to build a gold mine, then get dirty and sweaty and actually dig up the gold. Not something I can imagine our “money elves” at the Fed getting down to whenever they feel like playing God with the economy.

As you can see, inflation and fiat money are very seductive and beneficial to those at the top, and very dangerous to everyone else and the nation as a whole. Every country that relies too much on fiat money is ruined sooner rather than later.

There is only one possible solution to the inflation problem: Stop creating money out of thin air. But we’re already in such a mess that the only way to have a real impact on the money supply is to increase interest rates so that people pay back their loans and borrow less money from the banks, which decreases the amount of money in circulation. However, higher interest rates might very well crash the economy. So the Fed’s current “solution” to overcoming inflation is… creating even more of it.

The first step towards monetary freedom is to allow open competition in currencies. Once gold and silver are allowed as legal tender and can be sold without sales tax, everyone can use them to store their wealth and to pay for the things they want to buy. The Federal Reserve will finally have a very compelling motivation to stay honest and maintain the value of the dollar because if they don’t, they will simply lose all their customers. (Read more about Honest Money)

Representative Jason Spencer (who co-sponsored a version of the coin bill in Georgia that Utah introduced not long ago, allowing [precious] metal coins to be used as legal tender) says “Fiat currencies, if you study them through history, always end bad. What the Federal Reserve is doing with our monetary policy is catastrophic.”

“Think of it as a person with a debit card rather than a credit card. The debit card holder can only spend what he or she has in the bank,” says Mark Luschini.

What’s the answer? Be knowledgeable. Understand the terms and pay attention. I suspect that sooner or later, our generation is going to wake up and realize we’ve been dealt a bad hand by the old cronies ruling the world of finance. We need to wake up and figure out how to survive our own gray-headed years. I’m going to start by reading what kind of Gold to buy and what not to buy….


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Claire is an editor of the YoungPatriots website. A 20-something mom, her main concern is how the decisions made in government today will affect the lives of her children when they're her age. She believes passionately in a limited government, a charitable church and a peaceful personal life. In necessariis unitas, in dubiis libertas, in omnibus caritas.
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