I believe Switzerland is the only country that has ever successfully kept a Gold standard. Having currency based on a single commodity is a big risk because it can easily be influenced by outside events. If we went to a commodity based currency, I would rather see it as a broad spectrum instead of just one.
It’s the simplest answer one can give. We aren’t on it because it would require that our dollar be backed by something somebody really wants versus lies that he and little Timmy G tells us. They wouldn’t be allowed to print scrip on toilet paper anymore.
We’re not on the gold standard because you can’t print gold and inflating the currency is one of the primary ways the government asserts control
Because going back on the gold standard would slow and probably stop the advance of world collectivism.
I have a better idea of a logical basis for currency, one that is better than the current fiat, or “faith based” currency in use.
Way back when, an idea called “mercantilism” arose, which simply meant that those countries with the most specie, gold and silver, were the most powerful, because the more specie they had, the more army and navy they could afford.
In most every book on economics, mercantilism is mentioned, and is said to have died out, mostly because there is just not enough specie to go around.
But in the modern scheme of things, specie no longer plays such a critical part, compared to other commodities, such as oil and food.
So instead of thinking that mercantilism has died out, instead imagine it as having *expanded* to having far more bases than just specie.
But would this “expanded mercantilism” automatically impoverish resource poor nations? Not really. Because raw materials are worth much less than processed and finished goods. While a resource wealthy nation might mine iron and make it into steel, a resource poor nation might buy that steel, and make it into automobiles.
In fact, resource wealthy nations would be at something of a disadvantage, unless they also “value enhanced” the products they made.
An easy way to see this “expanded mercantilism” in practice, is to look at the Gulf oil states. While they pump and ship a lot of crude oil, they actually don’t get as much profit as they could from this resource. That is, imagine if instead of selling crude oil, they refined it themselves and sold the refined products: gasoline, home heating oil, jet fuel, etc., they would make much, much more profit.
An important lesson about “expanded mercantilism” is little known means by which Ronald Reagan broke the Soviet Union—with wheat.
The Soviets could never overcome their stupid philosophy that the communist-style farm *had* to be better than the wage farm or the free enterprise farm, so they had a perpetual shortage of grain for both themselves and their farm animals, on which they were very reliant, to eat.
Reagan got some very harsh criticism from both the left (pandering to the farm vote), and the right (helping the Soviet Union), by opening the flood gates to unlimited grain sales to the Soviet Union.
The Soviets were far too paranoid to eat US grain, but they would feed their animals with it, and divert their food to human consumption.
Expensive US grain. It began by Russia giving us all their gold, for wheat. They rapidly drained their gold reserves, so they began to dredge their river deltas for more, and every bit went to the US. But it was not enough.
Soon, more and more Soviet crude oil went to the US as well, eventually almost all of it. But it was not enough. All their foreign currency reserves went to the US. The effect was like a vampire, draining their economy dry. And all for wheat.
Then finally, when their purse was empty, Reagan announced his Star Wars program, and it broke their will. No way could they match this. They were impoverished. They gave up.
So as you can see, wheat can be just as powerful as gold and silver.
Today, most people could make a common sense judgment about what commodities and even services should be part of an expended mercantilism system. But no matter what was used, by being “reality based”, instead of “faith based”, would mean that it would be far less prone to monkey business, speculative gambling, or government manipulation.
“If the gold standard is so great, why aren’t we using it right now?”
There’s a twofold answer to this question. It’s perhaps overly simplistic, but it is sufficient to understand why the US and the rest of the world is not on a gold standard.
First, a gold standard enforces a discipline upon all economic actors, even governments. If there’s one thing that governments and politicians hate, it’s discipline.
Second, certain economic actors benefit from a fiat monetary regime. These include politicians and “civil servants”, of course, but also government contractors of all varieties, commercial banks, and highly leveraged financial entities like investment banks and hedge funds. Beneficiaries of a fiat monetary regime tend to be those with the greatest political pull, though they can readily co-opt penniless, indigent, and slothful folks who have nothing to lose from a corrupt monetary regime.
And who does the fiat monetary regime hurt? Only the prudent, the frugal, and the industrious, the savers and investors, the inventors and entrepreneurs. Who needs people like that?
The bankers cannot plunder a nation that is on a gold standard. They NEED fiat money like the “Federal Reserve Note” that they can manipulate at will.
A precious-metals based currency can still be debased . . . just ask the Romans!
A precious-metals based currency can exist for a thousand years . . . just ask the Byzantines!