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Peter Schiff - The Gold Standard Gets Another Look

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August 29, 2012 – Comments (8)

As Republicans convene in Tampa to nominate Mitt Romney and hammer out their party platform, one of the planks that could attract the most attention is the Party's official position on the gold standard. As it is now being considered, the platform stops short of recommending a return to the gold standard, but does advocate a commission to consider the possibility. However, judging by the reaction with which many Republicans have greeted the idea, one would think that the platform might as well have called for the return of slavery. 

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8 Comments – Post Your Own

#1) On August 29, 2012 at 7:26 PM, awallejr (81.55) wrote:

". . . America has become the world's largest debtor nation and is now teetering on the brink of financial ruin."

Maybe in fall of 2008 we were but I certainly don't see that to be the case now. Personally I think going on a gold standard is silly because all you do is shift the wealth into the hands of the gold miners and the countries with the most mines.

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#2) On August 29, 2012 at 11:19 PM, MoneyWorksforMe (< 20) wrote:

 @ awallejr

"Personally I think going on a gold standard is silly because all you do is shift the wealth into the hands of the gold miners and the countries with the most mines."

This is a ridiculous and very common misconception. Gold, under a gold standard has no use-value. It is strictly treated as money. As such, gold would be used to purchase goods that have use-value. A country that contains mines, may have a prodigious amount of gold, but gold has no use-value. If gold is used to purchase goods with use-value then it can be said that X amount of a good with use-value is worth Y amount of gold. i.e. a country's ability to produce goods with use-value is a measure of wealth. A country that just produces gold, but cannot produce any goods with use-value will be forced to export its gold in exchange for products with use-value to survive. A country who relies on others to produce goods with use-value is not only a weak country, but a very vulnerable one, as we all know, mines don't last forever, and the more they mine, the less each oz. of gold can buy.

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#3) On August 29, 2012 at 11:44 PM, awallejr (81.55) wrote:

Not true.  You can't expand the money supply without increasing the gold you hold.  Who said other countries only produce gold?  They aren't even on the standard.  You peg the US dollar at say $1,500 per ounce, but South Africa wants $2,000 an ounce for their gold. You won't buy, India will. And then what about the private gold mines in the US?  You nationalize them?  You force them to sell  to the US for $1,500 an ounce when they might be able to get $2,000 an ounce elsewhere? So the money supply is dependent upon the availability of gold?

The world has been buying our Tbills because they have faith in our currency.  S&P lowers our rating and Tbills are in greater demand.  Why should a country bind it's growth to the scarcity of some mineral? I'm sorry, it is silly in my opinion.

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#4) On August 30, 2012 at 8:45 AM, MoneyWorksforMe (< 20) wrote:

 First. I'm going to start by saying you need to do your own due diligence and read up on how a gold standard actually works. Most, if not all of your questions could be answered with a quick internet search...

 "You can't expand the money supply without increasing the gold you hold." You peg the US dollar at say $1,500 per ounce, but South Africa wants $2,000 an ounce for their gold. You won't buy, India will."

South Africa isn't the only country that owns/produces gold. And the price of gold is dictated by the demand for money. Trade surplus and trade deficits would still exist and they could easily be resolved by increasing/decreasing the amount of gold in reserve.  

"Who said other countries only produce gold?"

You're not understanding my point. The U.S. is --and would be under a gold standard-- the wealthiest country because of its ability to produce use-value goods, NOT gold

 "The world has been buying our Tbills because they have faith in our currency.  S&P lowers our rating and Tbills are in greater demand."

You have the fed overtly propping up treasuries, and speculators predicting they will continue to do so and you think current prices reflect real levels of supply and demand? Negative real rates....Let me give the government money so I can receive a guaranteed loss...That's funny...

"Why should a country bind it's growth to the scarcity of some mineral? I'm sorry, it is silly in my opinion."

Because a gold standard imposes restrictions on politicians' ability to SPEND. You cannot trust politicians to make the right decisions for the long term fiscal health of our country without a gold standard.

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#5) On August 30, 2012 at 9:00 AM, outoffocus (23.09) wrote:

In other words, it doesnt matter if you hold all the gold. Eventually you (the country) will need to trade that gold for things that actually matter. Otherwise you are a hungry country with alot of gold...

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#6) On August 30, 2012 at 9:01 AM, outoffocus (23.09) wrote:

Its the old "if you are locked in a bank vault you are a millionaire" analogy.

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#7) On August 30, 2012 at 7:19 PM, awallejr (81.55) wrote:

There is nothing to look up since there is only really one argument for it whch you stated succinctly here:

"Because a gold standard imposes restrictions on politicians' ability to SPEND."

That is it in a nutshell since they can't spend without a corresponding increase in vaulted gold.  Since the rest of the world isn't on a gold standard putting us on it is just silly since gold valuations with fluctuate within all the other nations.

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#8) On August 30, 2012 at 7:22 PM, awallejr (81.55) wrote:

with=will

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