The Gold Standard in Theory and Myth (by Joseph Salerno)

More videos about money at: http://vforvoluntary.com/money

The final lecture in a series of ten, presented at the "Austrian School of Economics: Revisionist History and Contemporary Theory" seminar, hosted by the Mises Institute. 06/10/2005

http://www.mises.org/

LUDWIG VON MISES INSTITUTE - CREATIVE COMMONS ATTRIBUTION 3.0

Category:

Education

Tags:

• gold
• standard
• myth
• inflation
• deflation
• central
• bank
• fed
• money
• currency
• purchasing
• power
• trade
• savings

[tetleydidley]

from what i understand, there is but one difference between the gold standard and the somewhat-permanently-constrict­ed-supply-of-paper-money-unbac­ked-by-commodity. No matter how advanced the technology is for extracting gold, paper money is much easier and cheaper to produce. So why even bother to move back to the gold standard?

[Nielsio]

@tetleydidley If you want to hold your wealth in a purely paper currency, go for it. Do you allow me the same freedom to not do so? (un-taxed and un-regulated)

[jccusell]

Ben Bernanke missed this class.

[buznee17]

@tetleydidley Because the fed controls the money supply and therefore the value of money by printing and removing money from the market.

With the gold standard, the market would control this based on the supply of gold which the FED can't create. This follows the philosophy of free economics.

[TheBalancedAmerican]

13:49 Economies of scale make sense to me in the manufacturing sector. But if the service sector wants to increase output, they must increase wages and costs, so they don't benefit from any cost reductions. Since 75% of our economy is service-based, wouldn't that suggest that a slow rate of inflation would be necessary with a growing population and growing economy?

The alternative is to see wages decline along side prices to maintain profitability, and this incentives passive savings, yes? =/

[TheAfroCapitalist]

@pftyea Very flawed analysis; shows you do not understand monetary economics. Money does arises from indirect exchange as a commodity outcompete others into becoming the most valuable media of exchange. Gold measurements have developed from its " weight" into its state in the indirect exchange market up to the formation of coins. Rather than being arbitrary as you state, the gold contain is the byproduct of historical evolution and conformity through time!

[pftyea]

The gold value of a gold-backed dollar is arbitrary for the intents and purposes of the needs of the economy. Just because it wasn't pulled out of a hat by a politician or bureaucrat, doesn't mean you can't call it arbitrary. It is influenced by factors that have nothing to do with the state of the economy, so it's arbitrary.

[tjtomkins]

@reefpirate

"Unbacked paper currencies are backed by trust in the printer not printing too much. The problem is that they often print too much sooner or later."

Well said "trust in the printer" lmao

Bear in mind though, that most of the money today isn't even printed, they just put a couple of numbers on a computer & VOILA new money & as you've said, anyone who has power to issue money will keep issuing it, he gets goods/services virtually for free by STEALING others' purchasing-power

[tjtomkins]

@Raphael2885

"be back to printing our own money anyhow"

Gold can't be printed. There needs to be freer exchange between gold, which wasn't until PHONY "gold-standard" world had until 1971. FDR ROBBED American people's gold & banned it so people couldn't exchange it when govt & banks starting printing.

If there's free exchange then people will cash in gold as soon as govts & banks start inflating, which be a CHECK against govt & banks printing more than they've gold, which was outlawed back then

[tjtomkins]

@Raphael2885

"keeping our inhouse manufacturing too costly while zealously buying cheap imported goods, we will dole out any gold we have to other nations"

Please refer to my earlier post, we just won't be able to import forever under gold-standard because gold flow out to them & since there goldsupply increases, their stuff will cost more & our local stuff will become cheaper for us. Right now, we're simply borrowing money from the "future" & putting future generations in perpetual debt

[tjtomkins]

@nivekvb

"As the USA buys in more than it sells surely the Chinees will eventually owning all the gold"

When we buy our gold goes out & they've more which means our goods/services become cheaper for them to buy so they'd be able to buy more from us while their goods/services become costlier for us so we'd buy more locally since local goods/services would become cheaper & so on until the prices between the countries reach equilibrium by them buying stuff from us & gold comes back