Mr. Carroll's arguments are very easily disposed of when one compares fiat paper money. Certainly a gold-standard currency has its problems, but those problems are orders of magnitude worse with a currency not backed by anything. Nearly every argument he makes can be made more harshly upon a fiat/floating currency.
A true gold standard is really a barter system, wherein people trade goods (gold) for other goods & services. If, in the worst case, there is a run on the banks, everyone actually has something: the gold represented by the gold-backed currency. Sure, one may not find a pile of gold particularly useful, but it is infinitely more useful than an ATM card and a "We're sorry, but your banking institution is permanently closed" screen.
Gold is used for currency because it is relatively (but not exceptionally) rare, compact, easily purified, attractive, and generally convenient in relation to currency needs. Silver and platinum are similar, but less suitable due to greater or lesser availability in relation to the desired convenience. The main idea is that the monetary system is actually bartering, instead of a truly abstract representation of wealth. A barter-backed currency could be based on other goods, but gold is by far more convenient; we could have a pastrami-sandwich-backed currency, but storage & durability proves problematic. A floating/fiat currency represents nothing, it is merely an IOU.
Economic problems begin when the gov't starts cheating by handing out more reserve notes than there is gold to back it, meaning that some people are actually holding reserve notes for nothing - a problem exacerbated ultimately when the currency officially represents nothing; a run on banks means people discover they actually own nothing except an "IOU" useful only in scamming the next person into accepting it.
The only good a floating/fiat currency has is, perversely, economic stimulation: it's in everyone's best interests to pass on the IOU notes as quickly as possible in exchange for other goods/services, so that when the music stops they are not stuck with nothing more than a piece of paper (or, more accurately nowdays, a few bits in someone else's computer).
Sure, gold standards have problems - problems which mostly rise from the abuse thereof: handing out reserve notes with nothing backing them, punishing people for owning & marking gold, etc. But fiat currencies are wholly built upon exactly these problems.
I'd like to see an explaination of what's so great about fiat currencies without resorting to gold-bashing.
The private banking cartel -- Federal Reserve System has been sucking the wealth from productive Americans for 90 years using their literal and figurative "monopoly money."
The Constitution's Article I, Section 8 reads, "...The Congress shall have the Power to...Coin Money, regulate the Value thereof and of foreign Coin, and fix the Standard of Weights and Measures..." It does not authorize Congress to transfer this function to private bankers (Federal Reserve).
Accordingly, our Congress committed treason and violated the Supreme Law of the Land by allowing private/foreign interests to regulate our currency by fiat. And all politicians who take an oath to defend and protect the Constitution are committing perjury by allowing this funny-money system to continue to operate.
Now, we use "colorable" money that moved us into a colorable jurisdiction (Uniform Commercial Code), and right out of our Common Law Jurisdiction (Constitution), where real money (gold/silver) is the substance of Law.
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About FDR:
I agree that FDR was socialist scum, but when it came to taking us off the 'gold standard', he had no choice. The Great Depression was deepening and the US gold reserves were disappearing at an alarming rate as people redeemed their currency for precious metals. There was no where near enough bullion of any kind in America's reserves to cover the amount of currency issued; there never has been in the entire history of our nation, not even close to that amount.
If FDR has not acted, the bullion reserves would have been exausted in a very short time. Once everyone discovered that there was nothing left to back the supposedly gold-backed currency, there would be a panic and hyperinflation, with the currency becoming literally worthless overnight. I'd like to hear the gold cultists explain what FDR could have done instead.
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About the 'real value' of gold:
People pooh-pooh the market value of gold and talk about the 'real value'. They are right in that the market value is heavily manipulated, but they are wrong in that the 'real value' is not what they think. The goal in using the term 'real value' is to project the false impression that gold's value is immutable. They point to the history of our country, and say that supply changes (like the California gold rush) didn't drastically change the value of gold, which is true. But that doesn't take into account new events that have never happened before, like a technological breakthrough in gold extraction, or a really massive new source, like asteroid mining.
The basic point is this. The true value of gold is what other people are will to trade you for it. It's just that simple. The only reason that gold has remained so valuable over the history of our country is that the general population believed it was scarce, thus believed it was valuable. If news gets out that new technology can extract/mine/transmute gold cheaply in very large quantities, that general perception of value, which is totally predicated on gold's scarcity, will disappear in a flash, and gold's true value will evaporate on the spot. No one can change that fact.
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About the changeover from floating currency to specie-backed currency:
No one has yet explained how this can be accomplished without crashing the economy. The argument seems to be, "gold will solve all our problems, and since the fiat currency will crash anyways, we have nothing to lose, so let's go for it!" First, our fiat currency has survived for 70 years now without becoming worthless, in spite of constant predictions of imminenet currency collapse since day one. Second, the benifits of a specie-backed currency have been largely debunked here. Third, the dangers of a specie-backed currency remain unanswered by the gold cultists. I can't see the justification for destroying our economy with such a changeover for no real gain.
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I would love for someone to show me a realistic option to our fiat currency with a realistic plan to get there, but I have yet to hear either after dozens of gold-standard debates. The privatization of currency has some interesting possibilities, although I think those that actually believe that such a currency couldn't be manipulated by banksters or the government are being quite naive. Such sleazebags always find a way to manipulate currencies, and our gold-standard currency was certainly heavily manipulated by currency speculators throught it's history.
Just to stir up the debate, I will propose an idea I came up with myself. Suppose we used land titles to back currency. The fedgov could start selling the huge amount of public lands to private currency issuers (PCIs). The PCIs would hold the land, and have the right to lease use of it. They would be responsible for maintaining the land. The PCIs would then issue currency based on the value of the basic land title (not on the structures on the land). They would pay these 'land notes' to the fedgov, who would use them to pay the national debt and for government services, thus putting this new currency into circulation painlessly. The trick would be the appraisal of the land, to get an impartial board to decide the value of each title, and how much currency could be issued against it. This is an idea I haven't heard elsewhere before.
The obvious advantage is that, with increasing populations, land is highly unlikely to lose any long-term value - ever. The two currencies, FRNs and land notes could coexist in the economy, making the currency transition gradual. The currency would become privatized, although the fedgov would likely grab an oversight role to stop the inevitable fraud. The drawback is potential inflation, as over the long term, land always increases in value due to the fixed supply.
Anyways, there's an alternative for all of you to think about. Perhaps you could come up with other better ways to ditch FRNs. The idea that fiat currency or specie-backed currency are the only possible options is false.
On the contrary, I think they are very easily disposed of. The article is full of ex cathedra pronouncements--such as the suggestion that America owes her present greatness to paper money. The Founding Fathers would certainly not agree with that. The man does not a case make.
There is sound reason that the Founding Fathers in the Constitution forbad the States from making anything but Gold or Silver a medium of exchange. Getting rid of the reckless inflation that followed the War, was one of the motives for the Constitution. Because it was the hard money group who were backing the Constitution, they overlooked the fact that a similar prohibition against the Federal Government would have been in order. But regardless of that, we had a Gold Standard until FDR, and a Gold Exchange Standard until Nixon. The Foundations of modern America were very closely related to that Gold Standard.
Of course, the reason for Gold is that it has value to most people. It does not depend upon the arbitrary fiat of the State of Bankers. While gold coins may be clipped, or adulterated, that does not make a point either. Man can corrupt almost anything. But fiat--paper money that is not convertible--is made to be corrupted. On the other hand, paper money convertible into a precise quantity of gold, offers far greater safety--unless a demagogue like FDR repudiates its convertibility, which is what happened. (Gold didn't fail us; our leaders stole our assets.)
Traditionally the opposition to the Gold standard is that it prevents the manipulations of the currency for the temporary advantage of the politically favored groups. It means that your savings--what you put aside in one era--should retain their value in the next. It adds predictability to accounting; makes long term planning easier.
William Flax Return Of The Gods Web Site
[From you]: Mr. Carroll's arguements are not easily disposed of.
You're right. It would take me at least 20 hours to "dispose of" this bozo's positions.
But for starters, let me address the above quote from the article.
"There is a distinction between a debt discharged and a debt paid. When discharged the debt still exists, though divested of its character as a legal obligation during the operation of the discharge. Something of the original vitality of the debt continues to exist which may be transferred, even though the transferee takes it subject to its disability incident to the discharge. The fact that it carries something which may be consideration for a new promise to pay, so as to make an otherwise worthless promise a legal obligation, makes it the subject of transfer by assignment." (Stanek v. White, 172. Minn. 390, 215 N. W.784).On June 5, 1933, Congress enacted House Joint Resolution 192 to suspend the gold standard and to abrogate the gold clause. This resolution declared that "Whereas the holding or dealing in gold affect the public interest, and are therefore subject to proper regulation and restriction; and whereas the existing emergency has disclosed that provisions of obligations which purport to give the obligee a right to require payment in gold or a particular kind of coin or currency. . . are inconsistent with the declared policy of congress. . . in the payment of debts."
This resolution declared that any obligation requiring "payment in gold or a particular kind of coin or currency, or in an amount in money policy; and . . . Every obligation heretofore or hereafter incurred, shall be discharged upon payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts."
Is the above a "pseudo-legal argument"? I think not.
A legal "note" has to possess the following four indicia to be valid:
1. It has to state the amount owed.
2. It has to state to whom it shall be paid.
3. It has to state when it is due and payable.
4. It has to state the form of payment.
Before Federal Reserve Notes arrived, our formerly specie-backed currency conformed to all four indicia listed above. As to #1, a Twenty Dollar Bill stated the amount, $20.00. As to #2, it stated "Pay to the Bearer". As to #3, it stated that it was due "On Demand". And as to #4, it stated that it was payble in "Gold or Silver".
The following is the verbatim text from a 1922 note:
"This certifies that there have been deposited in the Treasury of the United States of America fifty dollars in gold coin payable to the bearer on demand."
A Federal Reserve Note fails on all four counts.
To put it more simply. If I write out an I.O.U "note" to you in the amount of $100.00, and agree to pay that note in 30 days, I can't simply hand you another I.O.U. as "payment" when the 30 days are up.
Wrong. While the country that issued the gold coin may have failed, gold has never failed because there is always a large percentage of the global population willing to pay a high price to keep it and/or wear it. All paper money becomes worthless, gold never becomes worthless.