This article demonstrates an almost total lack of understanding. To begin with, the author takes the simplistic view that all of our current problems can be solved by switching to a gold standard. Doing so would not get rid of the massive debt already incurred; it would just make it payable in gold. The problem is the debt, not what is used as money. As for what we use as money, the author does not seem to realize that gold would actually be a very poor choice. It would be so because gold has other uses whereas what we use as money should have no other use. Just as copper, nickel and silver cannot be used for coinage because they have other uses that eventually made the coins they were made from more valuable as scrap to be melted, gold would suffer the same fate at some point because gold is not a renewable resource. The author also seems utterly oblivious to the very real fact that there has never been a gold standard that worked. Each and every single time a gold standard has been tried, it was abandoned and not because it was doing such a fine job. It is a point lost on almost all goldbugs, of which i happen to be one.

The notion put forward that the markets would adopt a gold standard all on their own without the participation of government is so banal that the English language lacks the words to adequately describe its idiocy. With gold prices fluctuating far more wildly than cash, nobody in their right mind would ever sign a contract that would have to be settled in gold. And this says nothing about the fact that gold is not legal tender and that the markets have no way to magicly make it so. Until such time that it becomes legal tender, what you would have is barter, meaning that almost all economic activity would come to a grinding halt. And of course, were governments to try again to revert to a gold standard, gold would then be a fiat currency, its value determined by government edict. And as has always happened in the past, the government would eventually change things up by either lowering the gold content in the actual money or by decreeing that an ounce of gold was now worth more dollars than was the case the day before.

Again, let me state that the problem we face is one of debt, not what we choose to use as money. And that debt would not be magicly erased just because we decide to switch to gold. It would only mean that the debt is now payable in gold.

What is required if we are to ever escape from this boondoggle is to get away from debt based money. In the first place, it is absolutely ridiculous that governments should have to borrow money into existence when they know every bit as well as the private banks that now issue our currency how to operate a printing press. And to keep our governments from abusing this power, let us pass laws that strictly limit their ability to run up defecits year after year. Doing so would almost certainly result in wars becoming a thing of the past. And as a further safeguard, we should limit our leaders to one term in office.

i understand from past experience that my comment will lead to a plethora of down arrows. i do not care whatsoever and will happily contribute the first one myself. That said, if you can actually refute what i have posted, enlighten me with a response.

Permalink