A crazy idea...

[Mitera Nikkou]

I'm the kind of person who thinks about things on many levels and, while I may disregard some as highly unlikely, sometimes I decide that I should share it with others who may want to give it the benefit of the doubt. Right; so, here's the idea...

The poor condition of our country is in part a result of a plot to get our money backed by precious metals. This came to mind because the value of both gold and silver are high and several organizations have popped up to buy precious metals, especially gold, from people. And how you do it is to place people in a position where they are more willing to part with their jewelry.

Precious metals didn't work before because there wasn't enough in the treasury, right? And assuming that we have about as much precious metals in our treasury now it could be increased by the new quantity of precious metals that have been introduced into the country in whatever form they come in.

How's that for a crazy idea? ;p Help make the population poor and more willing to give up their gold and other precious metals (like silver and platinum) to make money, and in the process direct those precious metals into the treasury and bulk it up for a return to a precious metal standard.

*I watch a cuckoo fly around my head*

[Mitera Nikkou]

Was it that crazy? X3

[Syllinia]

I like to think so. Ron Paul is the only one around interested in going back to a precious metal standard, and he doesn't have enough sway to cook up a plot. Everyone else around considers that to be one his more eccentric ideas, and they wouldn't want to go back to a metal standard because it limits the government - it takes away their ability to gain funds by simply printing money. The precious metals standard never 'stopped working', it just became too limited as the government decided to grow in size and take liberties with our economy by maintaining control of our money printing.

[Mitera Nikkou]

It seems like this country shouldn't be in debt if money can come from nothing like that. Ah, play money... And what a lovely game we have, here. I'll never understand what is so important about money. It's one of the silliest creations that was inducted into reality, in my opinion.

[Syllinia]

Heh, now you've gotten to the crazy part. Money is really supposed to just signify value. After all, they're called federal reserve notes. You're supposed to be able to trade in money for gold to the government because gold has a true market value, like a TV for example. Therefore, money is just a representation of what goods/services the government owes you. Now, before we left the gold/silver standard, this was all well and good because you could trade your money in for gold, so the value of money was directly tied to the value of precious metals. Then they decided to leave the standard entirely, so now money only has value because people use it, which is all thanks to it having had a true value at one time. And, of course, the more money the government prints, the less valuable all of it becomes. I believe that a dollar today is worth the equivalent of 1.3 cents in 1850. That means that if not for inflation, I could buy a PS3 for $5.20. And inflation can't get that bad with a gold standard, so... Vote Ron Paul...

[Syllinia]

Although, on a side note, I'm not sure how you would go back to a gold standard this 'late in the game'. I guess you would probably just base the value of our currency off of our current gold reserves and start fresh...

[Mitera Nikkou]

Now I'm a bit confused... If it's the gold's value that counts then quantity only becomes a problem if the value is too low; then the quantity can't spread out as thinly. And yet, in the midst of the depression, which marked the change from the gold standard to this fiat system, the value of gold rose... Just as it does now. I just don't get it.

[Syllinia]

Well, here's what one article said about it:

"Early in the 20th century, liberal economists rejected the idea of a currency backed by gold, not because they failed to see that unbacked money would cause inflation, but precisely because they saw that it did. They wanted inflation—because they believed that inflation would make people feel wealthier than they really were, and thereby trick them into spending more than they otherwise would. This argument was advanced most effectively by a British economist named John Maynard Keynes. Free market economists quickly saw the flaw in Keynes’ argument—that eventually people figure out that they’ve been tricked and respond by cutting back on spending."

[Link]

A less... conservative article here says that it was just part of Nixon's plans to have government take control of the economy, not that there wasn't enough gold. They say that he wanted the government to have direct control due to people demanding action during the depression.

Either way,I haven't found anything that says the gold standard ever failed us, just that policy makes thought that they could control America's money better.

[Mitera Nikkou]

Either way,I haven't found anything that says the gold standard ever failed us, just that policy makes thought that they could control America's money better.

Let me see if I've got my terms right... That's essentially socialistic, then? Or is it something else? It doesn't seem like something a democracy or republic should have.

[Syllinia]

Not really. Socialism is the redistribution and control of wealth by the government. Our government isn't doing too much of that (some via programs to help the poor which are funded by taxpayer dollars) so you can't really call them socialist. They're essentially just controlling their own debts by doing this. Now, you could say that this isn't something a free market society should have, and you would have a point, but the government meddles in economic affairs alot these days. This isn't necesarily bad, but it definitely restrics the invisible hand of the free market.

For example, if the government didn't meddle there wouldn't be any protections against monopolies. Monopolies don't seem intuitively bad from a free market perspective - if they were good enough to get rid of all the competition, then they must be the most efficient, right? And if they try to price gouge, new competition could come in... The only problem is that a monopoly can create significant barriers to entry, making it very difficult for anyone else to get into the market that they control. There are numerous examples of similar interferences, and in every one you could make a point for free market, or make a point for the neccessity of interfence.

[Mitera Nikkou]

So... Basically the government is screwing around: because nothing seems to be improved economically, and it seems like the natural course of things is for big organizations to buy out others until only one is left. Kind of like in Highlander. ;/

It seems like things are made so redundantly-complicated on purpose.

[Stellar]

I have nothing to add, I just want to know when million dollar bills are going to start circulating and when I get my free authentic copy =)

[Syllinia]

Well, that's beurocracy, and why I'm a libertarian. I think it's fair to say that the government can't really be trusted to fix more than it breaks, so I agree that they should just leave things to the market. The real problem though is that free market works great on the large scale, but offers no quick solutions on the small scale.

For instance, lets take the minimum wage. It provides poorer people with more money and takes effect instantly. Of course, this means that lower end jobs cost more to fill, so prices go up overall, making things more expensive for everyone. Meanwhile, if you left things be, most people would not have much trouble warking their way up to at least minimum wage, and even past it. However, some people would have to start below that level, so the goverment institutes a quick fix that redistributes the costs to the whole of society. Now, these costs are low because minimum wage isn't all that high, but the cost is there.

[Million dollar bills are a far way off, but I could seriously see $500 or $1000 bills becoming part of common circulation in the not too distant future. I mean, just think about how much more things are now than when you were a little kid, and how much more $100 would have bought back then...]