Question

The US Dollar is no longer backed by gold and is currently a fiat money (the gold standard ended roughly in 1971 under President Nixon). Some individuals wish a return a return to the gold standard. Make a post arguing FOR a return to the gold standard.

Answer 1

Gold retains a value recognized throughout history throughout the globe. Our paper money is a "fiat" currency that is unlimitedly printable and has no real value–its value is preserved only by the government's "full faith and credit." Gold, because of its beauty, usefulness, and scarcity, has real value. Humanity recognized the value of gold as a medium of exchange dating back to 550 BC when the King of Lydia (modern Turkey) started to mint gold coins "retains more than anything else an intrinsic, enduring quality.By restricting its ability to print money at will, a gold standard places limits on government power. The government could produce money practically from thin air with a fiat currency. After quitting the gold standard in circulating U.S. money (M1) in 1971, it has risen from $48.6 billion in 2012 to over $1 trillion. The overall supply of money (M3) in the United States grew by 1.100 percent between 1971 and 2003. Only if a similar amount of gold was sufficient to back up the currency would new money be issued under a gold standard. This restriction is an existential control of the power of government.

Inherently, our present fiat monetary system is undemocratic. The current fiat monetary system empowers a non-elected central banking board (the Federal Reserve) to decide whether the money supply is increasing or decreasing rather than allowing market forces to assess the money supply as they would under a gold standard. Fiat dollars enable government to spend money without raising taxes, shielding them from democratic accountability. Rather, they impose the hidden inflation tax

Returning to a gold standard would reduce the deficit in US trade. The existing fiat money system allows the Fed to fund large trade deficits by printing money, enabling Americans to purchase "without paying" for imported goods. After dropping the gold standard in 1971, the U.S. has had the world's highest trade deficits ever seen–hitting $378.6 billion in 2009. In this way, 50% of the US national debt has been funded by foreign creditors since 1995 A gold standard would restrict the ability of the federal government to increase the national debt.