— On the Swiss Franc, it is no longer on the Gold Standard, completely removed in 2000 via constitutional amendment. Before that time, and after the mid-1930s, it was only on a 40% Gold Standard, not a true gold standard. They amended due to all the “Nazi gold” stories, not because of any economic reasons.
The Swiss Economy has by no means been hurt by being on the Gold Standard; they had a so-so 1990s, but you have to remember that Federal spending there is 40% of GDP, and the Cantons have almost as much power as the federal government! The Swiss economy has been kicking ass since the dollar started going down in 2001/2, but even before that their unemployment rate was the lowest out of any OECD country, 3.4%.
Arguing that a strong currency in a fiat system is a weakness is a major fallacy. The stronger the currency, the better. Here’s why:
1. Most obviously, imports are cheaper. IF the dollar went up 100% in value, that $20,000 Honda Civic would only cost $10,000.
2. Cheaper imports lower business costs and helps exporters. Many of our raw materials needed to manufacture come from overseas and are re-exported with value added. This includes everything from Oil to Copper. This is what the Chinese are realizing on a smaller scale since they let the Yuan appreciate a bit.
3. The stronger the monetary policy is, the more efficiently resources are allocated within the economy. In a weak fiat monetary system, any fly-by-night operation can raise enough capital to increase operations, such as the dotcom companies. The stronger and more rigid the monetary policy is, the more efficient the allocation of resources. In a 100% gold dollar system, only companies that meet stringent feasibility requirements by lenders will get loans. This makes the economy much better off.
The Chinese have so much pent-up demand, with a purposely-depreciated currency, that they would have a billion new consumers as soon as they wanted to. The argument that the Chinese are dependent on US demand is another demand-side Keynesian fallacy. In the post-WWII 1950s, world economies outside of the US were quite poor, but we had a strong dollar and an amazing manufacturing sector.
Tight monetary policy industrializes and economy, while fiat policies de-industrialize. Of course, when everybody is fiat, it’s hard to notice.
— Before WWI even started, there were movements around the world to move to a fiat currency. After all, we set up the Federal Reserve in 1913, and Lincoln issued fiat paper during the Civil War. Hell, the pro-Fiat movement in the US achieved critical mass in William Jennings Bryan’s 1896 presidential campaign.
— We are too set on this paradigm of victory and defeat. The president himself, who is strongly disagree with on Middle East Policy, has said there will be no clear-cut victory—neither will there be a clear-cut loss.
In all honesty what matters in warfare is not who won or lost, but the actual outcomes, yes? Any other victory would be a Pyrrhic victory.
If we go home and mind our own business, he is what will happen: regional powers will assert themselves and provide regional security, while in the Middle East Arab and Persian power will return to historical norms. Samuel Huntington, Author of the Clash of Civilizations, has stated that this needs to happen (something in the Arab power vacuum). I foresee many Arab states completely collapsing, with city-states like we see in the UAE emerging to provide authority. Leagues of these city-states or micronations will provide security in the region and will provide centers of Commerce. Leading city-states will be Dubai, Qatar, Abu Dhabi, and an independent Mecca and Medina. This will especially be the case after oil ceases to be so important in a few decades as we move into other forms of energy.
We had the only manufacturing sector in the world that hadn't been destroyed by the war. We had a worldwide monopoly. And that's how the American Middle Class as we know it was created -- by the union movement.
Thanks to that monopoly and the unions, a man could drop out of high school, go down to the union hall and get his card, sign up for work at the local assembly plant, marry, have 2.3 kids, buy a car, a house and a vacation home -- and retire after 50 years to a nice fat pension. But that priced American goods out of the world market once other industrial bases came back on line. Once the Third World came on line, the cost of American labor forced companies to move offshore. It was not overt taxation that drove them away, or even environmental regulations, but the indirect taxation of high labor costs due to the Wagner Act of 1935.
A gold standard and low taxes will not get companies to repatriate our old manufacturing capability. You'd have to finish off the unions first.
Before WWI even started, there were movements around the world to move to a fiat currency.
In Europe it started in 1909 when the French government started paying its civil servants in paper, not gold coin. And it happened because France saw quite clearly that it was going to have to fight the Germans again.
We are too set on this paradigm of victory and defeat.
When we see a clear paradigm of victory and defeat, we win, as we did in World War II and the Cold War. When we don't, we lose, as we did in Vietnam. I can recall all too clearly the people who told us it would be good for the nation to lose in Vietnam. We would be a better people for it. Based on what happened to us after Vietnam, I would see us reliving the Seventies under a second Carter, with other nations running rings around us. We could easily be cut off from the region's oil. I can't see that being good for America.
Your view of the Middle East following an American departure strikes me as being unrealistic. Were the shah still in charge, I could see a Persian return to historical norms, but not with the current whack jobs in power. Regime change is necessary. Regrettably, religious hysteria is still too strong in that region for a positive outcome.