US should of stuck with the gold standard

[stevendobbs]

why should a currency be backed in anything?

A good economic policy deals with three major areas:

Energy, Production, Priority.

And the market economy, guided by currency - is just a means to set priority of production. It doesn't matter if its backed in something or not. Just so long as the money supply is properly controlled.

[stevendobbs]

the US currency in this depression would become suddenly over valued, which it probably has been for a long time anyway because it is linked well to oil. Oil is actually needed by everybody and so everybody needs $ to buy oil which has uplifted the US currency for many decades.

I see this argument very often.  It is wrong.

Global currency markets are very, very liquid.  The value of the dollar comes from people wanting to hold dollars, not spend them.  Most oil bourses are priced in dollars, and settlement usually happens in dollars, but that doesn't increase net demand for dollars.  If the buyer doesn't have dollars, they sell whatever they have into Forex to get dollars, and if the seller doesn't want to hold dollars, they turn around and sell the dollars into Forex.  The net effect is zero.  If the buyer already had dollars, or if the seller wants to hold them, that represents a net change in the desire to hold dollars, which is independent of the oil transaction.

my point is, if 1$ = x . gramms of gold.

then as 'investors' park money in gold, then a currency backed in gold would appreciate in value, since holding $'s would gain value against none gold backed currencies.

At precisely the time when the US required devaluation to correct for the over valued $, it would surge in value

[bitconformist]

UGH...US should of stuck with the gold standard
they have tons of gold in fort nox and the currency price would be a lot higher and stabler
but nooo they had to change it back then

Ugh. You should have paid attention in your English class. Aside from the 20-30 obvious problems with your English fluency, this isn't even a meaningful statement. Why should they have? How much higher? How do you justify that remark?

[Raize]

And the market economy, guided by currency - is just a means to set priority of production. It doesn't matter if its backed in something or not. Just so long as the money supply is properly controlled.

One way to control the money supply is to ensure 0% or next-to-zero inflation.

I had one guy tell me if pegging the dollar was really a good idea because at some point we'll be able to atomize gold from electrons, protons, and neutrons. Keep in mind, this guy was in favor of the Federal Reserve just printing money, but he was arguing against a gold standard because someone might be able to "print gold".

I don't really care what we peg a currency to, we do need to make sure it stays relevant, though, and proper controls on the money supply are going to be pretty key to that.

[kokojie]

"should have"

[steelhouse]

The US should have stayed with the gold standard.   What happens is you got a group that benefits from government spending so they hire a great speaker to get them their money.  In 1933, they already violated the gold standard then Roosevelt ripped off the public with a low price.  Before that we had bimetallism which caused problems.