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Returning to the Gold Money System Takes the Control of Money Out of Human Hands.

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America’s departure from the gold standard has been a source of the debt cycle that consumes modern American economics.

From the bank runs of 1907 to the Great Depression in 1929, the United States experienced its most severe period of financial turmoil.

During those times, the dollar was still tied to gold, and gold could be exchanged for cash, just as cash could be exchanged for gold at the rate of $20 per ounce of gold.

In 1933, President Franklin D. Roosevelt ordered a federal meltdown of gold and a reclamation of gold certificates. 

After the meltdown, the value of the dollar declined dramatically, resulting in a $35-per-ounce cost for gold exchange.

The melted-down gold went into the vaults or the books of the Federal Reserve, and paper currency took its place.

In 1971, President Richard Nixon abolished the gold monetary system in order to absorb the effects of the Vietnam War and to accommodate international demand for gold following the Bretton Woods Conference.

Since the breakdown of the fixed-price model in the gold standard, the dollar has not been based on its exchange value against a hard asset. 

Instead, the Federal Reserve prints fiat currency, and lends it at interest that was never created, which is paper that must be accepted as legal tender for goods and services because the government requires it.

The only thing that the current standard is based on is the government’s promise to enslave the population via taxation in order to repay its debts to the Federal Reserve.

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Disadvantages of the Gold Standard

Several arguments against a return to a gold monetary system have been raised in government debates on the issue.

One such disadvantage is that the amount of gold mined amounts to less money than is currently circulating in the United States, even at an exchange rate of $1000 per ounce.

The ratio is roughly $4.5 trillion worth of gold to $7.6 trillion of currency, and over $110 Trillion in electronic currency owed as debt.

If the United States returns to a gold monetary system under these conditions, the total value of gold would be adjusted to account for about $8 trillion.

The value of gold would instantly rise to about $2000 per ounce, which limits its potential applications for use in circulation.

Fiat currencies allow flexibility that the gold standard cannot offer. This is useful in times of recession to cushion the blows by adjusting the money supply.

However, with a gold monetary system, it is impossible to ever have a recession or depression that is naturally caused.

Only manipulation by banks, in this current fiat system, can cause a recession or depression, like in 1929.

The money supply on a gold standard is not controlled by the minds of people. It is controlled by the supply of gold that is mined.

Some regard this as a disadvantage, but advocates believe that the only way to establish accountability and remove the factors contributing to oppressive control of the system is to return to a standard tied to natural hard assets like gold.

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Ron Paul and the Federal Reserve

Congressman Ron Paul serves in the House of Representatives for Texas. He is a strong and vocal advocate for returning to a gold monetary system.

Many times, Congressman Paul has grilled Ben Bernanke, the Chairman of the Federal Reserve about the activities of the nation’s central bank.

He has long been opposed to the Iraq War, and he takes strong issue against the federal bailouts because they result in the printing of more fiat currency, which further devalues the dollar, while enslaving the population even further because we have to repay the bailout money via taxation, and we never saw a cent of that money.

He is upset by the fact that the total supply of circulating capital, known as M3 by the Federal Reserve, is no longer published.

Therefore, the public never has all the information it would need in order to have a yardstick against which to measure the decisions of the Federal Reserve.

By returning to the gold standard, the United States would remove control of the nation’s money supply from the hands of the private bankers who, as the current response to recession shows, cannot be trusted to act in the interest of the country or the people.

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