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Can Gold Serve Humanity Better Than Fiat Currency?

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Mr Schultz, in the following article, appears to think so.

http://www.fame.org/HTM/Harry%20Schultz%20...20re%20gold.htm

Here's an extract:

"I am pro-gold regardless of the price! I don’t fight for gold in order to make a profit on gold shares, bars or coins! Gold is important for far more important reasons and I would be embarrassed to promote gold only for monetary gain. Gold is the essential linchpin for our individual (not group or nation) freedom. Gold belongs to the monetary system as a governing factor. We belong back on the gold standard".

Some interesting questions arise out of this article. Would the rate of human achievement be any less if the currency was backed by gold? Was the British pound always backed by gold until fiat currency was established?

Is there any nation which still has a currency backed by gold?

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Ambitious of you to open the topic. The short answer is "nobody knows", because we can't make like for like comparisons. Niall Ferguson discusses the gold standard in The Cash Nexus, but does not really reach any conclusions.

The UK was on the gold standard from 1717 (when its inventor Sir Isaac Newton put us on it) until about 1914. We nearly lost it in the Napoleonic Wars, but the debt was not so large that it could not be overcome. They tried to get back onto the gold standard after the FWW but they just couldn't do it.

I doubt this question could be answered decisively enough to get a clear answer one way or the other. Perhaps the best system is simply a greater recognition of gold as a world currency, rather than a freakish relic. I can foresee the gold price being announced on the BBC after the news along with the FTSE, Dow and NIKKEI. This will be a useful signal to the "peepill" about the real value of their currency and the temper of current affairs.

The main problem with going back to the gold standard now is that most central bankers have been getting rid of the stuff over the years. Even the canny Swiss have sold half their sovereign holding of gold. How could states ever buy enough back to base their currencies on? I don't see how they could, unless the Olduvai Theory comes true and we revert to absolute feudal tyrannies.

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Ambitious of you to open the topic. The short answer is "nobody knows", because we can't make like for like comparisons. Niall Ferguson discusses the gold standard in The Cash Nexus, but does not really reach any conclusions.

The UK was on the gold standard from 1717 (when its inventor Sir Isaac Newton put us on it) until about 1914. We nearly lost it in the Napoleonic Wars, but the debt was not so large that it could not be overcome. They tried to get back onto the gold standard after the FWW but they just couldn't do it.

I doubt this question could be answered decisively enough to get a clear answer one way or the other. Perhaps the best system is simply a greater recognition of gold as a world currency, rather than a freakish relic. I can foresee the gold price being announced on the BBC after the news along with the FTSE, Dow and NIKKEI. This will be a useful signal to the "peepill" about the real value of their currency and the temper of current affairs.

The main problem with going back to the gold standard now is that most central bankers have been getting rid of the stuff over the years. Even the canny Swiss have sold half their sovereign holding of gold. How could states ever buy enough back to base their currencies on? I don't see how they could, unless the Olduvai Theory comes true and we revert to absolute feudal tyrannies.

Would they actually have to buy any though? All they have to do is divide the fiat money supply by the number of ounces held to calculate the value of that currency in ounces. It would certainly make gold an extremely valuable store of wealth, but then isn't that the point? We will never again see £1=0.2354oz, but perhaps £1=0.00002354 ounces.

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That's like asking can freedom serve humanity better than serfdom?

It depends on your position in the welfare state.

Gold and

Economic

Freedom

By ALAN GREENSPAN

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense-perhaps more clearly and subtly than many consistent defenders of laissez-faire-that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

....

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

Gold and Economic Freedom by Alan Greenspan

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My young years, in comparison to Mr Schultz, makes it difficult to relate to his view that gold is more than monetary value. In my eyes that's all it will ever be. It is simply a stock to invest and retain value or sell when the time is right. The days of gold serving as a moral standard have long gone. I can say that because I have never experienced a true loss of wealth, neither personally or as a citizen of a nation. However, I can't say this gives me confidence. In truth, it makes me anxious. Why? There is some truth when Mr. Schultz says that the ills of this world have been exacerbated by the invention of fiat currency.

As to Greenspan being an advocate of the gold standard, this appears to be an ideal he has forgotten since his formative years.

http://www.mises.org/story/1985

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
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      • up 5%



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