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"The return to the gold standard is supported by many followers of the Austrian School of Economics and libertarians, perhaps most notably 2008 U.S. Presidential candidate Ron Paul." This statement is incorrect. Dr. Paul certainly advocated hard currency "such as" gold or silver, but has stated repeatedly that he belives that gold is not the best option. He does however, advocate that either 1) the US returns to a gold or silver standard in order to comply with the US Constitution, or 2)ammend the constitution to not require gold or silver currency.Gawain VIII (talk) 21:14, 14 January 2008 (UTC)[reply]

I added the copyedit tag because some of the text is duplicated and some of the grammar is questionable. I haven't the time to fix it at the moment.

I presume that "reasons why" in the article as it was were those given by the Nixon Administration - the opposing view is attributable to nearly everyone who commented on the Euro-dollar. Pick your source. I'll stand by the fact that there was no way there was enough gold in Fort Knox to redeem the notes in 1975, and no way to test for it, since US citizens couldn't own gold and Europeans couldn't redeem notes.24

Well duh........

U.S. currency was representative money and as such no one ever pretended that the United States had the gold reserves to redeem all the dollars in circulation if everyone decided to redeem their dollars at the same time.

ok, this is our "representative" versus "commodity" argument again. I think it arises because really there is some degree of commodity, credit, and fiat involved in *every* kind of money. In other words we should not write about "commodity money" but rather "commodity settling", and likewise "credit clearing", and "fiat backing" - any of which may be involved in a given currency.

The trouble was that in 1971 to 1974, everyone *did* decide to redeem their dollars at the same time because the dollar was seriously undervalued with respect to its nominal value in gold (and this was the result of Johnson administration deficit funding for Vietnam and the Great Society).

more than that - there was the counterfeiting and Eurodollar problems there in the background too - but all grist for the mill. Those were causes of a balance of trade problem.

As such the Bretton Woods system broke down.

yup. Except the also-broken Bank for International Settlements was never fixed, nor the IMF...

24, the fact that you don't seem to know what the gold standard (and for that matter what commodity money is) makes it very difficult for me to take anything you have to say regarding economics seriously.

and, the fact that you don't use "is" the way I do makes it hard for me to believe you understand how money itself works. I find it very hard to believe that I would understand the ultra-complex arguments around flags, brands and labels, and simultaneously not understand the simple silly ones around gold. but, it's always possible, certainly the article as it is has benefitted from your rewrite, and from my bringing up the issue of non-convertibility and insolvency. 24

Currently the first paragraph reads as follows:

The gold standard was a monetary system in which paper money was convertible on demand into gold. Under such a system money represents gold: coins are made of the corresponding amount of gold, and/or coins and notes represent an amount of gold held in a vault somewhere. Banknotes were issued fractionally backed by gold (i.e. gold reserves were a fixed proportion of the value of the notes in circulation). Rates of exchange between countries were fixed by their currency values in gold. Most financially important countries were on the gold standard from 1900 until its suspension during World War I because of the problems of transporting gold. It was reintroduced in 1925 but finally abandoned in 1931.

Several issues with this:

1. With regard to "Banknotes were issued fractionally backed by gold" etc. This is inappropriate. It is not part of the "Gold Standard" but part of the Fractional reserve banking system and therefore does not belong on this page.
2. Regarding "Rates of exchange between countries were fixed by their currency values in gold" This issue is handled further down the page. The repeat, in this sentence should be removed since it does not need double treatment when it covered properly further down.
3. With regard to "gold standard from 1900 until its suspension during World War I because of the problems of transporting gold" This is simply not true. Gold is transported even now, and often gold does not need to be transported, but simply becomes reallocated in the COMEX vaults et. al. More to the point, it is a silly thing to say on the face of it. If transporting live cattle, copper, aluminium, rice, corn, and wheat by ship is economically viable, then why not gold? If User:172 has reason for this comment, then I would be interested in reading about it.
4. With regard to "It was reintroduced in 1925 but finally abandoned in 1931." This is untrue on the face of it. There is no mention where "it" was reintroduced in 1925. In fact what was "introduced" was the Gold Exchange Standard in Britain and parts of Europe, not the gold standard per se, and I believe that was in 1926, not 1925.

Here is my suggested replacement for the currently rather muddled and inaccurate first paragraph:

The gold standard was a monetary system in which paper money was convertible on demand into gold. Under such a system money represents gold: coins are made of the corresponding amount of gold, and/or coins and notes represent an amount of gold held in a vault somewhere.

When banknotes were issued fractionally backed by gold (i.e. gold reserves were a fixed proportion of the value of the notes in circulation) this was the Fractional reserve banking system, and should not be mistaken for a true Gold Standard.

I suggest User:172 cease attempting to revert this page to eliminate these changes. -- Octothorn 20:09, 17 Aug 2003 (UTC)

Quit trying to get away with pushing an agenda. So far you've been able to do it because the articles dealing with economics have always gotten a low degree of interest around here. Articulate the distinctions between the prewar "classical gold standard" and the postwar "gold exchange standard" in this article, if you want. Please review the NPOV guidelines so that you'd realize that it is inappropriate to try to sneak in your advocacy piece and veiled theses. The Gold Exchange Standard was a gold standard, just not a restoration of the classical prewar system per se. I added a good deal to the article since, and it should clarify what set the classical gold standard and the Gold Exchange Standard apart. 172 07:29, 18 Aug 2003 (UTC)

Volunteer to make it less UK-US centered? --Ann O'nyme 21:15, 31 Aug 2003 (UTC)

Sure, go for it. I would've done it much earlier had I had time. 172's been fairly inactive for the past few weeks. Next week, however, I'll make my presence known once again. 172 22:26, 31 Aug 2003 (UTC)

The History section has a rather large chronological jump from the Sumerians directly to the year 1824. Volunteer for some history in between, particularly with regards to the large Spanish movements of gold and silver from the New World to the Old and what effect that had? Tempshill 06:25, 23 Oct 2003 (UTC)

Move here for discussion

Nixon's move to cease allowing foreign Governments to redeem dollars for precious metal was the final act in a 150-year-long 'transfer' of the citizen's gold and silver to the Federal Government's vault. This allowed the U.S. Government to have much more freedom in determining the rate of printing and volume in circulation of its fiat currency.

Need source

Tantalum is also suggested as an alternative money supply standard, since even in an economy based on molecular engineering it would remain extremely difficult to forge - and remain quite easy to hide.

Roadrunner 00:48, 30 Apr 2004 (UTC)

A proposal was floated to stabilize exchange rates between France, Great Britain and the United Kingdom based on a system of drawing rights, but this too collapsed. I have changed Kingdom to read States as I assume that was what was originally intended. --Spencer BOOTH 07:17, 15 Jul 2004 (UTC)

The picture at the top is far too large and doesn't really add much to the article. Could someone reduce it to a smaller png and put it in a more appropriate place? Lisiate 00:09, 28 Jul 2004 (UTC)

"a questionable assumption in light of the spending binge of George W. Bush" removed from the Washington concensus secion. It just seemed too POV. I am, however, not sure how to word it better. -Vina 20:30, 3 Aug 2004 (UTC)

cited source of the contention - namely the International Monetary Fund. That Bush has run up massive deficits, that those deficits are structural and that they are destabilizing the international currency system are matters beyond dispute, and are not disputed by anyone not employed by the RNC or its subsidiaries. So sorry, facts are stubborn things here. Stirling Newberry 23:23, 3 Aug 2004 (UTC)

ahem, try debt vs. GDP (or debt as % of GDP). Plenty of sources. The US debt currently is lower than it is in the early 1990's. The rate of increase is high, that is not disputed, but neither is it higher than the rate of increase in the late 1980's and early 1990's. So sorry, facts are stubborn things here. -Vina 23:31, 3 Aug 2004 (UTC)

Did some more research on the IMF site. Included a summary in that section. Note that they are concerned about trends exhibited since 1999, and that they are also concerned about household spending. Hopefully this is more acceptable to you? -Vina 00:25, 4 Aug 2004 (UTC)

I will not be editing this page any more as I do not believe in getting to edit wars. In closing, I will mentioned that I still think what you wish to add is POV, not extremely, but still POV. -Vina 05:11, 4 Aug 2004 (UTC)

I'm reporting what the IMF has said about the need for a stable anchor currency and current US fiscal policy. "Tax increases will be needed to maintain the stability of the US dollar". It's also what comes straight out of the Fleming-Mundell model, namely that running a consistent budget deficit will continue to negatively impact the balance of trade, and therefore devalue the dollar. Find a model that says otherwise, and report on what it says. Stirling Newberry 08:31, 4 Aug 2004 (UTC)

Sigh, I never objected to the model, merely the personal attack. In all my research, I've only seen the comment on Jan 7, 04 about Bush, and that was 1 paper published by 1 analyst. In no other statement does the IMF come across so harshly, not even when it criticised the tax cuts 2 years ago did it comment that harshly (incidentally, the IMF now acknowledges the role the tax cuts did in bringing the world out of recession.) The papers that you refer to, those released July 30th, and accessible from the IMF front page, do not mention Bush by name (At least, what I (did not) find via an Acrobat Reader search.) Statements like the foreign debt being an "unprecedented" 40% of GDP is without base (the unprecedented part, not the 40% part) as Japan has one above 100%, and many euro nations are hovering around 70%. I have not seen the IMF follow up on the Collyns paper all that much. They have valid concerns, and writing about them is perfectly fine with me. it's the personal attack part that I feel is POV. -Vina 16:39, 4 Aug 2004 (UTC)

Sigh again - someone else proposed the tax packages? They were submitted to congress by Bush, who in fact wanted larger revenue reductions in 2003 than were finally passed. Again, "attacks" and what people wanted to be said are all well and good, but the documentable facts at hand are: 1. The tax policy is driven by the current US executive 2. Every economic model I have seen - including the ones from OMB and CBO - indicate structural deficits and continued devaluation of the US dollar. If you feel someone else is responsible for the tax reductions, I am sure we'd all be fascinated to know who that is. If you have a model which indicates that the IMF is wrong - and they've been wrong before - then by all means present it. I simply haven't found one. Stirling Newberry 00:44, 5 Aug 2004 (UTC)

Why were the sections "Post-War International Gold Standard (1946-1971)" and "The Washington Consensus" removed? They were acting as summaries of main articles. 172 01:01, 5 Aug 2004 (UTC)

Space considerations, and because as the author of the history section, it was better and more consistent to refer to the more extensive Bretton Woods article, so that issues could be resolved once, rather than multiple times. I've removed the Washington Consensus section because it is clear there are issues that need to be resolved which are not germane to the question of a gold standard per se. Stirling Newberry 01:15, 5 Aug 2004 (UTC)

And as the author of the more extensive Bretton Woods article, I think that there ought to be condensed summaries of that article available in entries on broader, encompassing topics. Some readers like detail while other types of readers want the most important facts in a condensed format. Space considerations are not a major concern; there are plenty of articles on important, broad, and complex subjects that take up well over 32K. 172 01:29, 5 Aug 2004 (UTC)

Just to add to the above, I'm not saying that a summary of the Washington Consensus article belongs here. However, at least a few concluding remarks on the Washington Consensus that are germane to the question of the gold standard will be helpful. 172 01:40, 5 Aug 2004 (UTC)

With regard to the following paragraph in the text:

"After the collapse of the empire in the West, and the decline of the mines in Europe which were largely played out, the Byzantine empire continued to mint successor coins to the solidus, called the nomisma or bezant. They were forced to mix more and more base metals with gold, until by the turn of the millennium the coins in circulation were only 25% gold by weight, a tremendous drop from the 95% pure old Roman coins. Increasingly trade was conducted in a coin struck in the Arabic world using gold from Africa: the dinar."

In the first sentence, whiile the Bezant was the successor coin to the Solidus, they became two names for the same coin [1]. The Greeks of the Byzantine Empire now called the old circulating Solidus by the name of the new Byzantine issues of the old coin, the Bezant [2].

The second sentence beginnning with the words "They were forced..." is inappropriate. "They" - the Byzantine Empire - were not forced to degrade the purity of the coin. If they were, someone ought to provide the text with some indication of what it was that "forced" them, otherwise the use of the word "forced" should be removed.

The reason for the degradation of the coin is simple, and nobody was forced do do so - "they" just wanted to be able to mint more coins for themselves using the same amount of gold. This is the same reason any government has ever had for degrading the purity of gold coins, a form of embezzlement - they get something for nothing.

More importantly, however, that sentence is inaccurate. The Bezant was not degraded as quickly as indicated. It circulated from the early fourth century, continuing until Emperor Michael IV (1034 - 1041) began to degrade it's purity. Prior to that tiime the Bezant circulated at it's full weight and purity. The Bezant was therefore stable for a period of about 700 years [2].

The final sentence is also inaccurate. The Dinar was modelled on the Bezant and the earlier Solidus [1][2]. Essentially it was the same coin, just minted by the Arab Empire. Consequently both the Dinar and Bezant circulated alongside one another. The text should also draw attention to the fact that the Dinar circulated for about 450 years unchanged, from the late 7th century to the mid-12th century, during which time the Saracen Arab civilisation flourished until it callapsed in religious turmoil.

The Solidus the Bezant and then the Dinar were all gold coins of the same gold content (4.4 grams at 22 carats) which at times circulated alongside one another. In this way a gold standard based on a single form of gold coin was maintained for a thousand years, surviving three empires.

References:

[1]"Trade Coins" http://www.cyberussr.com/hcunn/gold-co.html, by Hugo S. Cunningham -- Valid as at 2004-09-06T11:00:20+10:00

[2]"Gold Wars", by Ferdinand Lips, 2001, Pages 3-6.

[3]"Roman Imperial Coinage" http://www.roman-britain.org/coinage.htm -- Valid as at 2004-09-06T11:00:20+10:00

Octothorn 01:06, 6 Sep 2004 (UTC)

Even your own references contradict you - the solidus was debased repeatedly over time, and was, in itself, an attempt to debase the aureus. Stirling Newberry 20:11, 27 Dec 2004 (UTC)

Um... Where? And, how in the world would one coin be used to debase another? Coins don't debase coins, people debase coins. The Aureus was already very much reduced in size by the time the soludus was produced. The solidus replaced the aureus. Perhaps you are confusing "replaced" with "debased". Octothorn 07:33, 6 Jan 2005 (UTC)

The following paragraph near the beginnning of the text appears to be silly, and wording should be reconsidered:

"Typically under a gold standard, the physical transport of gold becomes cumbersome for popular use, and so promissory notes? (which may be either issued privately or by government) to pay in gold at a later date, circulate. These note are convertible into physical gold on demand. Also known as demand notes?, (see paper money)."

The idea that "physical transport of gold becomes cumbersome for popular use" is amusing. An 8 gram gold coin (nominal value of $5) carries US$100 worth of gold. Notes larger than $100 are seldom used. While a $100 note may not be quite as "cumbersome" as such a coin, the coin is certainly more durable. One may also suggest that if a single 8 gram coin representing $100 is "cumbersome for popular use", then the quarter, currently in "popular use", must then be over 400 times more cumbersome than a gold coin.

Originally large volumes of gold were required to make large purchases. While carrying 100 dollars worth of gold is not a problem, the volume of gold required for the annual wheat import of Rome would run a great deal more. The cost in silver of a chest of opium weighed thirty times as much as the chest itself. And in the present, larger bills are less common because of checks, credit cards and other instruments. That is to say, because even paper money is too cumbersome for popular use. Stirling Newberry 20:11, 27 Dec 2004 (UTC)

Surely you haven't forgotten that checks are claims on bank deposits, not money. If a cheque is written it does not add to the money supply, it's just a note to the bank to move money from one place to another.

Also, credit is credit, not money. Credit is a debt instrument. If I charge something to my credit card it does not increase the money supply.

Neither cheques nor credit can circulate as currency - they are not divisible, and they rely on the presence of sufficient bank deposits or the capacity to make payment in currency.

The text suggests that gold is more cumbersome than cash, but that is not true. Notes, originally issued as claims on a quantity of gold, are now so devalued that they are about as cumbersome as gold. Suggestions that gold is more cumbersome than fed reserve notes are not relevent or constructive to the issue, and the comment as it stands lacks NPOV ansd should be removed. Octothorn 07:58, 6 Jan 2005 (UTC)

The subject of notes should still be raised, since the page carries an image of one. What follows is a possible replacement:

The use of gold coins in large transactions is time consuming and prone to error. Centuries ago the market found a solution to this problem. Goldsmiths would issue notes of claim on gold coins deposited with them. Those coins were not spent, but were held in reserve to cover the notes that were issued. Each transaction involving a large amount of gold was easier with a note. Many consecutive transactions using one note could proceed smoothly. Coins would not need to be counted or transported until the note was redeemed, and each note could be exchanged for goods over and over.

This has also been true in more recent times, as with the 1922 U.S. Gold Certificate shown on this page. This $100 note was a claim on about five ounces of gold coins, or $2000 worth of gold in the year 2004. Notes similar to that pictured were issued to the depositor as a claim on gold coins.

The benefit of using something like the replacement above is that it outlines the need for notes in large transactions and the function of gold certificates. It also links the text to the image, giving the reader some perspective on what the note is worth.

Octothorn 04:29, 6 Sep 2004 (UTC)

graf was replaced with a graf on the general advantages of paper money within the context of a specie based monetary system Stirling Newberry 20:11, 27 Dec 2004 (UTC)

For a featured article, especially now highlighted on the main page, this article needs more pictures. I added one of gold ingots held by the Bank of Sweden, but I'm sure others could be found. Curiously, I could not find one image of a gold coin on Wikipedia. Perhaps you may have better luck than I, or find other relevant images.--Pharos 20:22, 21 Jan 2005 (UTC)

Britain was almost immediately forced to gradually end its gold standard

Immediate and gradual at the same time? Ubermonkey 21:16, 21 Jan 2005 (UTC)

Interesting, but too long and often redundant. The proponats' and oponents' viewpoints are presented over and over again, this needs to be made more compact.

There is no such thing as a doubloon in Spanish. It should read "doblón".

 That is the correct spelling in Spanish, but this is the english wikipedia. Feel free to edit the Spanish version.

IMHO The section on "early coinage" does not belong in this article. Shouldn't it be in an article on the history of coins?

Could somebody more knowledgable than I do it?

(This unsigned comment was posted from IP address 80.58.5.109 on 11:16, 28 June 2005.)

I agree that the history of gold-coin standards is not precisely relevant to the topic, but it is generally relevant. The genesis of the gold standard can only be properly understood when the circumstances of its creation are fully explained. I think that some of you gold-standard debaters could gain some insight by comparing the reasons a country adopts a gold standard with the reasons it later abandons a gold standard. After skimming through the articles on banknotes and John Law (economist), I see that transitions from a gold-coin standard to a gold standard are "intimately related to shortages of metal for coins," as stated in the banknote article.

Perhaps it would be better to put this section in its own article, then have a single paragraph on early coinage, which also links to the new article on early coinage. Or, this section could be transplanted to a "history of coins" article, inserting it as a section on gold-coin standards. In either case, there needs to be proper reference to this historical precursor. William Moates (talk) 12:09, 22 August 2008 (UTC)[reply]

Austro-Hungarian krone claims it was in 1892. I agree with it. Austria-Hungary has the single currency. -- Vít Zvánovec 09:05, 29 September 2005 (UTC)[reply]

I made edits to this page, though which were all reverted by User:Stirling Newbury. I've reverted them again to my version, with an explanation here of the edits:

• links such as London Conference and Washington Consensus link to the wrong conference, and the Washington Consensus has nothing to do with the Washington Agreement, hence my deletion of the link. Furthermore, the Wikipedia:Manual of Style (links) suggests its better not to have links to every year, century, etc, unless one is talking about a specific date.
• The plural of crisis really is crises..
• Not sure why SN deleted the dubious after Austria. See talk above.
• Greenback has written one article about his support of the gold standard, when the dollar was still convertible into gold almost forty years ago. To suggest that he supports a return to the gold standard is a claim made on many gold standard blogs, but I believe more evidence is needed for that claim.
• Barro wrote an article where he said "The choice among different monetary constitutions -- such as the gold standard, a commodity-reserve standard, or a fiat standard with fixed rules for setting the quantity of money...may be less important than the decision to adopt some monetary constitution. On the other hand, the gold standard actually prevailed for a substantial period (even if from an "historical accident," rather than a constitutional choice process), whereas the world has yet to see a fiat currency system that has obvious "stability" properties." As this was in 1979, it is clear that he makes a reservation about the fiat currencies, as they hadn't been in place for long (the dollar without gold convertibility only for 8 years). I do not believe this implies that he supports the gold standard.
• " several other nations accumulated gold in preparation for the Economic and Monetary Union" implies that Eurozone countries overall increased their stock of gold. They did not, as the data explains.
• "Gold standard advocates have a strong following among commodity traders and hedge funds with a bearish orientation." - this implies that speculators such as commodity traders and hedge funds want a return to the gold standard. This is the last thing they want! It will kill their business. There is a reason that the IMM was set up just after the collapse of the Bretton Woods system - it meant volatility in FX markets, so more business and profits for them. Bearish traders do invest in gold, as they hope the price goes up in times of panic.
• "fiscal meltdown" - what does this mean, that budget deficits explode..??
• "many hedge financial theories" - no idea what this is supposed to mean.
• "Mainstream conservative economists such as Barro and Greenspan have admitted a preference for some tangibly backed monetary standard, and have stated that a gold standard is among the possible range of choices." As this was either 40 years ago (and not since then), or not very strongly (see above), it seems this line is only here to try to increase credibility for the gold standard.
• Saying the use of gold as a reserve has increased suggests that the amount of gold has increased. It hasn't. Also, most countries (and the IMF) value their gold at cost price, so gold didn't even replace other reserves when the gold price rose.

Let me know what points you disagree with, and we can have a discussion. DocendoDiscimus 09:01, 31 October 2005 (UTC)[reply]

From the article: "Coins were struck in smaller and smaller amounts..." Should this be "smaller and smaller quantities" or "smaller and smaller denominations"?

The section that reads:

"Finally the quantity of gold available for reserves, even if all of it were confiscated and used as the unit of account, would put the value of gold upwards of 5000 dollars an ounce on a purchasing parity basis."

I can't find anything to verify the value of $5000 USD if all currency were converted into Gold. I understand that Purchasing Parity is different from Money Supply, but the comment doesn't address the concept that during said conversion a great deal of overextended moneys upply would instantly contract, but it's almost impossible to determine to what degree or the effect, so the only reasonable comparison we can make is to M3. All research I've seen along these lines, using *just* the United States M3 money supply puts the value up around $32,000 USD and growing along with M3. As can be easily determined, converting the entire worldwide money supply into a system where Gold Troy Ounces are the unit standard, this value would be several multiples higher. There is plenty of credible research showing (though naturally arguable) that a value of $5000 USD is easily approachable in the current financial situation within the next few years. Charlie Wiederhold 11:03, 15 January 2006 (UTC)[reply]

Secondly, this comment is very POV and I feel needs to be adjusted. I'm commenting here as to why:

"If the current holders of gold imagine that this is the price that they will be paid for giving up their gold, they are quite likely to be disappointed."

There is no way to verify or predict this scenario. There is no timeline given. If people expected $5000 USD *today*, of course they would be disappointed. Wait 50 years though and inflation alone under the current system will easily outpace this nominal USD value. On a purchasing power basis, it's quite simple to show that One Troy Ounce is easily over $5000 2006 USD compared to when the Dollar and Gold were linked. Some basis of comparison is required in order for any comments like this to have any meaning. This is why *any* commentary on fiat vs tangible assets is tricky and easily manipulated one way or another. Charlie Wiederhold 11:03, 15 January 2006 (UTC)[reply]

The following section from the article contains many major problems contributing to a particular POV that is neither accurate nor intellectually honest:

In the international gold standard imbalances in international trade were rectified by requiring nations to pay accounts in gold. A country in deficit would have to pay its debts in gold thus depleting gold reserves and would therefore have to reduce its money supply. This would cause prices to deflate, reducing economic activity and, consequently, demand would fall. The resulting fall in demand would reduce imports; thus theoretically the deficit would be rectified when the nation was again importing less than it exported. This led to a constant pressure to close economies in the face of currency drains in what critics called "beggar thy neighbor" policies. Such zero-sum gold standard systems showed periodic imbalances which had to be corrected by rapid falls in output.

In practice however this could seriously destabilize the economy of countries which ran a trade deficit, because people tended to make a run on the bank to retrieve their money before gold reserves were exported, thus causing banks to collapse and wiping out savings. Bank runs and failures were a common feature of life during the period when the gold standard was the established economic system. It also created a counter-cyclical effect, as governments taxed trade, they accumulated gold and silver coin, which reduced the monetary base for the private economy. This paradox lead to "money droughts" and inflation, as governments taxed, often to pay for wars, and paid in coin, while the velocity of money decreased in the private economy as individuals hedged against the uncertain political situation by hoarding gold. Each attempt to introduce paper money was met, sooner or later, with either over-printing of money and the resulting collapse of the "fiat" money, including paper francs, continentals printed by the pre-Constitutional US Congress and various "bubbles". Or it would create the demand by the government to be paid only in specie, which devalued the existing paper money.

The following POV issues with this text are aparrent;

1. It is true that imbalances in international trade were paid in gold, however under a 100% gold standard, the gold paid matched the notes held, so there was no reduction in the 100% reserve. The author of the paragraph seems to believe that the gold was shipped out from banks while the notes that it was backing were still in circulation. This is not the case, and is fraud under a 100% reserve. The money supply would be reduced, it is true, but the comment in the following paragraph suggesting that this would cause a bank run is entirely false under a 100% gold standard.
2. Trade deficits were not as significant as the author percieves. Suppose that the trade deficit was caused by the sudden need to import mining equipment from other countries. The best example of this is in a gold rush. Think about the california gold rush. Mining equipment was "imported" but gold was "exported" one might suggest that the outflow of gold was the correction of a trade deficit, but the point is that the gold outflows are a part of the trade.
3. Payment in gold would appear to cause "deflation" of all goods other than gold. However, the real case is that gold was increasing in value against other goods. This is normal behaviour for a commodity, and it occurs when there is greater demand than supply. The natural response to this is to reduce consumption and to increase supply, as with any other commodity. Gold mining operations in the country paying international debts would naturally increase (increase of gold supply) as would production of goods that would otherwise be imported (decreasing demand for gold for export). This really is basic economics, but the author prefers to call it "beggar thy neighbor" - leading to the final point...
4. "Beggar thy neighbor" was a term coined to describe the action of the Smoot-Hawley Tariff Act, NOT the action of the gold standard on international trade - the author has used it as the COMPLETE OPPOSITE of the way it was intended. The gold standard was symbol of free and open trade between nations, and the tariff act was the commencement of stifling business and the closing of trade borders. Check this reference - http://www.state.gov/r/pa/ho/time/id/17606.htm

The section "Zero Sum Gold Standard" should either be edited to NPOV, or preferrably removed entirely.

Octothorn 05:18, 16 February 2006 (UTC)[reply]

"...in 1796 President Jefferson suspended the minting of silver coins." Jefferson did not become president until the year 1800. In "silver standard," it reads as 1806, so I've changed it, assuming that article is accurate.

"As part of this process, many nations, including the US, banned private ownership of gold using the Trading With the Enemy Act..."

First, the phrasing here is a bit confusing; after all, US laws are irrelevant to other nations. But more importantly: the Trading With The Enemy Act was passed in 1917, and only allowed the Fed to prevent trading with the enemy. US citizens were banned private ownership of gold by FDR's Presidential Order 6102 in 1933, as cited at the bottom of the document.

The paragraph previous to the above quoted sentence talks about the UK returning to the gold standard in 1925. So it seems in the narrative we're already past 1917. And the subsequent paragraph adresses the London Conference in 1933. Surely this section meant Presidential Order 6102, and not The Trading With The Enemy Act?

I don't feel I'm familiar enough with the history to actually change the text. But let me propose an edited paragraph here, at least to get the ball rolling. Ahem:

As part of this process, many nations banned private ownership of gold. For example, in 1933 President Roosevelt signed Presidential Order 6102, which barred American citizens from owning gold. Any citizen "hoarding" gold could face up to ten years in jail, and/or a fine up to $10,000. Jewelry, private coin collections, and the like were exempt from this ban; in any case the ban seems not to have been enforced too zealously. In 1975 these restrictions on American citizens were abolished.

—Larry Hastings 06:07, 24 April 2006 (UTC)[reply]

On the left there are numerous links to pages explaining the same concept in another language, but the French page is missing. The French translation is "Étalon-or" and there is already such a titled page: http://fr.wikipedia.org/wiki/%C3%89talon-or I don't know how to add it to the list, can anybody do that?

This was apparently done, at some point. - Centrx 23:02, 21 May 2006 (UTC)[reply]

The reference to nobel is mis-spelt, it should be noble. —The preceding unsigned comment was added by Lawrence Chard (talk • contribs) 21:03, 18 June 2006 (UTC)

Thank you. I have corrected it. Note that anyone can edit Wikipedia, so in the future you are free to make a change like this yourself. —Centrx→talk 03:00, 20 June 2006 (UTC)[reply]

"Nevertheless, countries under the gold standard underwent debt crises and depressions throughout the history of its use."

Please provide citations with specifics. Currently, the words in this statement are ambiguous enough to make the statement lose meaning. What exactly is a "debt crisis"? How is the term "depression" used exactly? Did it have a negative effect on the private sector, or just the government (which is its intended effect)?

Currently, this just looks like a cheap shot against the gold standard. If this is an honest critique, it needs to be expanded with the mentioned details and citations and put into it's own critique section, or it needs to be removed. --DrDimension 22:25, 24 July 2006 (UTC)[reply]

Is there any evidence that Greenspan supports a gold standard, other than his writings way back in the 60's during his Ayn Rand days? If not, he ought not be counted a current supporter of the gold standard. The comments quoted later in the article do not indicate that he favors a return. Instead, he merely says he thinks it has certain advantages.Kitteneatkitten 03:01, 10 August 2006 (UTC)[reply]

Greenspan said in Congressional testimony on 7/22/98: "I am one of the rare people who have still some nostalgic view about the old gold standard, as you know, but I must tell you, I am in a very small minority among my colleagues on that issue."

This seems to imply (which is probably about as close as the Chairman gets) that his position has not changed.

Source: http://www.usagold.com/gildedopinion/greenspan-gold.html —Preceding unsigned comment added by 70.137.164.61 (talk)

Some nostalgia is not good enough to state that he "supports a return to the gold standard". Particularly so, since he's free to speak his mind today. That really ought to be stricken, as a quote from 1966 and some nostalgia in 1998 are hardly the stuff of present advocacy.

His most recently scholarly writings, listed below, do not even mention the word "gold".

• "Risk and Uncertainty in Monetary Policy" Alan Greenspan. The American Economic Review. May 2004. Vol. 94, Iss. 2; p. 33
• "Reflections on Monetary Policy 25 Years after October 1979: Chairman's Remarks" Greenspan, Alan, Federal Reserve Bank of St. Louis Review, vol. 87, no. 2, Part 2 March-April 2005, pp. 137-38
• "The Evolving U.S. Payments Imbalance and Its Impact on Europe and the Rest of the World" Alan Greenspan. Cato Journal. Washington: Spring 2004. Vol. 24, Iss. 1/2; p. 1 (11 pages)
• "Central Bank Perspectives on Stabilization Policy: Articles from the Bank's 2002 Economic Policy Symposium "Rethinking Stabilization Policy." Greenspan, Alan Federal Reserve Bank of Kansas City Economic Review, vol. 87, no. 4, 4th Quarter 2002, pp. 5-14 Derex 22:55, 29 September 2006 (UTC)[reply]

They do not mention gold, but they do not state that he has changed his mind either. Keep it, I would say that with those two sources, you need at least one current source that said he reversed his opinion in order for the comment to be stricken. Fephisto 15:26, 10 April 2007 (UTC)[reply]

It almost seems to be a logical fallacy: A said his opinion was X in 1970, he hasn't been asked about it since, so his opinion now must either be none or Y. Fephisto 19:32, 13 April 2007 (UTC)[reply]

I don't think the article should claim him as a current "supporter" of the gold standard. He was in the most important monetary policy position for 20 years and he did nothing to move the US to adopting the gold standard. I think the article should reflect the information we actually know rather than speculation. Greenspan supported the system in the 1970s and later expressed "nostalgia" for it. To list him as a supporter misrepresents the situation. For one, supporter can imply advocate, and he is definitely not an advocate for the system since he has done nothing to promote it.--Bkwillwm 20:32, 15 April 2007 (UTC)[reply]

Looked more into it: [1]. "In short, he claimed he was wrong about his predictions of calamity for the fiat U.S. dollar, that the Federal Reserve does a good job of essentially mimicking a gold standard, and that inflation is well under control."

Here's one that explicitly states him reversing his opinion (2005 I believe): "So that the question is: Would there be any advantage, at this particular stage, in going back to the gold standard? And the answer is: I don't think so, because we're acting as though we were there." [2]

He has reversed his opinion, although don't you think there should be some comment that he was a supporter or something of the sort? Like there is a mention of Milton Friedman advocating Great Deal policies earlier in his career, and then later denouncing them? Fephisto 21:29, 15 April 2007 (UTC)[reply]

If an individual claims to support something it is not up to you or anyone to decide that they no longer support it. Wikipedia must go with the facts available and there is no prescribed time when a fact expires. The fact that recent publications do not mention gold is irrelevant seeing as Greenspan may see it as extremely unlikely and for that reason or for one of any number of possible reasons no longer publish his opinion on the subject. Respectfully, suggesting that Greenspans stated opinion has 'expired' opens a Pandora's Box that brings into question any stated opinion that can not be proven to be up-to-date and will be used as a tool to enforce POV even if that is not what you are doing.70.68.160.115 (talk) 03:16, 9 March 2010 (UTC)[reply]

This paragraph is seriously disorganized, and I plan to straighten it out. However, there is one factual error where the present version says "many countries prohibited private ownership of gold." I am not aware of any country doing this besides the US, even countries going off the gold standard (of which there were many). I have put a "citation needed" on the statement and will wait a week to see whether anyone provides a credible cite. If not, I plan to delete the statement.--Joe 21:59, 22 August 2006 (UTC)[reply]

For some reason, User:Stirling Newberry is insisting on turning an article regarding an economic subject into an article that details crimes on part of the Nazi Germany Government. I'm sorry, but I see no relationship between the theft of Gold and the Bank of International Settlement and it's relationship to the economic policies of a gold standard, as one has nothing to do with another. Stirling has refused to compromise with me, due to my status as an "IP editor." I have reported him for a 3RR violation, and I will no longer revert as I am at my 3 reverts, but I was wondering if my fellow editors could step in and take a look at this. Thank you 87.19.140.175 20:38, 3 September 2006 (UTC)[reply]

This article avoids the fallacy of "innate value" for gold, which, as any other commodity, only has whatever "value" people assign to it. However, I have seen "innatism" to be fairly common among advocates of a gold standars. Should this article address innatism and arguments against it from various economic schools, such as the Austrian school (hardcore anti-innatist) and whatever schools might be out there that embrase innatism?Dogface 11:04, 11 September 2006 (UTC)[reply]

Central Bank Gold Reserves: An Historical Perspective Since 1945 by Timothy Green (World Gold Council, 1999) says, on Page 13, of the 1931 departure from the Gold Standard by Britain:

The suspension of the gold standard by Britain did not mean that people were forbidden to hold gold bar or coin, merely that the Bank of England did not have to sell gold at a fixed, statutory price. The London gold market worked normally. Banks and individuals could still buy and sell gold, import it and export it, but at the price of the day.

The cited publication may be viewed by clicking the footnote at the end of the second paragraph of this section of the article. The comment concerning the French order to turn in gold also comes from this publication.

The foreign-exchange controls that Britain relaxed in 1971 were not enacted in the 1930s. If you wish to hold that Britain, Japan, or any other country took steps besides suspension of convertibility and export controls (e.g., Germany), please provide citations to support your entries.

Again, confiscations of gold from minorities persecuted by the Nazis did not have perceptible effects on the foreign-exchange position of the German government, nor did any such considerations give gold any sort of priority among the comprehensive confiscations of property perpetrated at that time. If you wish to hold otherwise, please provide citation support. Joe 01:59, 15 September 2006 (UTC)[reply]

"in 1324 the US government suspended payment in gold and silver" I don't think there was a US government in 1324 146.7.211.82 00:46, 16 November 2006 (UTC)[reply]

I reverted this to 1861, however I wasn't able to confirm it from a reputable source, so it may still be incorrect. --69.255.141.119 01:10, 19 November 2006 (UTC)[reply]

As it is my past experience that a significant portion of the US population does not know what "specie" is, I felt it best to link the term to its definition.Filksinger 07:32, 19 November 2006 (UTC)[reply]

This section is not historically accurate--at best it could be described a having a POV problem, but unless clear evidence is given otherwise, it is simply wrong. The gold standard cannot be said to be in effect after 1914. Not only was it effectively abandoned during the Great War but it was legally abandoned in the USA by the Federal Reserve Act of 1913. I believe the original editors are confused as a consequence of certain lingering vestiges of the Gold Standard then in effect and pursued after the war. It's important to remember that outright abandoning the Gold Standard in 1913 was politically untenable.

Existing text already gives the proof of this key point: sterilization of gold flows. Such a policy necessarily implies per se that the Gold Standard was no longer functional. --131.215.176.81 01:48, 2 January 2007 (UTC)[reply]

You are incorrect. The view at the time was that the gold standard had been suspended, and policy makers of the time envisioned both a return to gold and a normalization of prices. Many laws were deferred or suspended during war, but that does not mean they are gone. The legal suspension of gold would occur, largely, in the 1930's. The period between the war and suspension was a crisis of the gold standard, but it was not clear, and is not clear even in theory, that it would not be returned to. Stirling Newberry 02:15, 2 January 2007 (UTC)[reply]

Sorry. I think you misunderstood. It is true that Britian, France, et al suspended the Gold Standard during the war with a public intention of returning to it. However, I am refering to the Federal Reserve Act of 1913. Ultimately, the trouble with the section as written is that it is bogus to say that Gold Standard was in operation after 1914. Therefore the discussion of the gold standard as it relates to the economic instability thereafter is presently dubious and misleading.

It simply is not accurate to say that the world was using a gold standard at any point after 1914 although certain systems imposed afterward had superficial similarities. --131.215.176.81 18:31, 2 January 2007 (UTC)[reply]

"A return to a gold standard is not generally thought feasible in mainstream economics,"

Where is the evidence for this? Please cite a source showing that this is generally thought by economists. Or I'll remove it. Zachorious 05:50, 7 January 2007 (UTC)[reply]

There is no evidence of this. Truth is, the economy was VERY stable when we had a gold system. If we have a fiat system (like we do today) wouldn't it be possible to create money by computer entry and loan it? Oh wow! I think were doing just that, arent we?! The logic behind this goes like so: If we implemented a gold standard today, there isn't enough gold to back all the new money that was created since 1933 (and thats true). The solution of course would be to eliminate every single loan created by fraud (and that would be just about every bank loan, including Mortgages, Credit Cards, Student Loans, and Business Loans in the US today), have a deflation period where the Treasury would ease in the new gold-backed currency as it eases the fraudulent currency (fed notes) out of the economy and destroy them. This is to prevent a hyper-deflationary shock. As a result, above statement is nothing more than a lie and should be removed as per Zachorious' suggestion.Goldwings (talk) 04:33, 10 January 2009 (UTC)[reply]

I agree, there is no legitimate evidence that we cant go back to the gold standard. The real obvious evidence is that we cant operate without it. I mean look at the US monetary system, it's a disaster. There has never been such a high level of crime as there is with the central banking system and the "Federal" Reserve. It's not federal at all, it's a private corporation. People need to understand this in order to even begin to understand the real problems in our economy.

“I see in the near future a crisis approaching that unnerves me, and causes me to tremble for the safety of our country. Corporations have been enthroned, an era of corruption will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people, until wealth is aggregated in a few hands and the republic is destroyed.” - Abraham Lincoln

"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around the banks, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." - Thomas Jefferson

"I believe that banking institutions are more dangerous to our liberties than standing armies.” - Thomas Jefferson

"The Great Depression resulting from the Stock Market crash was not accidental. It was a carefully contrived occurrence....The international bankers sought to bring about a condition of despair here so they might emerge as rulers of us all." - Rep. Louis McFadden, testified in Congress (1933), There were at least two attempts on his life by gunfire. He died of suspected poisoning after attending a banquet.

"The Federal Reserve Banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this Nation is run by the International Bankers." - Rep. Louis McFadden

I have to agree with Goldwings and Zachorious, that comment needs to be removed and a new one added

Preservefreedom (talk) 04:54, 10 January 2009 (UTC)[reply]

In the classical gold standard system, is partial reserve system used in that period? If the answer is yes, then the money supply can still be adjusted by adjusting the reserve ratio. Jackzhp 16:14, 26 January 2007 (UTC)[reply]

In the silver crisis section, it says, "In the late 18th century, wars and trade with China, which sold many trade goods to Europe but had little use for European goods, drained silver from the economies of Western Europe and the United States." Is it possible to have a link here linked to more detail information about it? Jackzhp 16:14, 26 January 2007 (UTC)[reply]

Does the featured star in the top right corner need to be removed since this was demoted? Just wanted to point it out to editors dedicated to this article. --Nehrams2020 05:43, 13 February 2007 (UTC)[reply]

For multiply banned trolls to leave harrrassing calls on the phones of editors that they hate. Nor is it appropriate to repeatedly vandalize a page by revertin g to an incorrect and POV version as the User:Roy Lopez Troll does. Stirling Newberry 05:11, 15 February 2007 (UTC)[reply]

I'm sorry, what harrrassing(sic) calls? Who is doing this to you? There is no user Roy Lopez. 207.14.8.119 01:41, 16 February 2007 (UTC)[reply]

I believe he's referring to me. Too bad I've never edited Gold Standard nor do I have an interest to. I would strongly suggest you cease falsely accusing me of actions other people are committing against you Stirling. Mr. Ray Lopez 05:30, 16 February 2007 (UTC)[reply]

It is pretty clear that our anonymous vandal isn't going to listen, isn't going to learn and is going to continue the habit it has of lying on edit summaries.

Stirling Newberry 13:26, 15 February 2007 (UTC)[reply]

I know it appears that I have removed quite a bit of text; I have, I removed incorrect information and unsourced statements. I'm working on the rewrite right now, but I wanted to start from a version that was previously at featured status vice the incorrect non-NPOV conforming garbage that was here before. 207.14.8.189 23:39, 21 February 2007 (UTC)[reply]

I have put the text back again. I have also reviewed the last six months of edits to this article. Please explain exactly what is incorrect in the material you removed. I agree that the article is in need of revision, but you still haven't said what the problems you see are. This seems to be the main problem with addressing your concerns. You may wish to set up a to-do list. Given that you have taken such an interest in this article, I also suggest that you set up a user account. Michaelbusch 00:33, 22 February 2007 (UTC)[reply]

Noting that anonymous user 207.14.8.189 is lying. The material he moved into the article was not present when the article was made a featured article, but is, in fact, his own material. Incorrect material.

Since there are other editors involved, let's go over this step by step.

• A gold standard does not make the unit of account a fixed weight of gold necessarily. That is, bank accounts are not quoted in the weight of metal, but in the unit. For example, dollars once had the notation of how much gold coin - in dollars - not in some unit of weight. The par value of dollar to weight was set by Congress, which had the power, under the constitution, to change that value simply by passing a law. Often this was a ratio, not a weight - for example a ratio to silver.

• Convertibility is also not assured under a gold standard. For example, if gold coins are minted, then there is nothing to convert to. More over, governments have suspended covertibility for various periods of time, and then resumed convertibility. Legally the gold standard was still in place during these suspensions - or silver standard if silver was the monetary metal - but there was no government assured convertibility. The British resumption of convertibilty after the Napoleonic wars being only one such example.

• The gold standard is not an economic system, the way, for example, capitalism is. It is a monetary system.

The key to the gold standard is that gold, and not currencies, is seen as the fundamental measure of money (See Alan Greenspan's essay on the topic, it is his first argument - currencies are not fixed and verifiable). This is different from a "fixed weight" of gold, For example, there is no fixed weight of gold or silver in Newton's assay - or in the others that were made. Instead, the metallic value of each type of coin was measured, and the results put in a table.

Whether governments maintain their peg to gold is a matter for the market mechanisms under a gold standard to decide. If a government is not seen as adhering to a gold standard, even if the nominal weight backing the currency remains constant, then that currency will trade at a discount to gold or other currencies where the monetary and fiscal authorities are seen as willing to take steps - balancing budgets, taxing imports or raising interest rates as examples - to maintain the relationship between their currency and the current peg. A simple example is the heavy discounting of the gold mark during the Napoleonic wars. The amount of gold that each gold mark was supposed to buy remained constant, however, there was a quite reasonable belief that Austria would either devalue, over spend in the war, or be defeated and have to pay reparations, as well as the increasing problems that individuals faced with convertibility. A gold standard in place? To some extent yes - but one which discounted the likelihood of it remaining in place. This example directly contradicts one of the favored troll versions that prattles about a fixed weight. Gold standards are much more sophisticated than that, capable of punishing economic actors even before they have overtly reneged on gold committments.

The gold standard is not a rigid system, but, in fact, offered more flexibility for economic actors to deal with "monetary mischief" by monetary authorities - banks and governments primarily - than did other systems without an external means of pressuring a monetary authority not to use sienurage to its own advantage.

00:43, 2 March 2007 (UTC)

I very nearly removed "excellence" from the See Also section, until I remembered that something which is excellent can be referred to as "the gold standard of x". This ought to be explained, perhaps on some kind of disambig page. -- Scott e^iπ 04:11, 10 May 2007 (UTC)[reply]

I'm not sure how neutral this article is, mainly because I know that there are a lot of differing views on the subject, and when I came to it looking for criticism of a return to the gold standard, it was conspicuously lacking thereof. The one "notable quote" is from a man who I believe dissents from majority opinion. I don't know where the neutral ground lies here, but I can't imagine it's as one-sided as this article, and I think that this subject is going to become increasingly important in the run-up to the 2008 Presidential election. Dextrose 00:50, 18 May 2007 (UTC)[reply]

I'm also unhappy with the lack of neutrality of this article. When I read the sections on advantages and disadvantages, the advantages section reads more like a history section and has very few examples of how a gold standard may be seen as a better choice. Maybe the history of government intervention in monetary systems implies that there is an advantage but it is not explicit in the advantages section. Surely with all the talk about the gold standard, there are more hard points that could be referenced. --WDRev (talk) 14:08, 27 September 2008 (UTC)[reply]

This section contains contains bald statements which are not backed up by sources and which are highly questionable.

For example:

1. The statement that the Gold Standard is supported by Monetarists; in fact the monetarists joined the Keynesians in supporting Nixon's abandonment of the Gold Standard in 1971.
2. Although the cited essay by Alan Greenspan from 1996 is a powerful and clear statement of support for the Gold Standard, his actions in office at the Fed hardly show respect for it in practice.
3. "the gold standard has frequently been shown to provide insufficient flexibility in the supply of money and in fiscal policy, because the supply of newly mined gold is finite and must be carefully husbanded and accounted for" is totally confused and perpetuates several common misconceptions. On both counts the opposite is the case. It is actually the stability of the quantity of gold available that renders it suitable as a basis for currency. During the heyday of the gold standard in the 19th century, the quantity of currency was continually varied by the Bank of England in accordance with the demands of the economy. It is the value of money that is preserved by the gold standard, not its quantity.
4. "'The reason these visions are not practically pursued is much the same reason the gold standard fell apart in the first place: a fixed rate of exchange decreed by governments has no organic relationship between the supply and demand of gold and the supply and demand of goods" Firstly It's far from universally agreed that that's why the gold standard "fell apart". A far mor common view is that it fell apart because the US under Nixon failed to balance its foreign exchange balance and then reneged on its commitment to discharge Dollar debts in gold. The second part of the sentence seems incoherent - can anybody suggest what the editor was trying to say? DaveApter 10:03, 29 May 2007 (UTC)[reply]

I removed this section:

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation." - Alan Greenspan, Ph.D, Gold and Economic Freedom by Dr. Alan Greenspan, 1966

This lacks context. If it's notable, it belongs in the Alan Greenspan article. - Crosbiesmith 19:03, 2 June 2007 (UTC)[reply]

After,

Also some privately issued currencies, such as digital gold currency, are backed by gold reserves.

I removed:

In effect, the holder of such currencies is long on gold and short on their own fiat currency, writing checks on their account.

The holder would only be short if they owed money in their own fiat currency. - Crosbiesmith 19:10, 2 June 2007 (UTC)[reply]

I'm going to replace this whole paragraph:

The end of the Great Commodities Depression has affected the price of gold as well, gold prices rising out of a 20 year trading bracket. This has led to a renewed use by monetary authorities of gold to back their currencies, but has not materially affected the use of a gold standard as money. In fact, the reverse is the case, the more expensive gold is, the more expensive the acquisition project to create a gold standard becomes.

The gold price was not affected by the Great Commodities Depression. It was part of the Great Commodities Depression. Neither here nor elsewhere is any casual mechanism proposed.

This has led to a renewed use by monetary authorities of gold to back their currencies

This requires a citation that there has indeed been a renewed use by monetary authorities of gold. It would also require a citation that this is in some way caused by the rising price of gold.

but has not materially affected the use of a gold standard as money.

There is no use of a gold standard as money. The use of a gold standard as money has not been affected by anything.

In fact, the reverse is the case, the more expensive gold is, the more expensive the acquisition project to create a gold standard becomes.

This depends on the nature of the project. A source is required.

This whole paragraph would be better replaced by:

This has led to a renewed use by monetary authorities of gold to back their currencies.

Assuming a reference can be found - Crosbiesmith 19:26, 2 June 2007 (UTC)[reply]

I removed the phrase that someone added recently qualifying the reservations about full convertibility as being only held by opponents of the Gold Standard. In fact this is a position taken by many supporters of the gold standard. The aim of the standard is to stabilise the value of currency, not its absolute quantity.DaveApter 14:36, 5 July 2007 (UTC)[reply]

i know usa does not have gold standard since the 70's.nixon pulled from the gold standard so it means that the dolar notes are printed from thin air.—Preceding unsigned comment added by [[User:{{{1}}}|{{{1}}}]] ([[User talk:{{{1}}}|talk]] • [[Special:Contributions/{{{1}}}|contribs]])

No countries currently adhere to a Gold Standard. Up until 1973, the world's major currencies were effectively pegged to gold, via their ( fixed but revisable) conversion rate to US dollars which in turn were be valued at 1/35 ounce of gold. You are right that Nixon abandoned this commitment, and the results are plain to see. DaveApter 10:26, 14 August 2007 (UTC)[reply]

What exactly do you mean by "this results are plain to see? I assume you mean "much greater economic growth and stability"? Fjafjan (talk) 10:28, 17 December 2007 (UTC)[reply]

No, I mean consistent erosion of the purchasing power of the currency.DaveApter (talk) 16:16, 16 October 2008 (UTC)[reply]

I removed "Unfortunately" from "Unfortunately, the Byzantine empire gradually degraded the purity of the coin...." The article, it seems to me, should seek to be as neutral as possible, and this sentence sounded suspiciously like it came from a supporter of the gold standard. Best, WH

The following sentence appears in the introduction:

Nevertheless, countries under a not truly 100% gold standard, like countries simultaneously using manipulated paper currencies, underwent debt crises and depressions throughout the history of its use with the Central Bank manipulation and inflation of the currency as the U.S. experienced in its Panic of 1819 after its Second National Bank was chartered in 1816.

Can someone reword this? I would, but I have no idea what it's trying to say. What's the difference between a country using a not truly 100% gold standard and a country using a manipulated paper currency? To me, this sounds like it's trying to make some POV statement, but it's so convoluted I'm not sure what it is. Pburka 23:07, 19 August 2007 (UTC)[reply]

I'm right there with you. I started to edit it, but ended up thinking 'WTF?' I think the basic statement is more or less "In practice, gold standard currencies have not exhibited exceptional stability due to currency manipulation, as demonstrated by the U.S.'s Panic of 1819.", but I could use some affirmation on that. BCC 16:14, 21 August 2007 (UTC)[reply]

http://meganmcardle.theatlantic.com/archives/2007/09/theres_gold_in_them_thar_stand.php http://www.econbrowser.com/archives/2005/12/the_gold_standa.html

If anyone wants to take a crack at adding this in and surviving the ensuing deletion wars. :-) TNaran 21:12, 7 September 2007 (UTC)[reply]

By my count, this article has dozens of paragraphs of promotional material expounding on the advantages (most of it unsourced), and only three paragraphs of disadvantages. Accordingly I have placed a {{POV}} tag on it. For a system that has been abandoned by everyone, we should have at least as much exposition on its disadvantages as its advantages. ←Ben^B4 19:09, 11 September 2007 (UTC)[reply]

I've removed the POV tag after doing a lot of clean-up and condensation. Let me know if it still needs to be there. Michaelbusch 20:06, 11 September 2007 (UTC)[reply]

You deleted the calculation showing that there isn't enough gold in the world to back the money circulating in just the U.S. alone. I agree with some of your deletions, but you really deleted an awful lot. ←Ben^B4 01:46, 12 September 2007 (UTC)[reply]

There was a problem here: there was an awful lot of POV for the gold standard, and some against it. I tried to condense as much as I could. The calculation on the limited amount of circulating gold is still given, as it is pertinent. Michaelbusch 03:51, 12 September 2007 (UTC)[reply]

Sorry, I don't know what I thought I saw; you're right. ←Ben^B4 08:57, 12 September 2007 (UTC)[reply]

The lead says "The gold standard is not currently used in any nation..." I don't understand how that statement could be true. For instance e-gold http://www.e-gold.com is money backed by a gold standard that is used all over the world. Operation Spooner 04:08, 15 October 2007 (UTC)[reply]

I've changed the "in" in the lead to "by" to meet your concern. Karl 08:59, 15 October 2007 (UTC)[reply]

The claim made in this article that a 100% reserve gold standard is "unworkable" on the basis that there is allegedly not enough gold to satisfy the amount of transactions in a modern economy is completely and utterly flawed.

For what a 100% reserve gold standard means is simply that all cash deposits such checking accounts, and other accounts immediately available for settlement must be backed by ANY amount of gold at a fixed exchange ratio. It absolutely does NOT matter how much gold this entails, because what is important is that the total amount of paper dollars would be backed 100% by however much gold was in existence at the time. It makes no difference whether the price is $1 an ounce, $10 an ounce, or $1,000 an ounce. The amount of money in circulation is irrelevent, because all that would happen is that all prices would adjust accoring to how much gold there is in the economy. The supply of goods in the aggregate and its rate of growth is independent of the supply of money in circulation and its rate of growth. For there is no real difference in relative prices, which is what is truly important.

For example, if there are 1,000,000 units of goods sold each year, and there is 1,000 ounces of gold in existence, and $1,000,000 paper dollars, then the law of supply and demand would imply that the weighted-average price for those goods is 1/1,000 ounce of gold per good, or $1 paper dollars per good. Gold would then simply be exchanged for paper in the ratio of $1 per 1/1000 an ounce of gold, or $1,000 an ounce of gold. Nothing important is changes if the velocity of circulation of money is not 1 but 2 or 3 or 4. It will simply be reflected in prices.

Now if instead of $1,000,000 of paper money in existence, say $10,000,000 paper dollars, but the same amount of gold and supply of goods for sale, then the only thing that would happen is that there would be a difference in the ratios. The new exchange values would be $10 on average per good, and STILL 1/1000 ounce of gold per good, and gold would be exchanged for $10,000 per ounce.

The important thing here is that the supply of goods is unchangef in the two examples, meaning there is no strain introduced on the economy, and people's standard of living would be essentially unchanged. The only difference between the two scenarios is that wages, prices for goods, basically all prices would simply relfect both the quantity of money in existence and the relative valuations between goods. The key is that the amount of goods for sale is independent of the quantity of money. This may surprise you, but ANY amount of gold and/or paper dollars is capable of clearing the market, and so the amount of currency is irrelevent to supply in the aggregate.

Actually, that last statement is not entirely accurate, because I never said anything about radical changes in the quantity of money which occurs in reality, and that it has disasterous consequences for the economy, but the point I made stands nonetheless when we are talking about any particular moment in time.

The proof of what I said can be found with Ludwig Vin Mises and his book "Theory of Money and Credit", which was written in 1922 and was the first publication that combined the macro and micro-economic spheres which have infortunately been since severed again by almost all schools shen they have separate classes on macroeconomics and microeconomics. A tragedy indeed.

I would like to make some changes to all the places where it simply states that 100% reserve gold standards are "unworkable", perhaps by making some additions of the Austrian Thoery.

Thoughts?

PS You will not be able to refute this so you might as well accept it.

A little bit of a condescending note at the end, but a rather nice comment. Go ahead, be bold, and just make sure you source your additions, if they rely on Austrian Theory or whatever. At the very least I think an Austrian subsection of the Theory section is accounted for, given their acceptance of the standard. Fephisto 19:53, 8 November 2007 (UTC)[reply]

Your note at the end really worries me about your POV here. If you want to enter information, please make very sure to cite and remember that Wikipedian content is based on verification and not truth (or truthiness)... and that it seems that there are quite a few economists and governmental bodies that do, indeed, disagree with your argument, so stating it as a fact would be irresponsible. Epthorn (talk) 05:47, 19 November 2007 (UTC)[reply]

A problem there is that when we get down to 1/000 of an ounce of gold it may become difficult to conduct meaningful transactions. Gold's density is reported at 19.32 grams per cubic centimeter, i.e., 0.681492945 ounces per cubic centimeter. That means that 1/1000 of an ounce of gold will occupy a volume of 0.001467366621 cubic centimeters. Try measuring that in a real practical way that can be used for real transactions, and there likely will be problems. The willingness of stores to sell small items like candy bars must rest on the consensus that the storeowner should not need to demand gold-backing on any such single small purchase. If they did, we would run into problems.

"I would like to make some changes to all the places where it simply states that 100% reserve gold standards are "unworkable""- I would rather you replace it with "fiat money is casino chips "

The exact quote is in "Disadvantages" - "The 100% reserve standard is generally considered unworkable because the quantity of gold in the world is too small to sustain current worldwide economic activity and the "right" quantity of money (i.e. one that avoids either inflation or deflation) is not a fixed quantity, but varies continuously with the level of commercial activity".

The problem with this statement is that every next person in the world thinks it is true because nearly every next person does not "think" economics nor have seen gold or silver coins as money - only pieces of paper. It is also a highly controversial statement and I cannot see how it can be supported in any way. Even citation of a renown economist here does not mean much as the there will be another who may take the other view.

China from Emperor Qin Shi Hwang (circa 220BC) right up to the end of the Qing Dynasty in 1911 never had any paper currency - money had always been copper, silver and Gold. It is more likely that a statement like "fiat money is detrimental to economic production" be far more accurate and reliable.

It is not difficult to work out a theoretical model that the quantity of gold is not a factor at all for gold as money, whether in international trade or within a country. It is also not a critical factor that all countries must use gold at the same time. A lone country like Iceland can tomorrow use gold as money ("real" gold standard, not paper 100% "backed" by gold) and not be harmed in its pursuit of economic wellbeing for its citizens - in fact it only has benefits and no drawback. Changes would be there is no more a need to maintain any exchange rate or worry about attacks or speculation on its currency - it is self protecting. But for Iceland it may be a little too late as a bankrupt can do nothing.

PS - the above are my edits LearningQM (talk) 19:50, 29 October 2008 (UTC)[reply]

The assertions in this note may be correct, but it ignores some issues. If, as the writer seems to concede, there is not enough gold at current prices, then a global gold standard would disrupt the gold market. The use of gold for decoration, computer parts, or anything else except money could become prohibitively expensive, and more resources would be consumed in finding & extracting gold. The establishment of a gold standard could be followed by a period of inflation as the search for more gold begins to be successful. Even when start-up effects have settled down, every major gold discovery would cause inflation, and periods without adequate gold discoveries would be deflationary. The last effect was documented in detail in "The Wealth of Nations". PandaAndPunk (talk) 18:26, 27 January 2009 (UTC)[reply]

I removed the sentence "History will be the judge of whether that has indeed been the case" from the section, because it implies an opinion without providing any evidence, and does not embody a neutral tone. please revert it back if people feel i removed this in error. Viperphantom (talk) 01:14, 19 November 2007 (UTC)[reply]

I have now deleted the sentence "The opposite is also believed" as it seems so weasaly as to be completely meaningless. Obviously this entire section needs work... I'll go scrounging for some citations this week, hopefully... 218.152.32.141 (talk) 05:38, 19 November 2007 (UTC)[reply]

The following sentence has a 'dubious' tag after it: "It is opposed by the vast majority of governments and economists,[citation needed] because the gold standard has frequently been shown to provide insufficient flexibility in the supply of money and in fiscal policy, because the supply of newly mined gold is finite and must be carefully husbanded and accounted for."

What is the specific problem with this sentence? Is the last fragment controversial (that the supply of newly mined gold is finite), is it the lack of a citation for the opposition of the vast majority of governments (who, of course, do not use it- this is not necessarily the same as opposition), is it the 'insufficient flexibility' part (which seems to be complementary to 'stable' - you can't claim one without addressing the other) or is it just that it needs more NPOV? Epthorn (talk) 05:50, 19 November 2007 (UTC)[reply]

That is just one of many problems. Do a web search on "gold standard economics" and you will find reams of references with their disadvantages. I am sorry the English Wikipedia is in such a sad state. 208.75.91.25 (talk) 16:58, 25 November 2007 (UTC)[reply]

I believe I responded to this concern in the "Disadvantages" section, and so I removed the POV tag. MilesAgain 01:47, 1 December 2007 (UTC)[reply]

I just put the tag back on the "disadvantages" section, because right now it still reads like Federal Reserve advocacy. —Preceding unsigned comment added by 24.6.157.14 (talk) 02:53, 2 January 2008 (UTC)[reply]

You need to be more specific about what you see as wrong, especially since the section doesn't even mention the Federal Reserve. MilesAgain (talk) 16:02, 2 January 2008 (UTC)[reply]

One example "It is difficult to manipulate a gold standard to tailor to an economy’s demand for money, giving central banks fewer options to respond to economic crises.[13] However, most acknowledge that all fiat currencies have failed to do this." What does this quote mean by most? Most people who have never taken a history lesson?? Just an example, look at Canada, its been able to avoid recessions, lowered inflation and employment at the same time. That sounds like its working to me. —Preceding comment was added at 02:48, 5 April 2008 (UTC)

I am very concerned about this removal of material from the "Disadvantages" section by User:C1010. The edit summary is "Removed false statements. Please read your own sources, they don't support your claims!" I have indeed read the sources, and anyone can read most of them by clicking on the links. I believe all of the removed statements are supported by the citations, and I would like to ask C1010 to clarify exactly which he believes are not, and why. MilesAgain (talk) 02:44, 19 December 2007 (UTC)[reply]

Yes, I'm concerned as well, for some of my changes were removed without any comment whatsoever. As I explain below I rephrased or removed some of your changes 1) to clarify the issue and 2) due to the fact the the sources you cite don't seem to support the claims you make in the article. Specifically: --C1010 (talk) 05:59, 19 December 2007 (UTC)[reply]

• The total amount of gold that has ever been mined is estimated at about 142,000 tonnes according to the cited source, not 125,00 as it is claimed.

• "While there is enough gold to back the currency circulating in the U.S." was removed because it tries to create a false impression that there isn't enough gold to back all circulating currency, which is obviously false, for it mistakenly assumes that the USD-gold peg must only be done at US$640 per Troy ounce. The current (2007-12-18) price of gold is about US$800 per Troy ounce, even in the absence of the gold standard! (Perhaps because?)

• "During the gold rushes in California and Australia" was rephrased because it makes an ambiguous claim about "thirty percent increase in wholesale prices." Since the period actually covers six (6) years between 1850 and 1855, the actual annual increase in wholesale prices was 5%, that is, 30% / 6. I also provided a sourced quote regarding how it compared to the current inflation in the US, which you seem to have removed without any comment.

• "Using a fixed commodity as a monetary standard gives central banks substantially fewer options" was removed because the cited source doesn't seem to support it by saying, "it is no surprise that there is no simple correlation between the exchange rate regime and the prevalence of banking crises." --C1010 (talk) 05:59, 19 December 2007 (UTC)[reply]

I have accepted most of your changes, but reverted all of your deletions, and provided an additional source (for which you can see the text instead of just the abstract) to address your last point. The source you refer to does indeed say the same thing, but not in its abstract. It's obvious, though, isn't it? If you can't print or shred money, you have fewer options to regulate the economy. It's almost tautological. MilesAgain (talk) 07:52, 28 December 2007 (UTC)[reply]

It was wrong for you to put back statements that had been shown to be false, misleading and/or unsupported by cited sources (see above). This isn't a proper way to conduct yourself if you're interested in a mutually productive discussion, it'll be a waste of time for all of us. --C1010 (talk) 08:49, 3 January 2008 (UTC)[reply]

The statements are, as shown below, true and supported by the sources. It was wrong for you to remove them. MilesAgain (talk) 00:13, 10 January 2008 (UTC)[reply]

I haven't been involved in this, but the following removal seems to be excessive to me: "Using a fixed commodity as a monetary standard gives central banks substantially fewer options with which to respond to economic crises and stimulate economic growth.^[1][2] In particular, gold-backed currencies prevent tailoring the money supply to the economy's demand for money, and are subject to speculative attacks when the government's financial position looks weak; attacks which often require punitive economic measures to counter. Such measures exacerbated the Great Depression when the U.S. raised interest rates in the middle of a recession in order to defend the credibility of its currency.^[3] Finally, since commodity currency devaluations produce sharp changes in their values, rather than smooth declines, their effects are magnified.^[4] ".

This is a pretty standard, basic and substantive argument, with strong references. Could you explain why this was removed? To remove this whole section without more basis seems excessive.--Gregalton (talk) 10:04, 3 January 2008 (UTC)[reply]

Please see my comment above, especially the "Using a fixed commodity as" part, it answers your question. Additionally, the cited "Cross-Country Empirical Studies" actually seems to contradict your point, and I cite, "Crises, however, are more frequent now than during the gold standard and Bretton Woods periods, and are as frequent now as in the interwar years." In other words, if central banks now have substantially more options with which to respond to economic crises, how come the crises are more frequent now than during the gold standard? --C1010 (talk) 10:49, 4 January 2008 (UTC)[reply]

There is no relation between the number of crises and the opportunities available to deal with them. Although we have had more crises since dropping the gold standard, none of them have been anywhere near as bad as the great depression. I have removed the word "substantially" in an attempt at compromise. MilesAgain (talk) 00:20, 10 January 2008 (UTC)[reply]

Reviewing the two first sources, you are partially right: the first doesn't support the conclusion (in my quick read). The second does in part, but only with respect to banking crises (whereas the text refers to economic crises). Why, however, did you remove the other 3/4s of the para and the cites? (In my view, the first sentence should have been left with a citation flag, but will grant you that).--Gregalton (talk) 15:10, 4 January 2008 (UTC)[reply]

I think you may be playing with words to fit your particular view on the subject. Do you really believe banking and economic crises are not interdependent?! If you do I'd suggest you read "Two Econometric Approaches to Identifying the Determinants of Banking Crises" and "Using Econometric Models of Banking Crises as Early Warning Systems" sections of the cited source. As for "the other 3/4s of the para" I will have to ask you to be more specific. For now I'll assume you're referring to the "There's gold in them thar standards!" article. The problem with this source is that makes, intentionally or otherwise, obviously false claims. For example, it states, "The lone advantage of a gold standard--and it is a real advantage--is that it prevents governments from inflating the currency", which is patently, blatantly false. --C1010 (talk) 14:16, 5 January 2008 (UTC)[reply]

The crises are interdependent. What are you saying is "patently, blatantly false"? MilesAgain (talk) 00:20, 10 January 2008 (UTC)[reply]

Anyway, lately I'm leaning towards a conclusion that both "Why Gold" and "Disadvantages" sections should be removed, they seem to generate a lot of controversy yet are not all that well written. Perhaps the "Theory" section should be moved up in their place. --C1010 (talk) 14:16, 5 January 2008 (UTC)[reply]

I would not agree to such a change. One of the sources you added is from a broker who sells metals-portfolio investment accounts. I wonder if you have read any neutral economists on the issue. MilesAgain (talk) 00:20, 10 January 2008 (UTC)[reply]

Looking at the Disadvantages section there is the sentence:

In practice, the production of gold has usually trailed economic growth, resulting in periods of deflationary pressure, including contributing to the cause of the Great Depression[6] and events during it.[3]

The first reference links to what appears to be a BLOG(!) where the secondary text is quoted. Furthermore the author of the blog indicates that the supposed negative effects stem from the possibility that the government will alter or remove the gold standard. Clearly this is not a problem with the gold standard, but with government interferance with the standard. The second part of the sentence after pressure, should be removed.

Furthermore, the first paragraph contains a possible contradiction.

Beyond the difficulty in transporting, storing, and preventing the debasement of gold, one of the main disadvantages of implementation is that a gold standard would increase gold's value, due to the additional demand as a monetary medium, and thus increase the cost of items and industrial processes in which it is used.[3] ... the price of gold would likely have to be higher than USD $640 per Troy ounce.

It suggests that transportation and storage of gold are problems. However gold on a value per unit level is no less compact than banknotes, and is far less of a problem than our current coinage.

Now, despite the claim that storage and transport are problems (which is untrue) the paragraph goes on to claim that making gold a monetary standard becomes a problem because it causes the value of gold to rise. Excuse me, but if the value of gold rises, will not the value per unit ratio make gold storage and transport less of an issue because the same value will occupy even less space?

So the first sentence says that it is too bulky (when it is not) and the second suggests that if gold becomes less bulky (per value) then this is a problem too. The author wants it both ways apparently.

Octothorn (talk) 07:06, 9 January 2008 (UTC)[reply]

As you say, the blog cites a peer-reviewed source. Also, the author of the blog in question is James D. Hamilton, Professor of Economics at the University of California, San Diego. Per WP:V, blogs are, "acceptable when produced by an established expert on the topic of the article whose work in the relevant field has previously been published by reliable third-party publications." — MilesAgain — continues after insertion below

The issue is that the statements in the Wiki entry are contrary to the comments in the blog. The blog states that government interference is the big risk in the Gold Standard, so the paragraph should be corrected to meet the views of the reference used. Octothorn (talk) 08:05, 13 January 2008 (UTC)[reply]

Which statements, precisely, in the article and the blog do you think disagree? MilesAgain (talk) 02:51, 16 January 2008 (UTC)[reply]

As for storage, perhaps gold is by volume, if not weight, comparable to paper money. A million US dollars in $100 notes weighs 20 pounds and takes up 643 cubic inches.[3] That much gold would be only $258,800 by mass but $5,800,000 by volume. However, fiat currency deposits can be stored with a number in a ledger. MilesAgain (talk) 00:36, 10 January 2008 (UTC)[reply]

Specie currency deposits are also recorded with a number in a ledger, or do you suggest that banking did not exist prior to fiat money? Octothorn (talk) 08:05, 13 January 2008 (UTC)[reply]

Specie is by definition backed by something actually stored somewhere. MilesAgain (talk) 02:51, 16 January 2008 (UTC)[reply]

Not necessarily, see also fractional reserve banking. Only a tiny portion of the total specie need be backed by physical storage, as was the case under Bretton Woods. 137.244.215.51 (talk) 19:23, 1 April 2009 (UTC)[reply]

Article says "Commodity money is ... subject to hoarding." I don't get this. It's money. People want money. Plenty of people hoard non-commodity money and wealth. Why is hoarding of commodity money any different to be pointed out in a paragraph that's to the tune of "why a gold standard is bad". Cburnett (talk) 05:26, 10 January 2008 (UTC)[reply]

I agree, just about anything can be hoarded and hoarding of money is not limited to commodity money Aatombomb (talk) 05:28, 10 January 2008 (UTC)[reply]

While I don't have a dog in this fight, this [article] does give one reason why, and why it is different than hoarding of, say, shingles, should be clear. In short, hoarding can happen if there is any concern at all that a govt may go off the gold standard, which removes money from circulation, which increases pressure on the gold standard.--Gregalton (talk) 23:37, 10 January 2008 (UTC)[reply]

Simply implying that the potential for hoarding is a disadvantage of commodity money fails to express a neutral point of view. The potential for hoarding is an advantage to those who wish to hoard. Is is a disadvantage to those who wish to discourage hoarding. Having a subsection entitled 'Advantages' immediately leads to this problem, as to state almost any property as an unambiguous advantage is to express a point of view. It would better to create a section entitled 'Consequences of the gold standard' where the properties of the gold standard could be considered, together with positive and negative perceptions of each property. As it stands, the current material conspicuously fails to adhere to a neutral point of view. I have removed it. - Crosbiesmith (talk) 19:08, 28 November 2008 (UTC)[reply]

It would seem as though the Advocates of a Renewed Gold Standard article is a bit short considering the movement towards it. Internet markets based on gold standards have been mentioned in the talk section, but not in the article. Currencies such as the Liberty Dollar are also gaining notoriety and popularity. This section could be expanded to the point of having its own page. Blaqsparrow (talk) 15:51, 1 April 2008 (UTC)[reply]

Agreed. In fact, recent news regarding China and Russia (at the G20 summit) encouraging a return to a partial gold standard (along with a basket of other currencies) under a new reserve currency system, in conjunction with current Treasury Secretary Geithner's comments on being "open" to same (March 31, 2009) would seem to call for an update.137.244.215.51 (talk) 19:27, 1 April 2009 (UTC)[reply]

The claim that the US was off the gold standard by the time of the Great Depression is made twice in the Disadvantages and Rebuttals section. The Great Depression started in 1929, but the US didn't abandon the gold standard until 1933. This statement seems to be false: "Some hold the view that this contributed to the Great Depression, although the US was already off the gold standard at that time.[10][8]" and "Finally, the Great Depression occurred after the United States had left the gold standard for fiat". If there are no objections, I will remove these statements. --Akellymi (talk) 19:26, 10 June 2008 (UTC)[reply]

The U.S. abandoned the Gold standard sometime between November 16, 1914 and the end of 1916. According to Mark Toma in his book "Competition and Monopoly in the Federal Reserve System, 1914-1951", Cambridge University Press, Copyright 1995 by Mark Toma, The New York Federal Reserve bank opened it's doors on November 16th, 1914 with 100% gold reserve ratio but informal policy had caused the ratio to decline to around 70% by the end of 1916. Therefore the gold standard was abandoned by the end of 1916.

One could, however, make the argument that the gold standard was abandoned on April 2, 1914 when the decision was officially announced to establish the reserve system. The only reason it was not made illegal to own gold until April 5, 1933 was that it took that long for people to realize their money was not worth what it used to be. At that point Executive Order 6102 ordered that it was henceforth illegal to own gold as an investment in the U.S. and all investment grade gold in the country was confiscated by the U.S. government.

Those giving up their gold were paid the government established rate of $20.67 for it but as soon as the government owned it all they raised the rate to $35.00 thereby devaluing the dollar by 41% and cheating those former gold investors out of a big chunk of their investment. As seems popular, the government did all this under the auspices of the Trading With the Enemy Act of 1933 making it the patriotic thing to do. --WDRev (talk) 01:04, 28 September 2008 (UTC)[reply]

One thing that is not grasped by this article is that with the inception of the Federal Reserve, the gold-standard was effectively ended, and the gold-exchanged standard was put in place; therefore, Nixon, in all actuality, ended the gold-exchange standard and not the gold-standard.

The argument can also be made that a gold-standard has never really existed; economist Murray Rothbard believed that in order to have a true gold standard, you must have 100% gold for every paper receipt in circulation and you cannot have fractional-reserve banking as the mechanism of the system will generate more paper receipts than there are dollars in circulation; this, he suggested was one of the reasons that the first 'gold-standard' came to an end.Fox P McCloud (talk) 20:05, 14 March 2009 (UTC)[reply]

The following sentence is not clear:

After the Roman Emperor Gallienus, who ruled from 253 to 268, introduced a monetary reform in which surface-overvalued coins were no longer accepted for tax payments, resulting in inflation: for the surface overvaluation of an emergency coinage would soon degenerate to the point where the coinage simply traded for its metallic value, thereby eliminating the ability of the senate-constrained government to collect seigniorage at critical times.

What happened after Gallienus introduced the monetary reform? Inflation? Or something else, which resulted in inflation? Either a phrase was left out of this sentence, or you have conflicting tenses between "introduced" and "resulting". Also, I'm not sure what everything after the colon is referring to. Is it referring to the subject (Emperor Gallienus) or the object (monetary reform) of the first part of the sentence? Is it referring to the result of the reform--the inflation? I'm not trying to be sarcastic or acerbic here; I'm just confused by the text.

This later sentence is missing a word or phrase:

The circulation of Spanish coins was later _____ to create the unit of account for the United States, the "dollar", based on the Spanish silver real, and Philadelphia's currency market was to trade in Spanish colonial coins.

Some verb or phrase should fill in the blank between "later" and "to create". Perhaps "adopted" is the right word.William Moates (talk) 13:15, 22 August 2008 (UTC)[reply]

The introduction currently includes the following text:

The main purpose of either government money system has historically been to provide seigniorage, or money-creation profit, to governmental leaders in order to provide them with general purchasing power during emergencies, especially those leaders who are legislatively constrained and therefore unable to raise taxes in order to execute the defense commitments that are required for the survival of their states.

Gold standards replaced gold-coin standards in the 17th-19th centuries in the West as the extent of defensive warfare expanded to where the gold-coin standards were no longer sufficient to the task. A similar history generated a gold standard in China from the 9th through the early 17th century.

Placing this text in the introduction places too great an emphasis on a single historical interpretation. This text should be moved from the introduction to an appropriate sub-heading. I will do these shortly if there are no substantitive objections. - Crosbiesmith (talk) 18:37, 28 November 2008 (UTC)[reply]

Moved. I also deleted 'As gold standards have created deflationary periods they have been abandoned, as by President Roosevelt during the Great Depression.' as straight out POV. - Crosbiesmith (talk) 21:22, 1 December 2008 (UTC)[reply]

The article currently includes sections on 'Early gold-coin standards' and 'The crisis of silver currency and bank notes (1750–1870)'. As the article defines the gold standard as paper notes that are normally freely convertible into gold, this material is not directly relevant to the subject of the article. This material should be moved elsewhere. - Crosbiesmith (talk) 18:52, 28 November 2008 (UTC)[reply]

Done. I have moved the material on the history of gold money to the Metal as money article. - Crosbiesmith (talk) 10:56, 1 March 2009 (UTC)[reply]

Can someone explain to me what happens in gold standard economy if the net economic growth is larger than the growth of the gold supply? By my reasoning the gold will become increasingly valuable, causing deflation. As I understand it deflation is poison in a consumer driven economy. I might be mistaken about these points but it would seem to be a powerful objection against this system being put to use in a modern economy. Thank you.
--Thorseth (talk) 13:02, 30 December 2008 (UTC)[reply]

You are correct on both counts. If money supply grows more slowly that the economy, deflation will result. Deflation leads to a hoarding of money and reluctance to buy consumer goods (as they will be cheaper in the future), this can lead to an economic recession. In Monetary Reform (1924), Keynes argued against the reimplementation of the gold standard by the British government for exactly that reason. LK (talk) 18:05, 1 March 2009 (UTC)[reply]

Unfortunately, global economic reality does not bore this theory out in practice, i.e. no one waits to buy a computer or TV or automobile or typewriter today under the premise that the same identical product will be available cheaper next year (even if it clearly will be, thanks to technological progress and productivity improvements). Keep in mind that Keynes theories have been somewhat discredited in the decades since they were first put forth, in much the same way as prior economists' theories before him.137.244.215.51 (talk) 19:35, 1 April 2009 (UTC)[reply]

Above is misleading, the highest rate of economic growth ever achieved in the US was under the gold standard during a deflationary period. Specifically the late 1800's. Deflation results when the production of goods increases at a faster rate then the production of gold (or perhaps the minting of gold coin). An increased propensity to save is a must for this to happen as savings "fund the building of new factories".

It's actually a "virtuous circle". Savings fund factories which produce more goods, which cause money to be worth more (deflation), resulting in high "real interest rates" which increase the propensity to save.71.184.184.238 (talk) 01:39, 30 July 2010 (UTC)[reply]

Under the section "British hesitate to return to gold standard", I think the use of the quote by Keynes is misleading. The use of this quote within the context of the surrounding sentences in this section implies that Keynes supported the use of inflation as a secret source of enrichment of the minority at the expense of the majority. However, this is not the case, when one reads the whole quote in the context of his book, Keynes was in fact pointing out the menaces of inflation. I would suggest deleting the quote from this section or adding a bit more information to correct what this section currently and incorrectly implies.

An excerpt from Keynes' book from which this quote was extracted from is contained here: http://www.pbs.org/wgbh/commandingheights/shared/minitext/ess_inflation.html

Also, I'm quite sure the quote is not Keynes quoting Lenin but Keynes' own words expanding on an idea put forward by Lenin. —Preceding unsigned comment added by Shadho19 (talk • contribs) 07:45, 22 January 2009 (UTC)[reply]

Quite true, in fact Keynes was warning of the inherent dangers associated with the overexpansion of a fiat monetary system (without associated and commensurate economic growth), that such would create "hidden taxation" through inflation. He goes on to say "Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." Oddly enough, Thomas Jefferson had warned of the exact same danger in his comments against a US central bank some 150 years prior.137.244.215.51 (talk) 19:41, 1 April 2009 (UTC)[reply]

I've recently uploaded a couple interesting political cartoons by James Gillray regarding the move toward fiat money in Britain in the 1790s. They are shown below. Feel free to use them. Dcoetzee 22:47, 1 April 2009 (UTC)[reply]

This article needs more information about other countries' experience with gold. For example, the US Constitution (1787) specified only gold and silver as legal tender. That should be discussed. --Zeamays (talk) 15:48, 2 April 2009 (UTC)[reply]

According to the article lead, the gold standard specifically refers to paper notes which are convertible to gold. The United States was not on a gold standard in the 18th century. Unless there are specific, important omissions in this article, I will remove the distracting and unsightly {{Geographical imbalance}} tag from the article - Crosbiesmith (talk) 07:11, 4 April 2009 (UTC)[reply]

I take issue with this sentence. "Under the regime of the French President Charles de Gaulle up to 1970, France reduced its dollar reserves, trading them for gold from the U.S. government, thereby reducing US economic influence abroad. This, along with the fiscal strain of Lyndon Johnson's Great Society expenditures and the Vietnam War, led President Richard Nixon to eliminate the fixed gold price in 1971, causing the system to break down." The sentence implies that France caused the US to drop the gold standard. This is misleading. Frances actions were a sympton of the problem, not a cause. The problem was that it was widely believed around the world (correctly) that the US dollar was overvalued against gold, due to high rates of US inflation. As a result, all countries had an incentive to trade dollars for gold if they suspected a devaluation. This summary could be made clearer, so that it is more representative of Bretton Woods article. Any thoughts? Wikilemming (talk) 17:12, 4 May 2009 (UTC)[reply]

But isnt it a matter of fact that the gold standard could not be upheld because US had printed by large much more dollar than they could exchange for gold?? They gave a promise they could not keep. Just like today? —Preceding unsigned comment added by 85.180.129.17 (talk) 05:50, 23 June 2010 (UTC)[reply]

I researched this unattributed "fact" on the website of Mexico's central bank and couldn't come up with any truth to it, nor did googling give me anything dated after the early 1900's. I added a "dubious" tag to the page (I now realize I should have written this first - this is my first edit of something like this). New to this, I hope I am contributing correctly. ToadMan8 (talk) 16:39, 17 June 2009 (UTC)[reply]

It mentions in the main article how China was on the silver standard at the time of the Great Depression, and that it almost entirely avoided the effects of the Great Depression. This is basically true. But it is written in a section which gives a wrong impression surrounding issues of cause and effect. It is written in a section which points out that those countries which abandoned the gold standard sooner, recovered from the effects of the depression sooner. That may also be true, but we need to separate the two issues.

The epicentre of the Great Depression was in the USA. The countries that were most strongly hit by the Great Depression were therefore the USA and countries that had large debts to the USA resulting from the First World War. In particular, the British Empire and Germany suffered in the Great Depression. The events that caused the Great Depression forced Britain and Germany off the gold standard, and the freedom from the shackles of the gold standard did assist somewhat in their subsequent economic recovery.

But as regards China, and its silver standard, this has really got nothing whatsoever to do with the issue. If China had had heavy debts to the USA at that time, it would also have been hit by the depression, whether it had been on the gold standard or the silver standard. So I intend to remove that sentence about China and the silver standard unless anybody objects. David Tombe (talk) 03:57, 8 December 2009 (UTC)[reply]

This section has been removed here because it contains some useful information that could be used in a re-orgainsed version of this article. But the material in question is not 'gold standard' history as such. It is a snippet of 'British currency history'.

==History==

The use of paper money, convertible into gold, to replace gold coins, originated in China in the 9th century AD.^{[citation needed]} Gold standards replaced the use of gold coins as currency in the 17th-19th centuries in Europe.

In the 1790s Britain suffered a massive shortage of silver coinage and ceased to mint larger silver coins. It issued "token" silver coins and overstruck foreign coins. With the end of the Napoleonic Wars, Britain began a massive recoinage program that created standard gold sovereigns and circulating crowns, half-crowns, and eventually copper farthings in 1821. In 1833, Bank of England notes were made legal tender, and redemption by other banks was discouraged. In 1844 the Bank Charter Act established that Bank of England notes, fully backed by gold, were the legal standard. According to the strict interpretation of the gold standard, this 1844 Act marks the establishment of a full gold standard for British money.^{[citation needed]}

David Tombe (talk) 04:08, 8 December 2009 (UTC)[reply]

It's not much of a history section, granted, but rather than remove it could have easily been modified in situ to retain the historical aspects in a better fashion, perhaps with different section title. Kbrose (talk) 04:22, 8 December 2009 (UTC)[reply]

Kbrose, I was originally intending to do that. But the whole article needs to be overhauled, because whoever first wrote it has got confused between 'the gold standard' as such, and 'the history of paper money'. Paper money is something which may or may not operate within the context of a gold specie standard. I decided to start from the top, with basic definitions and examples of gold standards. And I'm now beginning to think that the material above which I removed, should more accurately be appearing in other articles about banknotes and paper money. It is not coherently linked with the concept of 'gold standard' anymore than it is with 'silver standard'.

Paper money itself, along with its history is indeed an interesting topic. I haven't yet looked to see if such an article exists in wikipedia. But if it does, then all that stuff about the 1833 and 1844 banking acts should be going into such an article, and not into the 'gold standard' article. Paper money history will of course begin in China, and then take off again big time in the North American colonies.

Let's look at the last sentence in the section that I removed. It claims that the gold standard in the UK began with the 1844 Bank Charter Act. Somebody else has put in a citation request. Well it's the first time that I have ever heard of that act being linked to the establishment of the gold standard in the UK. The 'gold specie standard' was already fully in existence by 1844, by virtue of the legal tender circulation of gold sovereign coins. The 1844 Bank Charter Act on the other hand was all about regulating the banknote issues of the private banks. The act ensured that above a certain fiduciary amount, all banknotes were to be backed either by Bank of England notes or by legal tender coinage. It is an entirely secondary issue to the 'gold standard' itself. David Tombe (talk) 02:42, 9 December 2009 (UTC)[reply]

This first point claims that the total amount of gold in existence is: "This is less than the value of circulating money in the U.S. alone, where more than $8.3 trillion is in circulation or in deposit" It is less then the total Money Supply but not less than the amount in circulation which is $829 billion according to the fed: http://www.newyorkfed.org/aboutthefed/fedpoint/fed01.html most of which is not even inside the USA. Also it is erroneous to include fractional reserve based money(90% of the money supply) as something that a gold standard would have to replace as that money would not exist if there was a gold standard. Hopefully someone can at least correct this section to coincide with fact if not logic. ie. change the sentence that states there is over 4.5 trillion in circulation.70.68.160.115 (talk) 02:05, 9 March 2010 (UTC)[reply]

I have a bigger problem with this point. Is it realistic to assume, the entire gold ever mined, to back the US Dollar, in case of assumption of the Gold Standard? That would mean that every country, every individual and every other entity in the world, that owns gold, will be eager to turn their gold reserves in, for the US Dollars. The only realistic scenario that I see, is that only gold available from the US Gold Reserves, which is 8,133.5 tonnes, to be used to back the printed US Dollars. Considering $2.1 trillion printed in the M0 - monetary base, this would yield $8,000 per oz of gold. If we are to take $8.3 trillion M2 - printed or on deposit, we end up with $31,500 per oz of gold. WH Coordinator (talk) 08:51, 19 March 2010 (UTC)[reply]

please advise what you find objectionable about my edit.

The section I edited is plainly wrong of a number of its statements. I revised that section and provided citations backing up my changes. What didn't you like? 71.184.184.238 (talk) 13:58, 17 July 2010 (UTC)[reply]

Hello!71.184.184.238 (talk) 22:41, 18 July 2010 (UTC)[reply]

Your more recent additions are unsupported OR opinion. I'm reverting them. Your earlier addition also suffered from OR, but is more workable. I'm reintroducing some parts of the edit. As to what I find objectionable, much of it was irrelevant, and evidence attempts at synthesis to imply a position. In particular, just because the Fed (might have) caused the Great Depression, this does not mean that the Gold standard did not prolong it. LK (talk) 03:49, 19 July 2010 (UTC)[reply]

Both Bernackee and Nobel Prize winning economist Milton Friedman have stated that the Great Depression was caused by Federal Reserve policies and not the gold standard. That is now a mainstream opinion. It is fact that the US went off the gold standard in 1933 due to the Roosevelt confiscation and the Great Depression continued until the late 30's. It is also fact that the Roosevelt Confiscation was to save the Federal Reserve from defaulting on its 40% gold backed notes. It's hard to pay 100% when you only have 40% and everyone and his brother would rather have gold coin then a promise of gold coin through a 40% backed Federal Reserve notes. Especially when that reserve keeps dropping since everyone is afraid of bank paper, having seen a few thousand banks go belly up during the bank panics. 71.184.184.238 (talk) 14:53, 19 July 2010 (UTC)[reply]

It is mainstream opinion that under a gold standard interest rates are generally higher since there is no central bank "printing gold" to lower interest rates

It is mainstream opinion that higher interest rates induce people to save.

It is mainstream opinion that when there is high inflation there is no incentive to save as the only thing saving gets you is lower purchasing power in the future.

Let me know if you are mainstream by either accepting or denying the above.71.184.184.238 (talk) 14:57, 19 July 2010 (UTC)[reply]

This is not mainstream and is so out there it belongs with the flat earthers "in part due to the Federal Reserve's reluctance to abandon the gold standard and float the U.S. currency as Britain had done" - Federal Reserve reluctance meant jack since it was Congress that had to act to drop the gold standard. If the Federal Reserve stopped converting its demand notes into gold it would have gone into default - Can you say BANKRUPT! Which it almost did anyway and was saved by the Roosevelt Confiscation71.184.184.238 (talk)

Again, whether the Fed caused the Great Depression does not deny that the Gold Standard prolonged it. Please stop trying to introduce goldbug POV into an Economics article. LK (talk) 02:47, 20 July 2010 (UTC)[reply]

Per Irving Fisher, http://fraser.stlouisfed.org/docs/meltzer/fisdeb33.pdf (see top of page 341) the main causes of depressions are high debt levels and deflation. High debt levels before the Great Depression were caused by the Fed easy money policies of the 20's. The housing bubble we still haven't gotten over was caused by the Feds easy money policies of the early part of the decade. Alan Greenspan pointed out that the US was on a "quasi gold standard at the time"

http://www.constitution.org/mon/greenspan_gold.htm With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.) 71.184.184.238 (talk) 20:17, 20 July 2010 (UTC)[reply]

As for being a goldbug I support the US Constitution! Do you? http://www.usconstitution.net/const.html#A1Sec10 No State shall...make any Thing but gold and silver Coin a Tender in Payment of Debts. 71.184.184.238 (talk) 20:25, 20 July 2010 (UTC)[reply]

wiki already reflects the fact that high debt levels can cause problems http://en.wikipedia.org/wiki/Debt-to-GDP_ratio Debt-to-GDP measures financial leverage of an economy; some economists, such as Steve Keen, advocate using it as the key measure of a credit bubble (both its level and its change – particularly of private debt and total debt), and high levels of government debt (public debt) are widely decried as fiscal irresponsibility.71.184.184.238 (talk) 20:41, 20 July 2010 (UTC)[reply]

About the addtions that 71.184.184.238 has been pushing to include:

• Saving is encouraged due to higher real interest rates since there is no central bank "printing gold" to drive them down.

comment: unsourced and wrong

That deserves a ROTFLMAO! You really think that you will have LESS incentive to save if the bank pays you 10% versus the current sub 1%?71.184.184.238 (talk) 23:49, 21 July 2010 (UTC)[reply]

• Going into debt is discouraged as higher real interest rates make it more expensive to go into debt.

comment: unsourced and wrong

That deserved a even bigger ROTFLMAO! You really think that you will go deeper into debt if you PAY 20% interest versus say 5%?

• As debt levels are lower, it reduces the chance of major financial panics/depressions caused by snowballing debt defaults.[22] The debt levels prior to the Great Depression and the current Great Recession were at historic all time highs.

comment: wrong since debt levels are not lower under gold standard, this contention is unsourced, and source does not mention gold standard

See quoted text in cite by Fisher.

• Many economists believe that economic recessions are largely caused by increasing money supply during economic upturns leading to dislocations in the economy which lead to recessions from a misallocation of resources.[23]

comment: improperly sourced. Ben Best is not even an economist. LK (talk) 23:45, 21 July 2010 (UTC)[reply]

Can Best parrot an economist? http://www.benbest.com/polecon/rothbard.html71.184.184.238 (talk) 23:56, 21 July 2010 (UTC)[reply]

Read WP:V where it says that the burden of proof is on the person who wants to insert or reinsert material. You are edit warring and reinserting unsourced or poorly sourced POV synthesis. Please stop inserting unsourced material without consensus. Also, please watch your tone, and remember to be WP:POLITE. LK (talk) 02:40, 22 July 2010 (UTC)[reply]

Do You REALLY think that if the bank offers you $20 (20% interest) a year to keep a hundred bucks with them, they you will have LESS incentive to keep that $100 with them then if that bank offered you the current sub $1 (under 1%) interest.

Do you REALLY think that you are more likely to go into debt to buy a house when mortgage rates are at 20% then if they were lower such as the current 4-5%?71.184.184.238 (talk) 11:34, 22 July 2010 (UTC)[reply]

Per wiki policies: Cites are needed for material LIKELY to be challenged. Forgive me for thinking that wiki editors are smart enough to know that there in LESS chance of a person going into debt at higher real interest rates and a greater chance of that person increasing his saving at higher real interest rates and the greater rewards received from those higher interest rates.71.184.184.238 (talk) 11:42, 22 July 2010 (UTC)[reply]

The onus is always on the person who wants to add to the article, to show that reliable sources directly support the added statements. See WP:V. IMO, the additions are blatant POV OR synthesis. If you feel otherwise, please start a WP:RFC or ask for a 3rd opinion on the issue. Do not keep on adding it back without a clear consensus. LK (talk) 02:51, 23 July 2010 (UTC)[reply]

If you feel a need for help answering the questions below, please feel free to request that help.

Question 1: Do You REALLY think that if the bank offers you $20 (20% interest) a year to keep a hundred bucks with them, that you will have LESS incentive to keep that $100 with them then if that bank offered you the current less then $1 (under 1%) interest.

Question 2: Do you REALLY think that you are more likely to go into debt to buy a house when mortgage rates are at 20% then if they were lower such as the current 4-5%71.184.184.238 (talk) 03:57, 23 July 2010 (UTC)[reply]

Neither of the questions have anything to do with the accuracy of the text you are introducing.

Q1: You are assuming that interest rates will be higher without a gold standard (patently untrue, have you checked your bank a/c interest rate lately?), and then committing synthesis to come up with a novel conclusion.

Q2: Again, you are assuming that interest rates will be higher without a gold standard.

Those questions do not address the accuracy of the text you are introducing. I am challenging your text, you are required to provide a source that directly supports them before reintroducing them. Also, please restrict your sources to those that directly address the topic of this article, ie. the gold standard, otherwise you are introducing original research by synthesis. If you keep on reintroducing the statements without proper sourcing, you are edit warring to introduce OR into an article. Doing so is against policy and can result in your being banned from Wikipedia. Stop edit warring. LK (talk) 07:57, 23 July 2010 (UTC)[reply]

Are you aware that the Federal Reserve, like all central banks "prints money" in order to drive down interest rates? and are you aware that gold which is an "element listed on the periodic table" simply can't be "printed" with the liberal application of wood pulp and ink?

To further address your question, are you aware that money tends to "gains value" under a gold standard as the economy tends to grow faster then the increase in gold supply from mining, while under a "fiat standard" money tends to loses value as central banks print it at a faster rate then the economy grows. A saver doesn't even have to take his gold to the bank for interest to be rewarded for saving, he can stick his gold in a hole in the ground and a decade later it will most likely have greater "purchasing power". Another way the importance of the finance sector is reduced. The average person JUST DOESN'T NEED IT except on rare occasions.71.184.184.238 (talk) 12:59, 23 July 2010 (UTC)[reply]

Let me spell it out for you. Until and unless you produce reliable sources that directly support your claims, I (and no doubt many other Wikipedians) will immediately revert your addition of unsourced OR. LK (talk) 17:51, 23 July 2010 (UTC)[reply]

Let me spell it out to you as well. Anyone who states that higher interest rates do not reward savers and punish debtors is living in fantasy land. Say hello to to Dorothy for me. 71.184.184.238 (talk) 20:15, 23 July 2010 (UTC)[reply]

Why don't you look in the mirror?

You missed a 3RR violation by a only a hour!71.184.184.238 (talk) 11:37, 22 July 2010 (UTC)[reply]

The Founding Fathers thought enough of the gold and silver standards to include them in the US Constitution. They thought so little of "fiat" money that they refused to include the power to print money into the Constitution.

When you get out of fantasy land we can have a productive discussion, until then you should go and get a fantasy land mortgage at 20%. In fantasy land that is considered "rewarding" while in real life it is downright PAINFUL.71.184.184.238 (talk) 20:39, 23 July 2010 (UTC)[reply]

Please stop the OR and personal attacks.

I should also remind you that there's quite a large world - and many countries and currencies - beyond the borders of the USA, and in this world the economic beliefs of a small group of 18th-century American politicians are not considered sufficient to overturn modern evidence-based economics. If you have some good sources that directly support your arguments, let's see these sources.

bobrayner (talk) 21:19, 23 July 2010 (UTC)[reply]

The founding fathers had DIRECT PERSONAL experience with hyperinflation. Look up the Continental. They knew quite well what they were doing when they stripped language from the Constitution allowing the feds to print paper money. Yes! You read that right! The Founding Fathers STRIPPED language allowing the feds to print money from the US Constitution. A power one is STRIPPED of is a power one does not have, except illegally through usurpation. Usurpation is next door to treason.

BTW: Does modern evidence based economics say that a central bank can "print gold" through the liberal application of wood pulp and ink?

Does modern evidence based economics say that a saver is rewarded MORE if he gets 10% interest instead of the current sub 1%?

Does modern evidence based economics say that a debtor is punished MORE by incurring debt at say 20% versus the current 5%?

Does modern evidence based economics say that a financial panic, caused by rolling defaults as one default causes another to default which causes another to default etc etc, is MORE or LESS likely with low debt levels?

Happy spinning and don't drink the cool aid!71.184.184.238 (talk) 00:38, 28 July 2010 (UTC)[reply]

I've just reverted an edit by 71.184.184.238 which claims that "Deflation rewards savers and punishes debtors resulting in an society less burdened with debt". This is a tricky issue, so I should explain the full economic theory here.

In the long run, the only impact of deflation is to put a floor on the minimum real interest rate, as the nominal rate is bounded by zero. Just like any price floor, if the price restriction is binding, this will result in excess supply in the market. In this case, there will be an excess of savings, and a deficit of investment demand in the financial markets. This is in general not a good thing (like most price restrictions), as it gums up the workings for the financial markets, and so reduces the efficiency of investments, and thus the growth rate of the economy.

In the short run, if deflation happens unexpectedly, deflation will cause an unexpected jump in realized real interest rates, and this indeed does reward savers and hurt debtors. However, this does not result "in an society less burdened with debt". On the contrary, as the debtors now owe more in real terms, the amount of debt in the society actually increases. This was what occurred during the Great Depression (see debt deflation).

LK (talk) 05:17, 6 August 2010 (UTC)[reply]

Not tricky in the least. Higher real interest rates reward savers and therefor provide an incentive to save more. Higher real interest rates also punish debtors and therefore provide a DIS-incentive to go into debt. A society that rewards savers and punishes debtors is a society with a lower level of debt. 71.184.184.238 (talk) 09:47, 6 August 2010 (UTC)[reply]

I just noticed that you said that one of the problems is "an excess in savings". That deserves a laugh! I have yet to hear of ANYONE seriously complaining about having too much savings! How about you? Do YOU have too much savings? 71.184.184.238 (talk) 10:01, 6 August 2010 (UTC)[reply]

I think there can be such as thing as too much savings. I think that is exactly what they are having in Japan after decades of low inflation and deflation in their lost decade. Excessive saving means that the aggregate demand of an economy decreases, and that economic growth decreases with it. It's all within the paradox of thrift as Keynes described it.TheFreeloader (talk) 19:53, 6 August 2010 (UTC)[reply]

The problem with Japan is that it has a lot of old people who want to retire with enough savings to live a comfortable life. So they save.71.184.184.238 (talk) 04:02, 7 August 2010 (UTC)[reply]

You could say that. Although I would think that it would fit kinda neatly into your theory, that deflation encourages saving, to say that the high savings rate in Japan has been caused by the deflation they have had. But, whatever the explanation you ascribe as the reason for their saving, the point is still the same; it is an example of a too high savings rate bringing down the growth of an economy. Thus excessive saving can be a bad thing for an economy as a whole, as described in the paradox of thrift.TheFreeloader (talk) 05:19, 7 August 2010 (UTC)[reply]

What is killing the Japanese economy is too much government diverting too many people away from producing goods and services. The more people working in jobs that are a net drain on the economy the worse the economy performs. Taking from those that produce to give to those that leech of off the system (while leeching on it yourself) is a guaranteed road to disaster. Just ask the former Soviet Union, Pol Pot's Cambodia, or Mao's China.71.184.184.238 (talk) 14:02, 7 August 2010 (UTC)[reply]

So it's because they are communists in Japan? Well, actually if you look at this List of countries by tax revenue as percentage of GDP, it shows that Japan is actually taking in less taxes than the United States compared to the size of their economy. Japan is actually the developed country with the lowest tax revenue on the whole list. So good try, but it doesn't explain their lack of growth. Also the whole premise, that government spending is disastrous for an economy, doesn't seem to hold true either when you cross compare the list of tax revenue with a list of countries by GDP per capita. There are quite a few countries towards the top of both lists.TheFreeloader (talk) 15:47, 7 August 2010 (UTC)[reply]

A governments share of the economy is not JUST what it takes in in taxes, it includes what it borrows. Why don't you add the massive structural Japanese deficit of roughly 50% and see how it tastes when you smoke it.71.184.184.238 (talk) 22:03, 7 August 2010 (UTC)[reply]

The closest I could get that is these statistics(note that the figure for the US isn't very useful, as it doesn't include state and local). Again you see that Japan is well below a lot of countries which have not experienced the same growth problems that Japan has.TheFreeloader (talk) 07:03, 8 August 2010 (UTC)[reply]

The numbers in your link blow. The amount showing is taxes collected (at least for the US), and I don't think that federal spending as a percent of GDP has been around 15% (as your link shows) since probably the 1950's. If it can't get the US right, the odds of getting another countries right blow even worse! BTW: So an not to be misunderstood - for every yen the japanese government takes in in taxes, it borrows another yen. That is what I mean by a 50% structural budget deficit http://www.marketskeptics.com/2009/06/japans-demographic-collapse.html

It's not just the size of Japan's current debt that worries observers; it's how fast it's growing. Government receipts totalled only $463 billion in 2000, while its expenditures were $830 billion. The $367 billion difference--a staggering 40% of the budget--was borrowed, with the government issuing some 33 trillion yen of new bonds to fund the new debt. Deficit spending is now a mind-numbing 9% of the entire GDP.71.184.184.238 (talk) 13:12, 8 August 2010 (UTC)[reply]

For 2009 Japan borrowed MORE then 50% of what it spent (see 2009 second revised budget - showing 52% of total revenues was through debt. http://www.mof.go.jp/english/budget/e20091225b.pdf71.184.184.238 (talk) 13:23, 8 August 2010 (UTC)[reply]

Alright, I found some better numbers from the OECD[4](gotta go to the first spreadsheet with general outlays,it includes all levels of government). The story is the same again there, the Japanese public sector spending is continuously below the OECD average. And if you stay in that file, you can go the spreadsheet which shows net debt interest payment to see why the size of Japanese public debt really doesn't matter. They still pay less to service their debt than the average in the OECD. This I think is quite reflective of both how much deflation and how much private savings they have in Japan to push down the long term interest rate. But to go straight to the central point, whether or not deflation promotes growth in developed economies, if you go to real GDP in this spreadsheet and to the GDP deflator (you can use consumer price too) in this spreadsheet and take the averages for the entire period in both you will see that there is quite strong correlation between deflation/too low inflation and low real GDP growth. That can be seen not just in Japan (which has had 1% deflation on the average and 0.8% average growth) but also in Germany (with 0.8% inflation and 1.1% growth) and Switzerland (with 0.8% inflation and 1.7% growth). TheFreeloader (talk) 16:24, 8 August 2010 (UTC)[reply]

I don't know what your links are supposed to show, but they don't show what you say they do.71.184.184.238 (talk) 11:04, 10 August 2010 (UTC)[reply]

You have to go to the right spreadsheets. In Microsoft excel you choose which spreadsheet to view in the bottom left hand corner. In the first file you find total government government budget on the first sheet, Annex Table 25 General government total outlays. In the same file you find net interest paid for public debt as a percent of GDP on the seventh sheet(annex table 31). In the second file, real GDP growth on the first spreadsheet (annex table 1), and in the third file you find the GDP deflator on the first spreadsheet (annex table 16). You can also use the CPI which is the third spreadsheet in that file. You take the averages by inserting into a field "=average(" and then marking fields you want an average of.TheFreeloader (talk) 17:16, 10 August 2010 (UTC)[reply]

I've looked at those spreadsheets and frankly when looking at the Japanese numbers, I can't find much of a connection between them and the official Japanese numbers "provided by the Japanese government" in my link above. If the author of those spreadsheets can't get his numbers right for the worlds second largest economy then it is likely his other numbers are off as well.71.184.184.238 (talk) 23:49, 12 August 2010 (UTC)[reply]

Those happen to be numbers published by the OECD as a part of their most recent economic outlook. I would think the OECD is quite a credible institution when it comes to collecting and publishing economic data. So you are probably just comparing the wrong numbers.TheFreeloader (talk) 01:06, 13 August 2010 (UTC)[reply]

Its still a fact that they don't tie to the official Japanese numbers from their Ministry of Finance. HHHHMMMMM! Using bad information is almost guaranteed to get you bad results. Perhaps you should reexamine your preconceived biases. Like your bias that the gold standard is a BAD thing. I'm now going to pose you a question which you should try to answer truthfully. If you had a large sum of money which you expect to need in 50 years, and did not want to touch until then, which way would your store it to best preserve its purchasing power, in ounces of gold or in paper dollars?

Neither, I would have them in stocks and bonds, which is what would be best for society too, as then the money would be put to use elsewhere, while I didn't need them. It is exactly this kind of behavior that moderate inflation encourages people to have. For society to get the most out of the resources it has, people should not be holding their savings in cash, they be should investing them.TheFreeloader (talk) 02:01, 13 August 2010 (UTC)[reply]

Your biases are pushing you to avoid answering the question. I didn't give you the option of stocks and bonds. I gave you the option of dollar bills and ounces of gold. Please answer the question as given.71.184.184.238 (talk) 02:06, 13 August 2010 (UTC)[reply]

Japan's demographics are not very different from other developed countries. And even if it were, it would still be a valid example of why 71.184.184.238's simplistic ideas are flawed, as TheFreeloader says.

bobrayner (talk) 09:49, 7 August 2010 (UTC)[reply]

Flawed how? Even a dufus first year economy student knows that in order to invest in new factories you need savings. no savings = nothing to invest. Nothing to invest = no new factories. No new factories = stagnant economy. Growing population + stagnant economy = lower living standards. Happy Great Recession to all!71.184.184.238 (talk) 14:08, 7 August 2010 (UTC)[reply]

That's all very good, but what you fail to consider is the demand side of the economy. If demand is falling because people will rather save than spend their money, it means that companies won't have any reason for building new factories as they don't have anyone to sell extra goods they produce to.(That is unless they are able to export their products, but the whole world can't have net positive exports at the same time). And then you just start "No new factories=" in your line of reasoning to find out what happens. You also make the false dichotomy that either people have to save too little or (at least what I regard as) too much. There can be growth in savings, without it having to mean a decline in demand, as long a the growth in savings stays under general growth of the economy.TheFreeloader (talk) 15:47, 7 August 2010 (UTC)[reply]

Economic records of US economic growth show the best percentage gains were in the late 1800's under the gold standard. Saving result in investment in new factories, new factories produce goods at lower prices resulting in deflation, deflation rewards savers and punishes debtors increasing the incentive to save, increased incentives result in more savings, more saving result in more investments in new factories etc etc etc This is what is know as a virtuous cycle.71.184.184.238 (talk) 22:09, 7 August 2010 (UTC)[reply]

Here you take a very special case, namely the industrialization of the United States, and make it into a general theory. This seems to me a lot like saying that because China experiences 10% growth per year right now, all countries could get 10% growth if they just did as China does. It doesn't work that way. Industrialized economies do not need the same levels of relative investment that industrializing economies need. And without that need for investment capital, high savings rates will just mean a decrease in aggregate demand.TheFreeloader (talk) 07:03, 8 August 2010 (UTC)[reply]

China's money right now is quite a bit more "gold like" then it was under Mao! Money that doesn't change value removes one of the uncertainties of doing business. Less uncertainty = more investment. More investment = higher economic growth rate.71.184.184.238 (talk) 13:17, 8 August 2010 (UTC)[reply]

You are leaping from one argument to another. China's monetary policy is in no way "gold-like", all they do is that they copy the monetary policy of their major trading partners, none of which are on the gold standard. China did not have deflation in the last couple of years, a thing they definitely would have had, had their currency been tied to gold. Also, I wouldn't call it any kind of certainty the way the American inflation rate under the gold standard oscillated between massive inflation and massive deflation[5]. It is pretty hard to imagine how anyone ever would be able to get a mortgage under conditions like that. Or how companies could ever be able to raise capital with corporate bonds. All debt would have to financed very short term, as there would be extreme uncertainty over what money would be worth in the long term.TheFreeloader (talk) 16:24, 8 August 2010 (UTC)[reply]

I said "more" gold like as in more stable, then their currency under Mao. As for the US, during the 19th century the general condition was a gradual deflation, punctured by bouts of inflation around the major wars. The value of money changed little overall and was in fact MUCH more stable then the 20th century, which saw the purchasing power of the dollar reduced by 95%71.184.184.238 (talk) 21:17, 8 August 2010 (UTC)[reply]

I have no idea what you mean by the term "gold like", the value of the renminbi is in no way determined by the price of gold, or any commodity. Were the the price of gold to fall to a tenth of its current value would it probably have no effect at all on the value of the renminbi.

You seem to be unaware that under Mao China had a pretty high inflation rate. You also seem to be unaware that around 2000 China went through a period of deflation lastin a number of years. A health currency is a pre-requisite fro a healthy economy.71.184.184.238 (talk) 11:01, 10 August 2010 (UTC)[reply]

When it comes to certainty in inflation, it doesn't mean much the long term value of the currency changes. It is all about how volatile the inflation rate is. If borrowers and lenders can know that the central bank is determined to keep inflation within say a 2 percentage points band of 2% inflation, all that they need to do is just add 200 basis points to whatever real interest rate they want for the money. On the other hand, if the inflation looks like the heart attack chart, that the American inflation looked like for most of the period the money was backed by commodities, I doubt that even the smartest quants on Wall Street could figure out a fair medium term interest rate.TheFreeloader (talk) 00:07, 9 August 2010 (UTC)[reply]

Drivel. Ubder a gold standard, without a Central Bank printing money people know that the vakue of their gold will be about the bame or slightly greater next year. 71.184.184.238 (talk) 10:57, 10 August 2010 (UTC)[reply]

Perhaps a dufus first year economy student could point out how much Japan's industrial output has grown over the last 30 years. After all, there's lots of savings available to be invested in factories, right?

bobrayner (talk) 16:05, 7 August 2010 (UTC)[reply]

Perhaps then again perhaps not! Is he smart enough to adjust that growth for changes in the value of the yen? and is he smart enough to adjust the "personal savings rate" with the 50% structural deficit of the Japanese government to get a truer picture of the savings rate? Inquiring minds want to know!71.184.184.238 (talk) 22:13, 7 August 2010 (UTC)[reply]

Please try to stop insulting people who disagree with you.

Deflation is a Bad Thing. I added some extra sources to support this; can add more (from a wide range of sources) if necessary. Since deflation is a Bad Thing, I moved that paragraph to the "Disadvantages" section.

bobrayner (talk) 12:32, 6 August 2010 (UTC)[reply]

It's only a bad thing if you are in debt. If you have savings it is a GOOD THING! 71.184.184.238 (talk) 12:41, 6 August 2010 (UTC)[reply]

Economies are complex systems which include both debtors and savers - plus some complex interactions between them.

The sources I used (it only took a few seconds' search) made it clear that deflation is a serious threat to economies as a whole, not just one arbitrary subset of people within an economy.

If you don't like those refs, there are plenty of others out there which make much the same point.

bobrayner (talk) 12:50, 6 August 2010 (UTC)[reply]

Economies are simple in one very important respect. They are all composed of businesses that have to make a profit in order to survive. Too many blood sucking leeches makes making a profit almost impossible. No profits = Businesses going bust.71.184.184.238 (talk) 22:17, 7 August 2010 (UTC)[reply]

These are your kids playing with your savings http://www.educationforum.co.uk/hyperinflation.htm 71.184.184.238 (talk) 12:46, 6 August 2010 (UTC)[reply]

Those aren't my kids. That's an article about the economic problems of Weimar Germany. If you are trying to make a point, could you make it a little clearer, please?

bobrayner (talk) 12:50, 6 August 2010 (UTC)[reply]

That is a picture of worthless fiat money and the future of your dollar savings, assuming you have some(most Americans don't and live paycheck to paycheck).71.184.184.238 (talk) 12:55, 6 August 2010 (UTC)[reply]

71.184.184.238 is a classic example of someone suffering from the Dunning–Kruger effect. Fascinating to observe, irritating to deal with. LK (talk) 13:01, 6 August 2010 (UTC)[reply]

Lawrencekhoo is a classic example of someone suffering from the Dunning–Kruger effect. Fascinating to observe, irritating to deal with.71.184.184.238 (talk) 13:55, 6 August 2010 (UTC)[reply]

Do drop me a note when you have obtained your PhD in economics, or published your first peer-reviewed paper. LK (talk) 14:02, 6 August 2010 (UTC)[reply]

Do drop me a note when you figure out high real interest rates reward savers and punish debtors. I might then be able to have an intelligent conversation with you. Then again perhaps not. I learned that when I opened up my first savings account and it WASN'T hard to learn. Something about how much interest the bank way paying me. ROTFLMAO!!!!

I think this is getting a bit too personal. Can't we concentrate on the article, please?

bobrayner (talk) 14:03, 6 August 2010 (UTC)[reply]

I can't help it if Lawrencekhoo has delusions of braindom. It doesn't take much in the way of grey matter to figure out that higher real interest rates benefit savers and hurt debtors. See above for Lawrencekhoo's comment that what I just said is wrong! ROTFLMAO!!!!!!!!!!!!!!! —Preceding unsigned comment added by 71.184.184.238 (talk) 14:07, 6 August 2010 (UTC)[reply]

Thinking about I'd have to say that most 5 year olds are smarter about money then most adults. If a 5 year old has a buck and you want him to loan it to you, the first thing he'll probably ask is "how do I know you will pay me back?". A question most adults skip right over.71.184.184.238 (talk) 14:14, 6 August 2010 (UTC)[reply]

Is anyone here aware that China, the economic powerhouse of the globe, has had several years of DEFLATION this decade? If not, then live and learn

http://www.indexmundi.com/china/inflation_rate_(consumer_prices).html71.184.184.238 (talk) 01:17, 11 August 2010 (UTC)[reply]

Yes, clearly their average inflation of 2.2% is a great example of the advantages of deflation. Though it might be a good example of the problems associated with not having a free floating currency.TheFreeloader (talk) 01:53, 11 August 2010 (UTC)[reply]

Funny thing! You seem to avoid the fact the the economic powerhouse of this decade has had several years of deflation. Funny how you treat deflation as a boogieman. Are you AFRAID of having your money worth more? or is it that you are in hock up to your eyeballs and don't have any money?71.184.184.238 (talk) 02:22, 11 August 2010 (UTC)[reply]

Severe recessions/depressions are less common under a gold standard then under a fiat standard.

cited by http://www.amatecon.com/gd/gdoverview.html The Federal Reserve Board was created in 1913 and yet half of the worst depressions happened after its creation.71.184.184.238 (talk) 02:08, 13 August 2010 (UTC)[reply]

I'd have to be convinced that page qualified as a WP:RS. It also doesn't mention the gold standard. CRETOG8(t/c) 02:17, 13 August 2010 (UTC)[reply]