Cut Taxes And Go Back To The Gold Standard, Says Steve Forbes

[Usui Takumi 1,562]

Thanks Sousuke. Would you please provide CNBC link. I'm curious where they got that amount. What price per ounce did you multiply?

see post 11. I was being lazy and went with their figure.

[Vi-Jay 218]

see post 11. I was being lazy and went with their figure.

OK.Thanks.

Regardless, you are correct. Reverting back to the Gold standard now, would further crush the value of the Dollar.

Edited June 23, 2011 by Vi-Jay

[Usui Takumi 1,562]

My first post was really silly. I wrote million when I meant trillion.

[Vi-Jay 218]

My first post was really silly. I wrote million when I meant trillion.

That threw me.

[mawilson 2,133]

For the US to go back on the gold standard, we'd need Alchemy and alot of lead.

Why? Our monetary base (M2 which includes all physical currency, savings and market accounts,

money market mutual funds and CDs) is only about 10 trillion dollars.

One ounce of gold costs ~$1,500.

Our M2 in gold is therefore 6,666,666,666 ounces or 188,997 metric tons.

All the gold mined by the end of 2009 totaled 165,000 tons, which is just a bit short of that number.

Global production of gold is around 2,000-2,500 tons per year.

Give it 10 years and we'll get there

[Usui Takumi 1,562]

Why? Our monetary base (M2 which includes all physical currency, savings and market accounts,

money market mutual funds and CDs) is only about 10 trillion dollars.

One ounce of gold costs ~$1,500.

Our M2 in gold is therefore 6,666,666,666 ounces or 188,997 metric tons.

All the gold mined by the end of 2009 totaled 165,000 tons, which is just a bit short of that number.

Global production of gold is around 2,000-2,500 tons per year.

Give it 10 years and we'll get there

Haha, I took this seriously for a moment then I realized your joke. You are saying the US would need to acquire the entire world supply.

[mawilson 2,133]

Haha, I took this seriously for a moment then I realized your joke. You are saying the US would need to acquire the entire world supply.

Pretty much. Either that, or wait for the price of gold to double

[Gary and Alla 3,694]

Sell all the gold in Ft Knox, a little at a time, and pay off the debt.

[SuperDuper! 230]

Per CNBC its 8,965.6 tons

Won't be worth much even if it is a million tons of salted bars....

http://viewzone2.com/fakegoldx.html

Edited June 24, 2011 by Boing!

[scandal 951]

Haha, I took this seriously for a moment then I realized your joke. You are saying the US would need to acquire the entire world supply.

The idea of returning to the Gold Standard is frankly wacko, and largely for the reasons you are suggesting. Namely that the money supply will be far too inelastic to support the growth and expansion of our modern economy.

However, I think there's a basic fallacy in your reasoning here. Namely, even when we were on the Gold standard, it did not imply that there was an ounce of gold in depositories for every note in circulation claiming to be backed by that ounce. Rather, the promise of the Gold standard is that the Treasury stood ready to redeem paper for gold to all who sought to do so. So long as you don't expect a 'run on the bank' with everyone wanting to exchange their paper for gold at once, that allows the government to circulate more paper currency than they have reserves. Hence the gold standard did not preclude having a greater float of paper currency in circulation than gold in vaults, or the selling of government bonds. In fact the US has always had a National Debt, and our first Secretary of the Treasury, Alexander Hamilton, was a great believer in the concept of using national debt to enhance liquidity in the marketplace and spur growth. Hamilton could in fact be considered the first Keynesian .

Also, while today we don't have a gold standard, we do maintain capital reserves in foreign currency holdings to serve effectively the same purpose gold did in its day, by allowing a pressure valve for those who panic and want to turn in their paper currency. What modern central banks do in such cases is to sell off foreign currency and buy back their own, helping to stabilize and squelch the panic. It's the same principle as exchange for gold but much more elastic.

[Usui Takumi 1,562]

The idea of returning to the Gold Standard is frankly wacko, and largely for the reasons you are suggesting. Namely that the money supply will be far too inelastic to support the growth and expansion of our modern economy.

However, I think there's a basic fallacy in your reasoning here. Namely, even when we were on the Gold standard, it did not imply that there was an ounce of gold in depositories for every note in circulation claiming to be backed by that ounce. Rather, the promise of the Gold standard is that the Treasury stood ready to redeem paper for gold to all who sought to do so. So long as you don't expect a 'run on the bank' with everyone wanting to exchange their paper for gold at once, that allows the government to circulate more paper currency than they have reserves. Hence the gold standard did not preclude having a greater float of paper currency in circulation than gold in vaults, or the selling of government bonds. In fact the US has always had a National Debt, and our first Secretary of the Treasury, Alexander Hamilton, was a great believer in the concept of using national debt to enhance liquidity in the marketplace and spur growth. Hamilton could in fact be considered the first Keynesian .

Also, while today we don't have a gold standard, we do maintain capital reserves in foreign currency holdings to serve effectively the same purpose gold did in its day, by allowing a pressure valve for those who panic and want to turn in their paper currency. What modern central banks do in such cases is to sell off foreign currency and buy back their own, helping to stabilize and squelch the panic. It's the same principle as exchange for gold but much more elastic.

But we did have something like 70-80% gold to currency before the 1970s in which runs began to occur.

If your suggesting we work with what we have (I'm not saying you are) it would be less than half that....thats basically fractional reserve banking.

Edited June 24, 2011 by Sousuke