Re: Re: POLITICS Gold Standard (was Who you should vote for)

[Guest guest]

On 1/7/08, Masterjohn <chrismasterjohn@...> wrote:

> On 1/7/08, Idol <Idol@...> wrote:

> > Second, adopting the gold standard would all by itself dramatically

> > inflate the price of gold, because there's presently more money than

> > there is gold. You could argue that this would be a one-time

> > correction and a necessary evil, except that...

> The money doesn't have to stay in circulation because it is there. I

> have no idea how to implement a gold standard and I think that is

> quite another debate.

LRC just republished this 1985 paper by Ron about a four-step

process for implementing a gold standard:

http://www.lewrockwell.com/paul/paul431.html

It would begin by allowing and propagating the circulation of gold

coins that are weighted in troy ounces and are not asigned a dollar

value, produced by government and private coiners. Assigning a gold

value to the dollar would wait until the gold coins were well in

circulation and had achieved equilibrium market values.

Eventually, the government would retain a central bank for the

issuance of paper dollars and would establish and independent

conversion agency for the issuance of gold coins on demand in exchange

for paper dollars, and Congress would establish a par value of the

dollar in terms of gold.

However, the gold coins would continue to be labeled according to

their weight and never assigned a dollar value. This would allow

participants in the free market to put a slight premium on the gold

coin over paper money -- everyone except the conversion agency would

be free to do this, but the conversion agency would be bound to

exchange dollars and gold coins at the standard exchange rate set by

Congress. Allowing free exchangers to value gold coins at a premium

would remove the incentive to hoard the gold coins and would keep them

in continuous circulation.

He doesn't seem to see a problem with weighting the dollar according

to its current value. For example, he notes:

==========

http://www.lewrockwell.com/paul/paul431.html

The dollar was defined as 25.8 grains of standard gold in 1900. Today

it might be defined as one grain of standard 0.900 gold. There is

nothing inconsistent with this requirement if the coins are

denominated in troy ounce, half-ounce, or quarter-ounce sizes.

=========

Like I said before though, if it was necessary, I don't see any reason

why the government could not just remove money from circulation by

destroying it if there was too much in circulation.

Chris