Is there any currency in the world backed by gold?

[calista]

i don't trust fiat currencies because they are inherently worthless, including bitcoins.

[andes]

Gold money is backed by gold.

[fcmatt]

i am pretty sure the last was switzerland (CHF), 40% backed.. but when they joined the ?IMF? it had to go.

[MoonShadow]

"Is there any currency in the worlk backed by gold?"

Not since the Swiss Franc dropped gold reserves in 2000.  They only used a partial (40%) currency reserve anyway, and it wasn't convertible, so it's debatable that even that would have counted.

[qed]

And gold is backed up by what? Can you go to a shop and pay with gold?

[Jaime Frontero]

i go back a ways, and i'm not so sure i understand the practicalities of this oft-repeated question.

i remember when it was illegal for a US citizen to buy or sell gold - and the friendship of your local dentist or jeweler was a thing of value, since they could.

but... backed by gold?

what is the real, practical difference between a currency backed by gold, and a currency with which one may buy gold at market rates?  i can't say i really see one.

[MoonShadow]

And gold is backed up by what? Can you go to a shop and pay with gold?

I've done it with silver, but never gold.  But I would hazard the guess that you can actually spend gold in many more places than you would assume would be likely, it's just that, because fiat currencies are the common unit of value measurement, any such exchange is necessarily between two individuals with the authority to bargin, and this pretty much excludes most any chain store you will ever encounter.  Engaging the shop owner in a bargining event requires the commitment of time by both you and the shop owner, so doing so for relatively inexpensive items, or many consumer items, tends to consume too much time to be profitable.  So don't count on buying groceries with a gold coin, but if you are looking to buy a tailored suit, give it a try.

[dennis_sweden]

i go back a ways, and i'm not so sure i understand the practicalities of this oft-repeated question.

i remember when it was illegal for a US citizen to buy or sell gold - and the friendship of your local dentist or jeweler was a thing of value, since they could.

but... backed by gold?

what is the real, practical difference between a currency backed by gold, and a currency with which one may buy gold at market rates?  i can't say i really see one.

The following is largely what I posted in a different thread:

The value of gold is relative to the scarcity/abundancy of it and difficulty/ease of mining it. The whole conception of gold being a "hard asset" is flawed, although the flawed conception is not apparent either in theory or practice today. From the 16th century and onwards, gold primarily facilitated trade. Adam Smith showed that mercantile nations, which hoarded gold instead of freely circulating gold for trade pruposes, restricted trade. The object of political economy thus became to increase exports and restrict foreign goods for home consumption, which increased the gold reserves.

Regarding issuing paper money to facilitate trade, Smith and David Ricardo and others argued that, a paper currency which falls below the value of gold and silver does not sink the value of those metals; they exchange for an equal amount of goods as when paper money was of equal value.

i.e.:

1 oz gold = 1000 USD; 1 oz gold = 100 hours labour; 10 USD = 1 hours labour
1 oz gold = 1200 USD; 1 oz gold = 100 hours labour; 12 USD = 1 hours labour

However, with the decoupling of gold from USD, gold is no longer a facilitator of trade, but instead becomes a goods that falls or rises in value in comparison with USD. If the gold standard was returned macroeconomic stability would be enhanced (well, at least if the US closed its borders).

The traditional explanation of inflation is when the amount of money put into circulation exceeds the amount of new goods/services in circulation. With a gold standard, inflation is restricted, or almost not possible. The problem with cycles, depression and prosperity, stems largely from hoarding/releasing gold, issuing/contracting USD (through many means), which is hopelessly obfuscated in neo-liberal economics.

[evoorhees]

what is the real, practical difference between a currency backed by gold, and a currency with which one may buy gold at market rates?  i can't say i really see one.

Sir, there is a very very big difference! Backed by gold (when properly defined) means that your dollar is SET at a specific weight of gold. You can hand in the dollar, and receive a SET amount of the gold, like 1 gram or whatever. What this means is that the money unit (dollar) is essentially just a measurement of weight. 1 dollar = 1 gram of gold, in this example. This is proper "sound money" in the traditional sense.

When dollars equal gold in this way, the government is restricted from printing them at whim, and this is all the difference in the world. The government cannot arbitrarily increase the money supply, as it does now. This means inflation is non-existent (or at least is bound to gold production capabilities, not political whims). The value of the dollars in your bank account, under a gold standard system, cannot be stolen from you by the politician who makes use of his printing press. It means savings is encouraged, not discouraged. It means spending is not artificially encouraged. It also means interest rates cannot be as manipulated by central banks, but that starts getting more complicated. Suffice to say, the housing crisis in 2007/2008 would've been impossible under a hard money system in which interest rates were set by market forces, not politicians.

We live now in a world where Bernanke is continually printing dollars, thereby devaluing every dollar in existance. This is why you see prices rise over time - it's not a phenomenon of nature, it is the result of printing money. Gold standard prevents this.

Perhaps one of the greatest articles ever written on this subject, was written in 1966 by none other than Alan Greenspan. It is truly a must-read, and raises some amazing questions in light of Alan's latter career. http://www.constitution.org/mon/greenspan_gold.htm

[Jaime Frontero]

When dollars equal gold in this way, the government is restricted from printing them at whim, and this is all the difference in the world. The government cannot arbitrarily increase the money supply, as it does now.

and yet, a declaration that gold is worth $32/oz (which existed for a few decades) has essentially the same inflationary result - if the fractional reserve requirements for gold and silver (when either backed the dollar) changed, based on how much money the gov't wanted in circulation.

but again, i was speaking practically.  i don't think it ever much mattered to the population at large.  there weren't a lot of people who showed up at the treasury ("This certifies that there is on deposit at the Treasury of The United States of America One Dollar in silver payable to the bearer on demand" ~ from a silver certificate i'm looking at) asking for metal...

[dennis_sweden]

what is the real, practical difference between a currency backed by gold, and a currency with which one may buy gold at market rates?  i can't say i really see one.

Sir, there is a very very big difference! Backed by gold (when properly defined) means that your dollar is SET at a specific weight of gold. You can hand in the dollar, and receive a SET amount of the gold, like 1 gram or whatever. What this means is that the money unit (dollar) is essentially just a measurement of weight. 1 dollar = 1 gram of gold, in this example. This is proper "sound money" in the traditional sense.

When dollars equal gold in this way, the government is restricted from printing them at whim, and this is all the difference in the world. The government cannot arbitrarily increase the money supply, as it does now. This means inflation is non-existent (or at least is bound to gold production capabilities, not political whims). The value of the dollars in your bank account, under a gold standard system, cannot be stolen from you by the politician who makes use of his printing press. It means savings is encouraged, not discouraged. It means spending is not artificially encouraged. It also means interest rates cannot be as manipulated by central banks, but that starts getting more complicated. Suffice to say, the housing crisis in 2007/2008 would've been impossible under a hard money system in which interest rates were set by market forces, not politicians.

We live now in a world where Bernanke is continually printing dollars, thereby devaluing every dollar in existance. This is why you see prices rise over time - it's not a phenomenon of nature, it is the result of printing money. Gold standard prevents this.

Perhaps one of the greatest articles ever written on this subject, was written in 1966 by none other than Alan Greenspan. It is truly a must-read, and raises some amazing questions in light of Alan's latter career. http://www.constitution.org/mon/greenspan_gold.htm

That was very interesting reading, coming from Greenspan as it were. However, Greenspan does seem to have a bias against the welfare state. More government debt is contracted during war than during any peace times, and government debt due to war is as old as the art of warfare. Also, when people lived scattered on vast areas of land, and farmed the land, each family was subservent. However, after the industrial revolution, people lived in towns and workers did not receive enough income to pay for all their needs. With every increase of income disparity the need for welfare increases. Very few people choose actively to live off welfare, but instead require welfare in order to subsist, or at least with some degree of comfort.

[evoorhees]

and yet, a declaration that gold is worth $32/oz (which existed for a few decades) has essentially the same inflationary result - if the fractional reserve requirements for gold and silver (when either backed the dollar) changed, based on how much money the gov't wanted in circulation.

You're correct, to a point. If banks or governments issue certificates that are actually not backed by gold, but only "claiming" to be backed by gold, then the inflation can still be very pervasive. However, even in this situation, banks can't print completely at whim, else they risk bank runs (until the FDIC removed this check). Without any backing, the printing never need end.

[Phinnaeus Gage]

what is the real, practical difference between a currency backed by gold, and a currency with which one may buy gold at market rates?  i can't say i really see one.

Sir, there is a very very big difference! Backed by gold (when properly defined) means that your dollar is SET at a specific weight of gold. You can hand in the dollar, and receive a SET amount of the gold, like 1 gram or whatever. What this means is that the money unit (dollar) is essentially just a measurement of weight. 1 dollar = 1 gram of gold, in this example. This is proper "sound money" in the traditional sense.

When dollars equal gold in this way, the government is restricted from printing them at whim, and this is all the difference in the world. The government cannot arbitrarily increase the money supply, as it does now. This means inflation is non-existent (or at least is bound to gold production capabilities, not political whims). The value of the dollars in your bank account, under a gold standard system, cannot be stolen from you by the politician who makes use of his printing press. It means savings is encouraged, not discouraged. It means spending is not artificially encouraged. It also means interest rates cannot be as manipulated by central banks, but that starts getting more complicated. Suffice to say, the housing crisis in 2007/2008 would've been impossible under a hard money system in which interest rates were set by market forces, not politicians.

We live now in a world where Bernanke is continually printing dollars, thereby devaluing every dollar in existance. This is why you see prices rise over time - it's not a phenomenon of nature, it is the result of printing money. Gold standard prevents this.

Perhaps one of the greatest articles ever written on this subject, was written in 1966 by none other than Alan Greenspan. It is truly a must-read, and raises some amazing questions in light of Alan's latter career. http://www.constitution.org/mon/greenspan_gold.htm

I'm beggin' everyone here on this forum to limit siting great reads like this one http://www.constitution.org/mon/greenspan_gold.htm to one a month. My Lithuania brain can only handle so much.

Posts: 77784
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[evoorhees]

However, after the industrial revolution, people lived in towns and workers did not receive enough income to pay for all their needs. With every increase of income disparity the need for welfare increases. Very few people choose actively to live off welfare, but instead require welfare in order to subsist, or at least with some degree of comfort.

With due respect, you may be a bit misguided here. The industrial revolution created MORE wealth, for MORE people. The very reason peasants came in from the fields to the cities was because the dirty factory job, miserable though it may be, provided a higher standard of living than did the fields. If that were not true, why would anyone move in the first place?

Further, income disparity will always occur due to simple math. If a rich man and poor man both increase their wealth 10%, the "gap" will still grow. So what? Both are still better off, and indeed as the income disparity rises, you find that those at the bottom still tend to be improving their lot in life. Case in point: a poor family in America has a car, two TV's, refrigeration, running water, soap, food, and an Xbox.  

Claiming that people "need" welfare is disingenuous, because you cannot define what "need" means. Not to mention that is a disturbing and immoral act to steal from one man in order to be generous to another. If you wish to help those who are less fortunate than you, please do so with your own money, or convince others voluntarily to help. Don't steal property and then pretend to be charitable with it...

[hugolp]

and yet, a declaration that gold is worth $32/oz (which existed for a few decades) has essentially the same inflationary result - if the fractional reserve requirements for gold and silver (when either backed the dollar) changed, based on how much money the gov't wanted in circulation.

but again, i was speaking practically.  i don't think it ever much mattered to the population at large.  there weren't a lot of people who showed up at the treasury ("This certifies that there is on deposit at the Treasury of The United States of America One Dollar in silver payable to the bearer on demand" ~ from a silver certificate i'm looking at) asking for metal...

Im not for a gold standard, I support competing currencies, but this is not true.

While the gold standard was regularly violated, specially during the Bretton Woods era, the different ties of the dollar to gold had some restraining effect on the government. Since the last tie with gold was broken in the 70's, monetary inflation on the USA has gone to some levels that had never been seen before.

So, while the gold standard is not perfect and is easily abused by the government, it offered some level of restrainement compared to the present situation.

[MoonShadow]

Case in point: a poor family in America has a car, two TV's, refrigeration, running water, soap, food, and an Xbox.  

Ha!  That's cutting the poor family short!  I am related (by marriage) to a family that, due to disabilites from birth, the parents don't (and really never have) work.  The only income they have is Social Security Income (the disability version of Social Security, pays even less then normal SS) totaling to about $1200 per month.  With this, they have in addition to all of the above; a Playstation II, a PC newer and more powerful than my own, an entertainment center with a 32" flatscreen & basic cable, broadband internet, three cellphones on pre-paid service plans, microwave oven, DVD & DVR, multiple MP3 players and CD-R capable CD players, a two bedroom flat with rent control, and subsidies for heat and air conditioning.  Hell, up until just last month, they even had a car so that friends (or their sighted and now of age oldest son) would be able to drive them to the grocery store.  Did you know that a sighted child of a blind couple can get subsidies from the state for car insurance?  I sure didn't.

[evoorhees]

While the gold standard was regularly violated, specially during the Bretton Woods era, the different ties of the dollar to gold had some restraining effect on the government. Since the last tie with gold was broken in the 70's, monetary inflation on the USA has gone to some levels that had never been seen before.

Check out the chart/graph here of USD value since the start of the country.  http://evoorhees.blogspot.com/2009/07/record-of-federal-reserve.html

150 years without The Fed and with an (imperfect) gold standard = zero devaluation in the dollar (appreciation, actually)
100 years since The Fed's creation and without a gold standard = more than 95% devaluation in the dollar

And one reason the Fed was created was to "stabilize the value of the dollar."  I wonder why they don't teach this in public schools?

THIS IS WHY BITCOIN IS SO AWESOME

[dennis_sweden]

However, after the industrial revolution, people lived in towns and workers did not receive enough income to pay for all their needs. With every increase of income disparity the need for welfare increases. Very few people choose actively to live off welfare, but instead require welfare in order to subsist, or at least with some degree of comfort.

With due respect, you may be a bit misguided here. The industrial revolution created MORE wealth, for MORE people. The very reason peasants came in from the fields to the cities was because the dirty factory job, miserable though it may be, provided a higher standard of living than did the fields. If that were not true, why would anyone move in the first place?

Further, income disparity will always occur due to simple math. If a rich man and poor man both increase their wealth 10%, the "gap" will still grow. So what? Both are still better off, and indeed as the income disparity rises, you find that those at the bottom still tend to be improving their lot in life. Case in point: a poor family in America has a car, two TV's, refrigeration, running water, soap, food, and an Xbox.  

Claiming that people "need" welfare is disingenuous, because you cannot define what "need" means. Not to mention that is a disturbing and immoral act to steal from one man in order to be generous to another. If you wish to help those who are less fortunate than you, please do so with your own money, or convince others voluntarily to help. Don't steal property and then pretend to be charitable with it...

Yes, I agree that the industrial revolution created more wealth, however at least in England, farmers were intentionally displaced. An agricultural revolution occurred during the 18th century. Instead of crop-rotation which had been the norm, enclosure of fields which reduced the amount of land was applied, in order to increase yield. Capitalists petitioned the Parlaiment who made laws. "The first enclosure act was passed in 1710 but was not enforced until the 1750s. In the ten years between 1750 and 1760, more than 150 acts were passed and between 1800 and 1810, Parliament passed more than 900 acts of enclosure." (http://www.historyguide.org/intellect/lecture17a.html) So many peasants were forced from the land to the cities to work in factories. Without this the industrial revolution would not have played out the way that it did. This information is not disseminated in school classes. I am not arguing that the industrial revolution was not beneficial to society, which it most certainly was. What I am arguing is that society became much more unequal as a consequence of the industrial revolution.

However, you are correct about the income disparity, of course the disparity can increase while both sets of people are better off. We certainly disagree on the need or unnecessarity of welfare. With needs I mean funds to feed oneself and one's family, to educate one's children, to afford health treatment when one and one's family is ill. In many countries these absolute needs are not fulfilled. If a more equal distribution of assets existed, there would be no need for welfare. As to stealing; the far greater share of stealing has been perpetrated on the working class by the capitalist class ever since the invention of capitalism.

I know that we are about to enter into a discussion on Obama's health care legislation, so I wish to point out a few viewpoints before you present your arguments. I am aware of the fact that Ron Paul used to be a practicing doctor, and that he used to treat patients for free if they could not afford to pay, rather than ask for funds from his state (I believe it was the state, maybe county?) Paul is of the view that government interference in all spheres of life is pervasive and to give government control over health care is to extend the obtrusiveness of govenment to the detriment of freedom and liberty. Having read parts of the health care bill, and also reading extensively (at least for a non-US citizen) informed peoples' views of the health care bill, I entirely agree with Paul. The bill was literally written by the insurance industry. However, in Europe and Sweden, free health care is the norm. Although as of lately, many people do take out private insurances, due to reduced government services. Rich or poor, if one suffers from health problems, one is in nead of treatment. The have's should not deny the have not's basic needs, at least not in a somewhat equitable society.

In Sweden, different authorities are barred in law from accessing data from other authorities, which ensures privacy. At least this used to be the case; during the beginning of the 21st century these separations are being removed, one by one. Of course it is for our benefits, is what they claim - which is entirely false; it is of course the same process takning place all over the world. A police state. If I were to draw a quick timeline from capitalism it would be:

Capitalism - democracy (partially) - welfare state (partly to promote the concepts of democracy) - aristocracy (although always in existence, much more prevailing) - socialist capitalism for the rich - police state.

I appologise for gearing off-topic, it is not my intention to divert from any arguments on the original topic. I am most willing to continue a debate on the original topic.

[kloinko1n]

There almost was: The Lybian Gold Dinar.

But 'luckily' the bankers prevented this from happening  

[Sandoz]

"Is there any currency in the worlk backed by gold?"

Not since the Swiss Franc dropped gold reserves in 2000.  They only used a partial (40%) currency reserve anyway, and it wasn't convertible, so it's debatable that even that would have counted.

They recently stated that with the current high gold prices the Swiss franc is actually more than 100% covered (http://www.schweizer-franken.ch/?Schweizer-Franken.ch:Durch_Gold_gedeckt).

THAT however does not mean you can get gold for Swiss francs but merely that the worth of the gold in the vaults of the Swiss national bank exceeds the bargaining value of the Swiss franks in circulation. Please correct me if I am mistaken!