If your state offered you the choice to bank in Gold rather than dollars tax free would you?

[Anonymous]

There is a growing trend among many of the united States to move away from the U. S. dollar as the only means of exchange and back toward gold & silver.

The first step is to remove all taxes on Gold and silver, something 42 of the 50 states have already done.

After that States start moving in different directions ranging chartering banks & reserves to use Gold & silver (such as Utah and Texas have done) to actually passing tender laws such as 6 states have already done

The point is it is becoming increasingly practical for American Citizens not to hold on to the inflating U. S. dollar and instead choose alternative currencies.

Would you be interested in trying this at some point?

[Soteris]

No. Its stupid. Relying on the gold/silver standard is pretty much worse than a fiat currency and was one of the causes of the great depression in the 1930's. Furthermore, countries with a lot of deficit and debt will be hit like a truck such as USA which probably can't function on a gold standard anymore. Lastly, inflation is generally a good thing if you can maintain it at around 2%, give or take.

If gold was a good alternative to money then we would still be using it all around the world. As it is, we dont and for very good reasons. Going backwards to adopt gold would only hurt us.

[Asker]

@soteris I find it hard to see how the gold standard could have had anything at all to do with the great depression of the 1930s.
Althou you are correct in that it was unconstitutionally limited by FDR out of his driving 'need' or really desire to spend far more money than the Federal Goverment could tax and thus debase our currency.
Unfortunately that is far from the only thing FDR did to rob the people of this country and prevent any kind of recovery. Like Hoover before him FDR worked tirelessly to limit and shut down economic activity. This is the only reason we never bounced back like after every other market correction.
Hoover cut off trade with the world and FDR cut off trade among ourselves along with the right to even do work in most industries.

So naturally we never recovered until FDR finally figured it out with the demands of World War 2 and started to reverse course, the conclusion of that war also reopened trade, lowered barriers to work, and created international gold standard which lasted until 1971 when we effectively ran out of gold to pay for all the reckless spending.

As for a deficit hitting countries hard that will happen regardless of gold as people simply demand more and for everything IE Inflation.

It also hardly matters what they think of our gold standard, as their own devaluing currency will still exist and we can still offer serveries for it at its then present value.
The only thing our alternative gold currency does is provide a baseline by which we will know how worthless their script is.

[Soteris]

So much here that I fundamentally disagree with but whatever. The reason the gold standard contributed to the great depression is because the best way to fight depression is to control the supply of money. Something you can't do if it is tied to your national gold reserves. Of course, there are more reasons too such as other countries using the gold reserve being unable to pay for your exports which in turn slows down your market just because they themselves dont have enough gold.

I would also like to point out that gold is also inflating/devaluing. We are mining more of it every day. Furthermore, if we ever do asteroid mining then the value of gold will become worthless. But I digress.

You dont want a currency that does not devalue at a certain rate. Money is not supposed to be saved, that is bad for the economy, it only has value when it is spent. You want people to use their money as soon as they get it which is why billionaires are such a bad sign for the economy because such a large part of your national wealth becomes stagnant in their pockets and no longer really contribute to the economic growth anymore.

You keep going on about how "worthless their script" is, but that is literally the point. Money is meant to be spent on things of actual value, both for yourself and for the economy. Money that sits still, be it in the form of paper or gold is equally worthless.

[Asker]

@soteris said: "The reason the gold standard contributed to the great depression is because the best way to fight depression is to control the supply of money. "

FDR effectively ended the gold standard on May 1st, 1933 and started "controlling" the money supply yet the depression didn't get "controlled" until after world war 2 in the 1940s. Which is odd as all prior recessions on a gold standard ended within a year or so. Indeed nearly all subsequent recession did the same. Clearly a lack of a gold standard didn't help if anything it made the problem worse. Althou his politics shutting down trade and work was far more important than a inflationary tax.

This Obama and Joe Biden redemonstrated as well in extending their respective recessions by regulations to shutting down trade and bushiness.

@soteris said: "I would also like to point out that gold is also inflating/devaluing."
I do not dispute that the available quality of gold and silver to the market is changing, that availability however is finite and its rate of change limited unlike goverment script which is really just a number, that unelected politicians and banks change at a whim.
In an ideal world we would be free to base a currency on a basket of usable items or better yet a fixed supply like script.

Unfortunately as theses things did not exist as such 200 years ago the Federal Constitutions does not protect the right of states to use them as it does Gold and Silver. Hence why Gold and silver is preferred, because Article 1 Section 10 clause 1 which prohibits states from making "any Thing but gold and silver Coin a Tender in Payment of Debts".

[Asker]

@soteris said : "You dont want a currency that does not devalue at a certain rate."
Ideally that is precisely what you want we proved that fact in the 19th century over which the currency doubled in value, and was one of the best economic periods in American history.

@soteris said: "Money is not supposed to be saved, that is bad for the economy, it only has value when it is spent. "

Money is suppose to be saved for rainy days although ti should be saved in the form of tangible investment with value. The average Joe does this mostly thou saving his money in a bank of his choice which invest for him.

Billionaires do this even better by investing most all of their money directly in businesses and stocks.

If our goverment didn't prohibit free banking the common man might have better options with his more merger savings via his bank.

[Soteris]

USA was suffering from the great depression for several years before abolishing the gold standard so it was by no means an event that followed previous historical examples in the first place and as such comparing it is dangerous because it is very easy to misrepresent.

The economy after WW2 is also incredibly different from before so there is no reason you would expect to see the same market behaviors such as an equivalent length of each depression. You are comparing apples to oranges here.

Regarding the finality of the gold/silver supply and its relations to money? I find it irrelevant quite frankly. Money, in whatever form is just there to facilitate trade of goods and services. It is not something valuable in and of itself, either conceptually nor realistically. The common saying about the value of gold and money on a deserted island where you can't eat or drink it comes to mind but beyond that the only point in which it benefits the economy is when there is a transaction. That is its one and only purpose and value in life.

[Soteris]

USA's golden age happened after WW2 and correlated more with the value and power it had secured from the conflict rather than any national effort. It was an outside influence that catapulted USA into its position as the worlds super power with all the benefits that comes with, including incredible economic potential. None of this was in large part caused by a change in the monetary policy.

As for what investments to do, it depends on what your goal is. Banks are generally a bad idea, outside of pure convenience. Stocks and such can be a good way to grow investments in a non-direct way. Otherwise you could invest it into something more concrete, such as starting a company that would give a return or something else more tangible than a share in a random company.

You might also invest in your own capabilities such as maintaining your house and car so they would not need a repair at a time where such things might not be available. You might also look for a private source for water, food and electricity. It all depends on what you are preparing for.

[Asker]

@soteris said: "USA was suffering from the great depression for several years before abolishing the gold standard"

As mentioned the abolition of the gold standard by itself did not cause the depression, goverment shutting down trade in response to a sever market correction made it very difficult to impossible to recover in short order. Other legal and regulatory changes in succession over the course of the decade each making it more and more diffiuclt and/or prohibitive to operate a business kept delaying "recovery".

I say "recovery" because technically we never recovered from theses changes, they were just priced into the cost of living we are still paying today. The period of time in which we figure out those prices and workable solutions is the reason for the delay in recovery.

[Asker]

@soteris said: "The economy after WW2 is also incredibly different from before so there is no reason you would expect to see the same market behaviors such as an equivalent length of each depression. You are comparing apples to oranges here."

As mentioned Democrats finally figure out and accepted why the economy never recovered by the early 1940s and laid into place a rollback with FDR dead if many if not most of the more damaging "reforms" under FDR starting with a reopening of trade and lowering of regulatory barriers.

This combined with fact that we had literally just bombed to oblivion most of our competitor industries created the post war boom.
A boom that faded and ended as those competitors rebuilt and our own goverment burden started to become non-competitive again.

Althou as far as the currency is concerned that really ended in 1971 as up until that time we were bankrolling the inflationary tax with our gold reserves. Reserves built up int he prior 100 years.

[Asker]

@soteris said: "Regarding the finality of the gold/silver supply and its relations to money? I find it irrelevant quite frankly. Money, in whatever form is just there to facilitate trade of goods and services."

In fractional reserve banking systems the finite supply of Gold/silver or other finite assets is only relevant in providing a baseline to limit the amount of inflationary lending and thus economic risk of said bank's loans going poorly.

Modern banking is not much more than an extension of the state at this point they are soo constrained in how they might operate by clueless politicians. This does not make said banks safe, indeed their losses are quite substantial and their fractional reserve lending the primary driving force of inflation.

The fuel of course being the dept congress has accumulated which is then used to change their expand their fractional reserve. Effectively multiplying an order of magnitude over time the number of dollars competing for goods and services.

As such inflation can be constrained by reducing the desirability of said loans in raising interest rates.

This financial scam will of course fall apart when the level of dept and interest on said dept becomes too much a burden and starts squeezing out along with goverment the people's ability to sustain themselfs.
Then things can really get out of control.

[ChillaxingLove]

In my opinion I think the USA is actually broke. I think we are just secretly printing money and going back to Gold would only expose that.

[Asker]

Hard to argue with that opinion, we can see them doing that right now.

Nonetheless many States are currently setting up the foundation to allow their citizens to use a gold and silver standard if they like.

[Agape93]

Gold only has value if it has a use. I'd rather have goods than some shiny metal that won't help me out here.

[Asker]

I don't think you quite understand what is being done. They are giving use to gold letting you store your wealth in it, and some states even making it legal tender so you can trade in it.

[Agape93]

Actually I understand full well. I have no use for gold. Gold being used as currency is a hedging against disastrous hyper inflation, as gold prices are far more stable. When hyper inflation hits, it's the start of a social collapse. So what good will my gold be? Nothing.

[jamesgoldman]

Absolutely but as a gold dealer and gold coin collector, I'm biased