re: #551 karmic_inquisitor

BTW - the greatest harms from going to an asset backed currency come from shrinking the economic capacity (although fundamentalists would argue that prevents speculation) and providing foreign debt holders a means of redeeming the debt instrument in a way that does not contribute to the domestic economy.

On that last point think about this - someone holding a treasury bill overseas paid for that note with US Dollars. How did they get those dollars? Usually through selling something they made to an American, who paid in dollars.

If that person holding those dollars wants to get value for them as it stands now, they’d need to buy something using those dollars. Theoretically that means that (ultimately) those dollars will be spent in the US (you can buy oil from Saudi Arabi in dollars, but now the Saudi’s have to spend the dollars).

If you let that person instead redeem those dollars for gold, then no new economic activity results.

If you are debtor nation (we are) going to a gold standard will quickly deplete your gold supply.

It also opens the door to all kinds of economic mischief that is impossible to control. Like an unfriendly nation hoarding gold, or dumping vast amounts onto the market, essentially gaining control over the value of your currency and leaving you with nothing that can be done about it.

Here’s a summary that lies at the core of all gold standard booster’s argument: the US was on the gold standard in year [x]; things were better in year [x]; going back on the gold standard will make things just like they were in year [x].

That’s as deep as it ever seems to get.