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Rep. Ron Paul of Texas: the fall of the dollar, rise of gold - Printable Version

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Rep. Ron Paul of Texas: the fall of the dollar, rise of gold - Fit2BThaied - 02-20-2007

Here's the text of Dr. Ron Paul, the libertarian in Republican's clothing, preaching libertarianism to his fellow members of Congress:

http://www.house.gov/paul/congrec/congrec2006/cr021506.htm

It sounds good to me, but I'm no ekonomissed. S1


- Independents4Bush - 02-20-2007

Interesting and yeah I'm concerned about the dollar. I have a question for you economists. If gold is needed to back the dollar but they discover a way to create (real) gold what else can be used to back the dollar?


- jt - 02-20-2007

Without a gold standard, you can have controlled inflation, which is good for all debtors, especially the government (the biggest debtor). Just enough inflation so the average person does not complain, and an occasional period of high inflation, due to an "emergency". So, there is no chance of going back to a gold standard, however beneficial that might be, politically.

Suppose that we were on a gold standard, and had to pay for oil with gold. Would Fort Knox still exist? Would we have any gold left? Or would the middle east be a US protectorate by now?


- Fit2BThaied - 02-20-2007

The last few posts mention something I hadn't thought about: the supply of gold, itself. Could it have been, back when Bretton Woods began in 1944, that there was enough gold bullion in the world to satisfy all the monetary reserves of all the nations? Interesting date, 1944: about the time the Bank of England was bankrupt! By 1971, maybe there simply wasn't enough bullion. Plus, most nations didn't want to be filling vaults such as Fort Knox with all that pesky, heavy, expensive stuff. Printing presses are so much cheaper, and more efficient at creating wealth.


- Independents4Bush - 02-20-2007

Is anyone going to answer my question lol. If you don't know it's alright. I just heard a report a few months ago of people able to create their own diamonds and how that might bring down the value. Naturally I pondered on the consequences if gold could be created and printed just like money. It could no longer back the dollar. Investments would plummet. Does anyone care now?


- Fit2BThaied - 02-21-2007

Indy, I didn't answer your question about artificial creation of real gold, because I know nothing. Isn't that the basis for alchemy, and weren't the 'scientists' of the middle ages always trying to invent a magic formula to create gold?

Your question or comment was one of several that helped me to realize, or wonder, that the supply of gold is insufficient to use for all of the nations' currency reserves. Precisely because, with increased population and productivity and world GDP and printed fiat money, there isn't enough gold even inside the earth to prop up all those phony banknotes.


- Independents4Bush - 02-21-2007

I know you couldn't answer, you admitted you're not an economist. I was wondering if our resident economists were around. However you're right it is a scientific question. What else can we use to back the dollar? What else can we use as currency if say we headed into another depression. If Hillary Rotten wins we better buy gold or something and fast.


- Brooklyn - 02-22-2007

Quote:Interesting and yeah I'm concerned about the dollar. I have a question for you economists. If gold is needed to back the dollar but they discover a way to create (real) gold what else can be used to back the dollar?

Gold isnt needed to back the dollar. Right now, nothing backs the dollar except demand for said dollar. But if the dollar was to be linked to something, it could be linked to any other commodity or better yet, a basket of commodities.


- jt - 02-22-2007

How do you back the dollar with a "basket of commodities"? Which commodities? Soy beans, wheat, copper, uranium, .... ? Pay the bearer 0.3 bushels of wheat on demand (printed on every dollar)? Ok, I could at least make ethanol for my car or me.


- John L - 02-22-2007

As I have learned, there is more than one 'Gold Standard', that can be used. In truth, FDR took us off the standard, that allowed for the exchange of Dollar for gold. However, the Gold Standard was still in effect, in that the Dollar was pegged to the value of a set gold price. Brenton Woods continued to keep this in effect, until Nixon did away with it entirely. In truth, the Dollar is still informally on a gold standard, but it is not rigid, and really should be.

However, this recent run on gold investments, by the speculators in the market, has given me pause to consider a formal declaration of gold value. While I still advocate a standard, in which the Dollar is officially 'pegged' to gold, the ability of speculators, to artificially run up prices, as has been done in the last few years has me concerned.

As I have said before, if you are heavily invested in gold, you would be well advised to start divesting, and collect your profits, before the market finally collapses and falls back to the point of reality.


- Brooklyn - 02-23-2007

Quote:How do you back the dollar with a "basket of commodities"? Which commodities?

The same way you would back it with gold.

Say you used wheat, corn, and soybeans; one dollar would be worth x amount of wheat + x amount of corn + x amount of soybeans. Though more than three commodities should be used if this kind of thing was to be used.

All this being said, I think the dollar shouldn't be backed by or linked to anything.


- JM0397 - 02-24-2007

Time for my monthly chime in.

There's a ton of info on this at G. Edward Griffin's web site: www.freedom-force.org
Griffin is the author of "The Creature from Jekyll Island" - a monster of a book all about the formation of the Federal Reserve, gold standard, fiat currency, and control of the US government. It's long, but a good read. You can glean most of the info from his website.
I like the "Unfiltered news" section.

Also, check out their Creed of Freedom.

On Ron Paul, go to Google videos and type in his name. Lots of good stuff there pertaining to this and other libertarian issues.


- John L - 02-24-2007

It's been an awfully long month, partner. Where have you been? Wink1


- JM0397 - 02-24-2007

Slow dial up at home and blocked access at work makes for long months S7

And the wife out of town this weekend, so I have time to kill 8)


- John L - 02-24-2007

JM0397 Wrote:Slow dial up at home and blocked access at work makes for long months S7

And the wife out of town this weekend, so I have time to kill 8)

that can be a problem. Anyway, wouldn't want to get the missus all riled up. Wink1


- Brooklyn - 02-28-2007

I didn't include this in my earlier replies but thought it might be interesting for those who may not know exactly how such a system would operate.

How the Federal Reserve would keep currencies linked to commodities is a simple theory. The Fed would raise or lower bank reserves in order to keep these commodities at a certain price. If commodity X's price rises, the Fed would lower bank reserves (by selling government bonds). If commodity X's price falls, the Fed raises bank reserves by buying government bonds.

P.S. Right now, the Fed targets the Federal Funds Rate instead of any commodity.


- John L - 02-28-2007

Brooklyn Wrote:I didn't include this in my earlier replies but thought it might be interesting for those who may not know exactly how such a system would operate.

How the Federal Reserve would keep currencies linked to commodities is a simple theory. The Fed would raise or lower bank reserves in order to keep these commodities at a certain price. If commodity X's price rises, the Fed would lower bank reserves (by selling government bonds). If commodity X's price falls, the Fed raises bank reserves by buying government bonds.

P.S. Right now, the Fed targets the Federal Funds Rate instead of any commodity.

You are correct here. However, there are exceptions, such as the current run on gold, due to slick marketing and fear over terrorism.


- Brooklyn - 02-28-2007

Quote:However, there are exceptions, such as the current run on gold, due to slick marketing and fear over terrorism.

Are you saying that that the Fed periodically targets gold? Because it would be impossible to target anything without inadvertantly changing the interest rate.


- John L - 02-28-2007

Brooklyn Wrote:
Quote:However, there are exceptions, such as the current run on gold, due to slick marketing and fear over terrorism.

Are you saying that that the Fed periodically targets gold? Because it would be impossible to target anything without inadvertantly changing the interest rate.

I'm not saying that at all. Unfortunately, there is no real targeting whatsoever, and that is why a gold standard is so important. what I am saying is that since 9/11, there has been so much hype with investment in gold, that the value of the precious commodity has been artificlally jacked up(due to scarcity), to the point where it no longer resembles the normal 'gold/Dollar' equation. If we were on a Gold Standard, where a reasonable back and forth exchange in gold were possible, this artificial run would not be possible, and it would be more down to earth. I view this entire fear mongered gold promotion to be a Huge Hunt Brothers like scheme, but not in silver as it was with them.


RE: Rep. Ron Paul of Texas: the fall of the dollar, rise of gold - John L - 05-11-2011

Steve Forbes predicts a return to the Gold Standard within five years.

Quote:A return to the gold standard by the United States within the next five years now seems likely, because that move would help the nation solve a variety of economic, fiscal, and monetary ills, Steve Forbes predicted during an exclusive interview this week with HUMAN EVENTS.

“What seems astonishing today could become conventional wisdom in a short period of time,” Forbes said.

Classical economists, from Austrians to Supply-Siders, have been pushing for this for decades now. But as long as Keynesians and remaining Monetarists, continue to resist, it will take time. I'm not so sure five years is all that likely. But I could be wrong.....again. S5