“The Dollar shall be equal in value to the weight of gold”
++++++++++++++++++
I’d highly recommend for everyone’s reading this article re: our money system. The article reviews what the US Constitution says about our money system, and why it’s not WHAT backs money, but WHO controls the money supply that’s key.
Fallacy of Gold Backed Money
http://economicedge.blogspot.com/2010/01/fallacy-of-gold-backed-money_02.html
“People who support gold backed money do so mostly for the right reason – to keep the
QUANTITY OF MONEY UNDER CONTROL. There are, however, MANY
misrepresentations, half-truths, and self-serving reasons to promote gold either as a backing for
money or as a direct form of money itself...”
—snip—
If gold backed money actually worked, then those money systems would still be around today, but they are not. During the 1920s gold backed our money yet one of the largest credit bubbles in history was formed and ultimately popped regardless of the existence of a gold backed money system – the same has been repeated throughout history.
—snip—
When it comes to keeping the quantity of money under control the ideal system would be one
that allows the QUANTITY of money toincrease and todecrease in accordance with the reality
of the economy, the size of the population, and a multitude of other factors. Such a currency
would withstand the shock of war or natural disaster and neither produce extremes in PRICE
inflation or PRICE deflation.
There is simply no way to remove humans completely from the equation. This is the illusion of commodity backed money – it is just that, an illusion – it has never worked to actually keep the quantity of money under control, nor has any system ultimately passed the test of time.
Even if we had perfect economic models (not even close) and a computer controlled the quantity, the computer would have to be programmed by a human! Here’s the simple truth… What ultimately backs a country’s money is the RULE OF LAW, and
what ultimately backs the rule of law is a nation’s PEOPLE. Not its bankers, and rarely its
politicians.
++++++++++++++++++
Interested in your thoughts.
Thanks for a sensible post on gold backed currency. One issue is that “money” includes all checking and savings accounts and all loans. Banks, by loaning money, create money. We need to monitor and control the amount of loans and the reserves required by banks and other lending institutions. This is the real source of booms and busts in our economy. We loan too little during depressions/recessions and loan too much during inflations and booms. Hence the boom and bust cycles we’ve seen throughout history.
This is the problem. And when the humans are politicians, or influenced or controlled by politicians, it's even worse. I proposed letting private entities, banks, commodity depositories, or anyone issue their own currencies and, even though each one might take years, or even decades, to develop enough of a reputation, if they really managed the currency carefully enough to develop a following, such currencies would have the tightest controls of all -- verrry hard-earned reputations and competition. Just musing. Wuddya think?