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Posted on 10/1/26 at 1:22 pm to WylieTiger
You lost me.
Posted on 10/1/26 at 1:23 pm to BoarEd
quote:
At any rate, this seems to be the direction they're moving in
I disagree. This administration might be kicking it around, but it does not appear to have much of a chance. If it did we would see gold prices shooting up, because the US’ one trillion dollars of gold won’t do the job.
Plus there are some huge problems with being on a gold standard. We would be very limited on how we could get out of recessions. The nice thing about it is that it imposes some discipline on our fiscal management and deficits.
Posted on 10/1/26 at 1:23 pm to PANTHER
Reasons why the gold standard is a bad idea:
1) Under a gold standard, a central bank cannot adjust the money supply to respond to economic conditions.
2) Economic output grows through population growth, technology, and productivity. If the money supply is fixed to gold production—which grows slowly at around 1% to 2% per year—the supply of money cannot keep pace with economic growth. You're basically strangling your economic growth just so you can adhere to the gold standard.
3) A gold standard does not guarantee price stability. The value of money becomes dependent on the supply of gold, leading to unpredictable inflation or deflation spikes.
4) Countries with large natural gold resources can manipulate the economies of countries without such a natural supply. China and Russia have large natural gold reserves which sucks for the rest of us.
5) The total size of global economic trade and financial assets vastly exceeds the physical value of all mined gold on Earth. You would have to either set the price of gold to some ungodly amount per ounce (tens of thousands of dollars per ounce) or you would have to shrink the money supply to match gold supplies. This risks triggering a massive depression.
6) It doesn't stop governments from overspending as some think. Britain was on the gold standard in the 18th and 19th centuries yet still ran up massive government debt. At one point their debt was 200% of the GDP.
7) Governments can break the rules. In wartime or severe panics, politicians can suspend the gold standard, nationalize private gold, or revalue the dollar-to-gold ratio overnight to print the money they need.
8) The gold standard is why the 1929 recession turned into a Great Depression. The UK abandoned the gold standard in 1931 and recovered much faster than gold standard countries like the U.S. and France.
9) The reason Nixon got us off the gold standard in the first place is because Bretton Woods agreement tied gold to the U.S. dollar. This resulted in countries making runs on our gold reserves by the 1960's. France famously gave us a bunch of cash (US dollars) and shipped 3,000 tons of gold to France. The UK said they were going to do the same, as did other countries. Nixon had no choice but to take us off the gold standard.
1) Under a gold standard, a central bank cannot adjust the money supply to respond to economic conditions.
2) Economic output grows through population growth, technology, and productivity. If the money supply is fixed to gold production—which grows slowly at around 1% to 2% per year—the supply of money cannot keep pace with economic growth. You're basically strangling your economic growth just so you can adhere to the gold standard.
3) A gold standard does not guarantee price stability. The value of money becomes dependent on the supply of gold, leading to unpredictable inflation or deflation spikes.
4) Countries with large natural gold resources can manipulate the economies of countries without such a natural supply. China and Russia have large natural gold reserves which sucks for the rest of us.
5) The total size of global economic trade and financial assets vastly exceeds the physical value of all mined gold on Earth. You would have to either set the price of gold to some ungodly amount per ounce (tens of thousands of dollars per ounce) or you would have to shrink the money supply to match gold supplies. This risks triggering a massive depression.
6) It doesn't stop governments from overspending as some think. Britain was on the gold standard in the 18th and 19th centuries yet still ran up massive government debt. At one point their debt was 200% of the GDP.
7) Governments can break the rules. In wartime or severe panics, politicians can suspend the gold standard, nationalize private gold, or revalue the dollar-to-gold ratio overnight to print the money they need.
8) The gold standard is why the 1929 recession turned into a Great Depression. The UK abandoned the gold standard in 1931 and recovered much faster than gold standard countries like the U.S. and France.
9) The reason Nixon got us off the gold standard in the first place is because Bretton Woods agreement tied gold to the U.S. dollar. This resulted in countries making runs on our gold reserves by the 1960's. France famously gave us a bunch of cash (US dollars) and shipped 3,000 tons of gold to France. The UK said they were going to do the same, as did other countries. Nixon had no choice but to take us off the gold standard.
Posted on 10/1/26 at 2:33 pm to Kjnstkmn
Here are few reasons why returning to the gold standard doesn't make modern sense. The total value of all mined gold on Earth is roughly $29 trillion with current Oct 1 2026 spot prices. According to projections, that is already less than the 2026 annual GDP of the US at $32.4 trillion and only a small fraction of the total world GDP at $126.3 trillion. Tying the currency to a finite physical metal would severely strangle the money supply. This may sound positive at first...
On top of that, the world’s gold supply only grows by about 0.9% to 1.5% per year through mining. That does not keep up with global economic growth, which moves ahead at roughly 3% annually. Forcing a gold standard would limit economic growth and trigger massive deflation, which historically destroys jobs and investments. The only way it works is if the price of gold is artificially inflated to an extreme degree. This would create a highly profitable grift for people who own large amounts of gold or sell it for a living but not really a good idea at large.
At the end of the day, modern economies are driven by productivity, innovation, technology, and services rather than physical commodities. Basing a currency on gold is no more logical than basing it on a basket of copper, wheat, oil or rainbow stew.
While owning gold as a personal asset for safety is fine, and even financial institutions like Morgan Stanley for example recommend roughly a 10% to 20% gold allocation for the purpose of shielding portfolios. But treating it as the foundation for the US or the entire global economy is a fundamentally flawed idea.
On top of that, the world’s gold supply only grows by about 0.9% to 1.5% per year through mining. That does not keep up with global economic growth, which moves ahead at roughly 3% annually. Forcing a gold standard would limit economic growth and trigger massive deflation, which historically destroys jobs and investments. The only way it works is if the price of gold is artificially inflated to an extreme degree. This would create a highly profitable grift for people who own large amounts of gold or sell it for a living but not really a good idea at large.
At the end of the day, modern economies are driven by productivity, innovation, technology, and services rather than physical commodities. Basing a currency on gold is no more logical than basing it on a basket of copper, wheat, oil or rainbow stew.
While owning gold as a personal asset for safety is fine, and even financial institutions like Morgan Stanley for example recommend roughly a 10% to 20% gold allocation for the purpose of shielding portfolios. But treating it as the foundation for the US or the entire global economy is a fundamentally flawed idea.
Posted on 10/1/26 at 2:37 pm to Kjnstkmn
How are we going to return a gold standard when at the same exact time Trump is upset with the Fed because they have higher rates due to the inflation?
That doesn't make sense.
That doesn't make sense.
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