User talk:192.162.19.21
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| - | + | Well I know that in the late 19th century (possibly the grateest economic period in American History), we had the gold standard. The main reason why the gold standard is better than purely fiat paper currency is that it cannot be subject to the whims of whoever has monopoly power over the printing press. The government can't use alchemy to inflate gold and devalue the savings of many Americans to finance wars, that's why a period of war (such as the civil war) often involves a departure from the gold standard. The gold standard won't quickly end the debt, but it will control inflation and heavily restrict government spending since the government will no longer be able to borrow money from the Fed's printing press. Also consider banking, if we had a gold standard and a person's deposit had to be backed up 100% by gold, there wouldn't any worry about a run on the bank like what happened during the great depression. People would know that they could withdraw all of their money and whenever the bank loaned someone's money, it would get that person's permission, and the person would know that X number of dollar in their account was being loaned out and would not expect to be able to withdraw it.The problem is the interest allied against this, namely the banks as well as people who want to get bank loans quickly to finance their projects. Fractional reserve banking can generate real short term wealth, but it is nonetheless fraudulent. Also, governments wouldn't be able to print the money they need so they prefer to have a fiat system. They and the people who get the new money first would benefit because the market hasn't yet caught on to the increased money supply, but by the time it trickles down to the average citizen, inflation would've sent in and the new money would do nothing to improve their buying power. | |
Current revision as of 07:08, 1 September 2012
Well I know that in the late 19th century (possibly the grateest economic period in American History), we had the gold standard. The main reason why the gold standard is better than purely fiat paper currency is that it cannot be subject to the whims of whoever has monopoly power over the printing press. The government can't use alchemy to inflate gold and devalue the savings of many Americans to finance wars, that's why a period of war (such as the civil war) often involves a departure from the gold standard. The gold standard won't quickly end the debt, but it will control inflation and heavily restrict government spending since the government will no longer be able to borrow money from the Fed's printing press. Also consider banking, if we had a gold standard and a person's deposit had to be backed up 100% by gold, there wouldn't any worry about a run on the bank like what happened during the great depression. People would know that they could withdraw all of their money and whenever the bank loaned someone's money, it would get that person's permission, and the person would know that X number of dollar in their account was being loaned out and would not expect to be able to withdraw it.The problem is the interest allied against this, namely the banks as well as people who want to get bank loans quickly to finance their projects. Fractional reserve banking can generate real short term wealth, but it is nonetheless fraudulent. Also, governments wouldn't be able to print the money they need so they prefer to have a fiat system. They and the people who get the new money first would benefit because the market hasn't yet caught on to the increased money supply, but by the time it trickles down to the average citizen, inflation would've sent in and the new money would do nothing to improve their buying power.
