The United States has a printing problem, and that problem is now beginning to cause ripple effects that touch every individual across the globe who deals in Dollars.
This isn’t a single person or party’s fault though, every president and Congress going back to Richard Nixon, who removed us from the gold standard, has played a role in increasing our reliance on fiat currency in order fund our entitlement state, the military industrial complex, and bailouts of banks who otherwise should have been allowed to fail.
During times such as these, you’ve probably heard people talking about Bitcoin and other cryptocurrencies as the alternative solutions to many of our monetary problems. You may have even seen some politicians talk about taking us back to the gold standard, especially as countries such as China and Russia are now exchanging gold for natural resources instead of doing so in Dollars.
So what is the gold standard? Why is it so heavily criticized and could it even help improve things if it were brought back today?
Going back to the gold standard would be the single biggest thing Congress can do to help the middle class in America to solve the double problem of inflation and job offshoring.
— Rep. Paul Gosar, DDS (@RepGosar) May 26, 2023
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Why Critics Hate the Gold Standard
Fiat money supporters such as progressive economist Paul Krugman have long said that the gold standard was more hassle than it was worth, meaning that ditching it when we did more than half a century ago left us off better longterm (despite the fact that everything shows we’re far, far worse off). While the gold standard has been romanticized for its perceived stability by libertarian economists and so-called “gold bugs” like Ron Paul and Peter Schiff, there are solid sounding arguments that appear to make it seem like an outdated and impractical monetary system.
For those who embracing fiat currency such as we have now, they claim that it offers numerous advantages, including flexibility in monetary policy, economic growth, and the ability to respond to the demands of a modern global economy.
One of the key drawbacks of the gold standard critics claim is its inflexibility in responding to economic fluctuations. The fixed supply of gold limits the government’s ability to print money during periods of recession or financial crisis. In contrast, fiat currency allows for greater flexibility, enabling central banks to adjust interest rates, implement quantitative easing, and employ other measures to stabilize the economy and mitigate the impact of economic downturns.
While the gold standard is often praised for its stability, fiat proponents claim that it is vulnerable to deflationary pressures.
Overall, critics claim that a gold-backed currency falls short in addressing the complexities and demands of the modern global economy.
What if I told you that the reason that the governments ended the gold standard was not that it failed, but that it was too successful?
It doesn’t allow for cheating. If you cheat, people just pull their money out. Governments wanted to disenfranchise the savers.
— Keith Weiner (@RealKeithWeiner) May 26, 2023
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Why Was the Gold Standard So Resilient?
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