waauw wrote:I agree that having a gold standard could a good thing, however I don't entirely agree with your suggestion of copper and to a lesser degree silver. Copper is a metal too abundant in the earths crust. If one would go on a copper standard(even partially), the amounts of copper mined annually would skyrocket, hence resulting in more moneyprinting.
The thing with gold is there isn't enough of it. It's scarcity makes it ripe for manipulation. Adding silver alleviates some of that, but I'm just thinking about the amount of money that will actually be needed. When you tie your currency to something it will be very desirable to have. I'll get into some problems with that in a moment.
waauw wrote:Another problem with copper is that it's a metal that is too important for our industry, the same goes for silver actually. A copper or silver standard might result in higher prices for both metals and more inflow into the monetary markets rather into the markets of tangible goods.
Sure, if we went to a gold and silver standard today, silver's price would be about 1/16th the price of gold, aroundabouts. That would be a significant increase in the price of silver, obviously, but that price would stay stable, a lot more so than the value of fiat currency. One can only mine but so much silver after all. And they are both important to industry, as is gold BTW. It has intrinsic value as well.
waauw wrote:But why not a currency system as proposed by Friedrich Hayek. Let the free market work. Get rid of central banks and let the markets create their own currencies. This way people will get to pick between multiple currencies. They will be forced to learn more about it and if ever any monetary institution would misbehave(expansionary policy), then the people would simply drop that currency and jump to another.
Sure, that's an alternative. Those issuing the currency would protect it, lest people leave it.
waaua wrote:Of course you could also just create a system where gold and silver once again become legal tender. Let the central banks have their fiat currency but let the people have the option to pay in precious metals. Basically you'd still have the same system as today, except people get a legally accepted safetynet.
The problem with that is Gresham's law. Bad money drives out good money.
You have a store, a person comes in and has fiat dollars and gold dollars. Which would you prefer to have?
Conversely, if you have fiat dollars and gold dollars and you wish to purchase something, which dollars will you spend?
You'd spend the fiat dollars of course. The gold dollars would be stashed away quickly, would they not? You'd spend the fiat dollars before they lost value and you'd hold onto the gold because over time it will increase in value.
And thus in no time at all all the gold legal tender would soon disappear from the market place as people hoard it. In the end you'd have all the producers holding the gold and all the consumers holding the fiat dollars. The Central banks also would have a horrible advantage in that they'd print fiat dollars and buy gold with it. Like they are now.
It's best to do away with the central banks all together. Don't allow them to create money out of thin air. That's too much power for any small group of people to have. Use a currency that is strictly based on the amount of whatever resource they are tied to. People will labor hard to acquire the means of producing more of that resource as well.
The problem we have today is that The Fed is creating some $85 billion a month just to keep the economy propped up. At some point they'll have to stop doing that and everything comes crashing down and we'll see that this "recovery" is all based on smoke and mirrors. It will be a rude awakening for most people. Those who have prepared, well, they'll do just fine.
In the past, it was gold and silver as the base. That is dollars were tied to gold. The gold was held in reserves and silver was coined as well. I'm only saying to put copper in there so we have enough of a resource to have an adequate monetary base. So it would be the dollar tied to gold, silver and
copper coined to supplement the gold back dollars.
I dunno, I'm always thinking of other alternatives to the unstable fiat system which is really just a 1,000 year old scam. The fiat system benefits only the bankers. Everyone else is fated to become debt slaves.
Not that the current money powers will easily give up their monopoly, will they? That's another hurdle to deal with, but I think if people truly understood where our current currency system comes from, how it works, they'd understand how bad it really is. How much most people have to suffer for it while a tiny percentage continue to suck the wealth and real assets away from thew whole.