The Pros And Cons Of The Gold Standard

1761 Words 8 Pages
Alexis Villarreal
Prof. Matlock
English 1302
12 August 2015

Gold Standard Gold has been admired and criticized throughout the centuries. There has been many unimaginable commodities like stones, pottery, tobacco, and after many errors of the wrong one, human kind embraced Gold. People did not randomly adopt Gold; it was rare, dense, shiny and easily identifiable. Even nowadays all people go crazy for a piece of gold, and would even kill. The gold standard would open up opportunities for the United States which is why it’s back into debate. Transitioning to the gold standard would stabilize the monetary system, limit the federal reserve from printing irrational amounts of money, and clear issues of inflation.

In the earlier years, the
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What people do not understand is that if gold is used as a currency, prices will remain stable over time. Suede explains this: “The purchasing power of gold does not fluctuate wildly because the supply cannot fluctuate wildly” (Suede 1). With fiat money, we can see that the money supply fluctuates greatly and prices are never stable because the Federal Reserve keeps printing out more money causing inflation and raising interest rates as well. With the gold standard, the value and power of gold blows the value of the dollar out of the water. Over time, we can see improvements in the economy and our debt may even decrease along the way. The main reason the government does not want this type of monetary system, is because it will limit them in how much they can spend because then they cannot rely on printing more money for them to spend. People may also think that with gold in the system, people will hoard their gold and the amount of money that is available will go down meaning that the prices will go down, as well causing deflation. However, reduction in prices are very good for the consumers. Suede says “I don’t know about you, but when prices fall, I tend to buy more goods, not less. It doesn’t take a rocket scientist to understand that falling prices are always beneficial for consumers” (Suede 1). If people buy more goods that means the deflation that is happening will dissipate after the mass amount of consumption because of the low prices, therefore both the producer and the consumer are both happy because it benefits them both. If we go back to the barter system in which we trade goods without the use of money involved it would be very beneficial economically. Philosophical Economics describes this as: “In a barter economy, certain commodities will come to be sought after not only because they satisfy the wants and needs of their owners, but also because they are durable and

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