Fiat currency and the Gold Standard
By historical definition currency has either been backed by an asset (i.e. gold) or backed by government guarantee in credit, which is essentially just promise of value. Money being backed by gold or other assets has consistently retained its value and inflation rate. On the other hand, “fiat currency” (money not guaranteed in value by physical commodity) has shown to be more elastic to cater to economic needs. There are cons as well: gold is a very scarce resource. When the world relied on the gold standard, the countries with large reserves of gold prospered while the developing nations fell behind because they lacked gold. Fiat currency is no saint in the matter of our economy either. It has been manipulated …show more content…
Financial analysts think it foolish to intertwine gold into U.S. monetary policy because they ignore the facts. Fiat currency does have its advantages (mainly in assisting government and corporations). It also helps finance small business with loans and FDIC insurance in the event that the owners lose their bank savings. Social programs flourish, and so do struggling communities with government aid and taxpayer funding. But why devalue our money with unnecessary printing when we can strengthen it with a commodity that we already have? The United States Treasury Department holds 11,041,059,958.46$ in gold, enough to finance a return to the Bretton-Woods agreement. In addition, gold prices are strong and stable above 1,000$ per oz. That will keep the dollar’s purchasing power stable. The only obstacle that we would face prior to readopting the gold standard would be surmounting the national debt of 18,000,000,000,000$. We know the advantageous nature of gold, we’ve seen it throughout history and we’ve also experienced the economic decline of the fractional reserve banking system. The benefits include more value/less inflation, lower unemployment rate, and higher GDP. Under this system, there is less cash available to finance fraudulent wars and no chance for giant corporations like Fannie Mae/Freddie Mac and Citi group to be bailed out due to their fraudulent practices. Purchasing power of the dollar will increase with time, the consumer price index will improve, and wages will correlate to the cost of living. You’re probably asking: “Why haven’t we returned the gold standard already?” It is because, fiat currency allows for indefinite credit expansion and inflation, all while placing the burden on taxpaying
By historical definition currency has either been backed by an asset (i.e. gold) or backed by government guarantee in credit, which is essentially just promise of value. Money being backed by gold or other assets has consistently retained its value and inflation rate. On the other hand, “fiat currency” (money not guaranteed in value by physical commodity) has shown to be more elastic to cater to economic needs. There are cons as well: gold is a very scarce resource. When the world relied on the gold standard, the countries with large reserves of gold prospered while the developing nations fell behind because they lacked gold. Fiat currency is no saint in the matter of our economy either. It has been manipulated …show more content…
Financial analysts think it foolish to intertwine gold into U.S. monetary policy because they ignore the facts. Fiat currency does have its advantages (mainly in assisting government and corporations). It also helps finance small business with loans and FDIC insurance in the event that the owners lose their bank savings. Social programs flourish, and so do struggling communities with government aid and taxpayer funding. But why devalue our money with unnecessary printing when we can strengthen it with a commodity that we already have? The United States Treasury Department holds 11,041,059,958.46$ in gold, enough to finance a return to the Bretton-Woods agreement. In addition, gold prices are strong and stable above 1,000$ per oz. That will keep the dollar’s purchasing power stable. The only obstacle that we would face prior to readopting the gold standard would be surmounting the national debt of 18,000,000,000,000$. We know the advantageous nature of gold, we’ve seen it throughout history and we’ve also experienced the economic decline of the fractional reserve banking system. The benefits include more value/less inflation, lower unemployment rate, and higher GDP. Under this system, there is less cash available to finance fraudulent wars and no chance for giant corporations like Fannie Mae/Freddie Mac and Citi group to be bailed out due to their fraudulent practices. Purchasing power of the dollar will increase with time, the consumer price index will improve, and wages will correlate to the cost of living. You’re probably asking: “Why haven’t we returned the gold standard already?” It is because, fiat currency allows for indefinite credit expansion and inflation, all while placing the burden on taxpaying