Go for the Sustainable Gold Standard

Gold is becoming more and more popular in the mainstream.  Only a few years ago, talk of gold was restricted to the fringe of society.   With the dollar declining in value, gold reaching all time highs, whispers of bringing back the gold standard are getting louder. Whether you agree or disagree with gold as money, investment, or a hedge, chatter around gold is permeating our culture.  How can gold be money?  Is gold as money economically sustainable?  To answer these questions, let us draw from nature, namely natural selection and natures use of resources.

Natural Selection of Gold as Money
Species survive through natural selection.  Likewise, money survives through natural selection.  We use money today to exchange for goods and services.  I want organic heirloom tomatoes, so I go to the store to exchange it for my hard earned US dollar.

However, many centuries ago, before money ever came to existence, our ancestors used barter to exchange goods and services.  If I wanted heirloom tomatoes, I would have to trade something I had grown or labored to get, say fish.  I give you fish in exchange for heirloom tomatoes.

The problem with this exchange is that we would need to have a “coincidence of wants.” What if you did not want fish, but something else, say apples.  I would need to first obtain apples from someone who wanted my fish, then trade those apples for tomatoes I wanted from you.  You can see how barter can get tedious.

To alleviate this, eventually a common “want” became money.  Historically, this was sea shells, tea leaves, and even gold.  Money was naturally selected through the market process, and changed through time.  Gold emerged as the common “want,” i.e. money.  Its property of weight and malleability lead it to be easily stored and exchanged as the common “want.”

Natures use of Resources
Nature uses only the resources that it has.  It lives within its means.  A cactus saves water for itself now and for its future, as there is no telling when it will rain in the desert.  Have we lived within in our means when it comes to our current monetary system based on fiat money?  The short answer is “no.”

Fiat money is money that is made out of thin air.  It never developed out of natural selection.  At its whim, the Federal Reserve can print money, and has done so in attempts to get out of the economic crisis.  We are living beyond our means.  Spending is out of control, and saving is next to nil.  Imagine if the cactus used all its water today, and just pretended to have water for tomorrow without any actually rain?  It would eventually cease to exist.

Imagine another scenario, where we lived within our economic means.  Our monetary system used to be tied to gold, i.e. have gold backing.  Gold certificates could be redeemable for a tangible piece of gold.  If you take out a bill, you will notice it is no longer redeemable in gold.  Having that backing allows us to live within our economic means.  It allows us to keep tabs on our savings and spending.  We would continue to thrive.

Returning to Gold
Going back to gold standard would be a giant leap in the correct direction.  We would return back to a naturally selected form of money.  We would be able to utilize our monetary resources within our means.  This may or may not solve all the worlds environmental or social sustainability challenges, but it sure will alleviate our economic sustainability problems.  Go for the sustainable gold standard.

Jonathan Mariano is an MBA candidate with the Presidio Graduate School in San Francisco, CA. His interests include the convergence between lean & green and pursuing free-market based sustainable solutions.

49 responses

  1. I like your thought process, but I’m not sure that I buy that a return to the gold standard will solve our problems. For one, isn’t the choice of gold kind of a random one, based on the limited nature of that natural resource? It was chosen because it was both permanent and relatively rare, but with today’s modern technologies, more gold can be gotten simply by mining for more. That’s obviously not very sustainable.

    I agree that we need to curb spending and live within our means, but it seems to me that we can get there with an adjustment in fiscal policy too.

    1. Hi Jen, Thanks for your thoughts. I agree, gold was somewhat “random,” but perhaps a better word to describe its coming into being is emergent or spontaneous? IMHO the rarity is a catch-22 when it comes to any money, be it gold or tea leaves. Money needs to be rare enough to be “highly valued” yet abundant enough so people can use it to exchange. Fiat money can come out of thin air, which degrades its value. Gold fit the criteria pretty well, and was the most recent to be a naturally selected standard before moving to fiat. Gold is still relatively difficult to find. All the mined gold in the world can fit underneath the Eiffel Tower!

  2. Why base the entire world’s economy on a metal that is itself useless except for jewelry and limited industrial applications? Gold is intrinsically worth no more than copper or lead or paper. It is just that people (especially gold bugs) have decided to attach a psychological value to it, just as they have to fiat currency. Tradition/history gives gold special status, but, so what? There is now some history associated with fiat currency as well.

    The fact that you can’t just print gold out of thin air obviously makes the situation different. But does it actually better? Didn’t we go off the gold standard due (at least partly) to issues surrounding the manipulation of a physical commodity? And wouldn’t going on to the gold standard just create more of a demand for a natural resource that must be acquired through mining which is destructive in nature? What’s sustainable about that?

    The world is moving towards electronic commerce which will be necessary to handle the changing economic face of the world. The answer to most of the future is not to retreat to the past.

    1. Hi Jeff, I agree with you on the most part:). The value of anything is subjective. I personally do not find any value in a piece of metal, per se, but I do subjectively find metal significantly more valuable than fiat.

      IIRC, one of the reasons we went off the gold standard was so the central bank could easily increase the money supply at its will. No need for natural resources to back it.

      I think the ideas and logic behind gold leads to economic sustainability, perhaps social sustainability, but not necessarily environmental sustainability. As you stated, it is still needs to be mined. My focus for the article was economic sustainability. Is there a way to sustainably mine for resources, whether it be aluminium for foil, lithium for batteries, or gold for jewelry/money?

      It would be great to get everything electronic, even money! But I think that digital money still needs to be backed by something, be it gold, trees, algae, or whatever emerges as the de facto standard. One example of digital gold is here: http://en.wikipedia.org/wiki/Digital_gold_currency. It’s a digital currency backed by gold.

        1. Aluminum? Seriously?! The price of aluminum fell by ~20% in two months, earlier this year. In the absence of flexible prices — if a dollar was required to always be tradable for a fixed amount of aluminum (which is the same as saying that the price of a ton of aluminum must be held constant in dollars) — we would’ve had to raise the prices of everything else by that 20%, i.e. experience 20% inflation in two months.

          If you really want hyperinflation, by all means, index your money to a volatile commodity.

  3. The fact that the number of goldbugs has increased in recent years does not make their arguments any less silly than they were in, say, 1996.

    (1) Commodity-based money is an extremely bad idea, because it makes the economy vulnerable to large swings of inflation or deflation due to technological changes around the supply or demand for the commodity in question. There was a Europe-wide episode of severe inflation after gold supplies from the New World began to flow. If you tied money to gold now, and a year from now we had an uptick in demand for gold — whether for fashionable jewelry, or a new kind of data disk (gold disks have a much longer shelf life than those based on corrodable metals), or whatever — with the price of gold unable to rise in response, the prices of everything else, including wages, would deflate, leading to a severe recession, as the real interest rate rose beyond the level at which businesses were willing to make real investments to maintain and expand production, and debts exploded relative to earnings and wealth.

    (2) The money supply has nothing to do with “living beyond our means”. The real economy of goods and services will have whatever capacity it has, regardless of how many dollars are chasing its output. The liquidation of natural capital in order to feed growth in throughput has to do with the short-sightedness and greed of a narrow class that has managed to accumulate massive wealth at the expense of everyone else.

    Jared Diamond wrote a quite good book about what happens when the class of people who make large-scale decisions about how to use a society’s resources are able to insulate themselves from the consequences of those decisions. Since we decide how to use our resources based on collective purchasing decisions, putting too much purchasing power into the hands of a narrow class of people is hazardous; you need to spread that power around, so that the pattern of purchasing power is influenced by the experience of more different people, with exposure to more aspects of the consequences of our collective behavior.

    (3) The gold standard did nothing to prevent corrupt or irresponsible governance in the ’20s (see: Teapot Dome, and Hoover/Mellon liquidationism). While it’s true that a controllable money supply comes with the risk of bad monetary policy (Greenspan was a pretty bad Fed chairman; his lack of interest in overseeing and regulating the shadow banking system caused him to miss the fact that it was altering the nature of money and debt) it’s better than the alternative. Supposing that we should get rid of monetary policy entirely is sort of like arguing that we should give up on air travel, because sometimes airplanes crash.

    1. Yes a gold standard is not perfect. It’s just better than the current discretionary monetary system under which we all labor.

      Between 1947 and 1968, under the Bretton Woods version of the gold standard, The U.S. experienced higher growth, less inflation, more stable interest rates, and a less volatile economy than since its abandonment in 1971.

      Since 1971, when Nixon abrogated the government’s promise to sustain the value of the dollar as 1/35h of an ounce of gold, we have experienced the three worst recessions since World War II, with the most recent contraction being the among the worst.

      In addition, the past four decades of a discretionary monetary system have been marked by approximately 10 financial crises, beginning with the oil crisis of 1973 and culminating with the financial crisis of 2008-09 and now the sovereign debt crisis of 2010. There were no financial crises of similar magnitude between 1947 and 1971.

      We may all disagree on why a gold standard delivers better economic results. But it does. That’s why I believe its time to begin the serious work of designing a 21st century gold standard for the benefit of American workers, families and businesses.

      1. You assume that the higher growth in that period was attributable to the gold standard. I would attribute it to progressive taxation, the expansion of trade, the effectiveness of New Deal consumer protections and financial regulations (e.g. Glass-Steagall), and other policies that ensured that growing prosperity was widely shared, rather than being expropriated by a narrow class of financial manipulators.

    2. (1) The key to understanding commodity money is that the commodity is the money itself. The argument you put forth implies another standard of measurement, but much of that is alleviated when thinking in terms of the commodity as money, not the commodity tied to a money.

      Furthermore, I would argue that fiat money via fractional reserve banking is a terrible system. The money supply can easily be inflated, as has been! The dollar is now only worth a couple cents of what it was worth a century ago because of the FRB and fiat money.

      (2) The money supply, when it is artificially inflated, has much to do with living beyond our means. Money is thus malinvested into areas of the economy it would thus not have been utilized.

      If the real economy of goods and services will have whatever capacity it has, regardless of money supply, would that not imply the unnecessary act of printing money in the first place?

      (3) Charles Kadlec below does a good job of defending the gold standard from the standpoint of history.

      1. The argument you put forth implies another standard of measurement, but much of that is alleviated when thinking in terms of the commodity as money, not the commodity tied to a money.

        You are drawing a distinction without a difference.

        If a gumball costs 25 cents, then one dollar costs four gumballs. If an ounce of gold costs a hundred dollars, then it costs four hundred gumballs. This is first-day Econ 101 stuff. If you declare that from now on, an ounce of gold will ALWAYS cost $100, and there’s a change in the supply or demand of gold that would normally suggest a change in price, then you can only adjust through a relative price change of everything else in the economy, i.e. significant inflation or deflation.

        The money supply can easily be inflated, as has been! The dollar is now only worth a couple cents of what it was worth a century ago because of the FRB and fiat money.

        So what? If you attempt to transfer purchasing power from the present to the future by burying money in the back yard, rather than helping to finance the productive assets that will provide goods and services to your future self (and all the rest of us), then yes, you lose some of that purchasing power. That sounds entirely fair to me. As long as inflation doesn’t run at such a high and volatile rate that it interferes with people’s ability to make long-term plans, it’s quite healthy — it encourages people to invest in maintaining existing productive assets and building new or better ones, ensuring that the supply of goods and services in the future will be sufficient to meet our needs. (The fact that we fail to invest enough in protecting and growing natural capital has to do with a lack of structures, like a cap-and-trade system, that would put an appropriate price on impairing or liquidating such capital.)

        And, of course, as I’ve observed, hard money can have volatile swings in its value, due to exogenous shocks. (I still can’t believe anyone ever suggests tying money to energy. The resulting economy-wide price volatility would be terrifying.)

        The money supply, when it is artificially inflated, has much to do with living beyond our means. Money is thus malinvested into areas of the economy it would thus not have been utilized.

        There is no obvious mechanism that would necessarily translate inflation into poor investment decisions. You can have an asset bubble in an economy with hard currency — for instance, there were rail and telegraph bubbles in the late 19th century, and of course the famous tulip bubble (though that was arguably the result of a poorly-thought-out change in the pricing structure for the bulbs, not a true “irrational exuberance” type bubble).

        If the real economy of goods and services will have whatever capacity it has, regardless of money supply, would that not imply the unnecessary act of printing money in the first place?

        Of course not. Money as a replacement for barter offers huge reductions in transaction costs, facilitating many mutually-beneficial exchanges that would otherwise be lost. Flexible prices in competitive markets are quite good at creating allocative and productive efficiency — and it’s much easier to widely disseminate information about flexible prices if you have a common medium of exchange, rather than needing to let people know that, for instance, the price of a side of beef is now three legs of lamb, or thirty bushels of wheat, or forty pound of fish, etc.

        1. I don’t think we are on the same page.

          When a commodity becomes money, goods and services would be denominated by that commodity, not the dollar or any other “currency.” Denomination could be weight or volume.

          For instance, the unit for gold would most likely be the gram or the oz, not the dollar. So a gumball would cost .001 grams of gold, so to speak.

          The dollar used to be defined 1/20 oz of gold.

          There is a huge distinction between denominating things in fiat and denominating things by commodity.

        2. There is a huge distinction between denominating things in fiat and denominating things by commodity.

          No, there just isn’t. You said it yourself:

          The dollar used to be defined 1/20 oz of gold.

          So an ounce of gold had to cost $20, and that price was fixed.

          Since there is a market in gold, with both supply and demand, under normal circumstances changes in that supply and demand would translate into a change in gold’s price. But since an ounce of gold must forever-and-always cost $20, a change in the relative desirability of gold, versus all other things, would have to translate into inflation or deflation.

        3. I still don’t think we are in the same page.

          At the time, one dollar was essentially 1/20 oz of gold. They were one and the same, as one could be exchanged for the other. That was when our money was backed by commodity.

          Now-a-days, it is not the price of gold that is going up, but the dollar that is being devalued through inflation. Yes, there are components of investment, jewelry, etc… that factor into the price of gold, but on the whole, it is a reflection of the devaluation of the dollar.

        4. Aha, a wonderful demonstration of the fallacy of Midas, the cardinal sin of hard money advocates.

          In most contexts, gold is not worth anything at all. You can’t eat it, or use it to build a shelter from the elements. It can’t be fashioned into basic tools. It has some modest value in modern electronics, and in dentistry, and some further value because among those with claims-on-production that exceed their basic needs, gold is used to fashion shiny baubles that show off their status.

          If you really want to treat gold as a medium of exchange, you should look at the exchange rate between, say, units of 0.05 oz of gold, and a basket of consumption goods, not the exchange rate between gold and dollars.

          It’s true that we’ve had modest inflation over the past couple of decades — about 2.6% a year, I believe we calculated earlier. Meanwhile, the nominal price of gold has risen at something like 6.4% (from about $390 per oz twenty years ago, to about $1340 today). In other words, you have to give up a lot more consumer goods today, to get an ounce of gold, than you did twenty years ago. (I’m really not interested in having a debate about why.) In order for the exchange rate between gold and dollars to stay constant, the prices of the goods people actually want to buy would’ve had to decline by about 3.8% per year.

          This is, again, stuff that you ought to be able to learn based on first-day Micro (supply and demand determine prices — and you can determine relative prices of one goods in terms of other goods, money is merely a convenience) and first-day Macro (the basic meaning of inflation, and the distinction between real and nominal prices).

        5. Here’s a quick math example.

          Say, over a given period, the CPI with a floating/fiat dollar goes from 100 to 120. Over the same period, the price of gold goes from $300/oz to $600/oz.

          In the earlier period, you had to give up three CPI-basket-of-goods units to get one ounce of gold. In the latter period, you have to give up five. If the exchange rate between gold and dollars had been held constant, the CPI would’ve been forced to fall by 40%.

          600/2 = 300 (gold held constant)
          120/2 = 60 (required CPI level)

          So, again, by demanding a gold standard, given the actual history of supply and demand in the gold market, you are demanding severe deflation, and almost certainly a new Great Depression.

        6. Hi Auros, It looks like although we are again at a stalemate, where will end up reiterating our past points. Although we see the same information, we have different interpretations of it.

          It’s always fun and insightful dialoguing with you.

  4. this article misses one major point: fractional reserve banking. even if we were back on the gold standard, fractional reserve banking ensures that we will continue to live beyond our means. it isn’t necessarily that fiat currency is good/bad or that the gold standard is good/bad; it’s all about who controls the system and what processes are in place. as long as fractional reserve banking persists, so too will monetary value flux.

    1. Hi David, Thanks for the point on fractional reserve banking. I accept the criticism, as FRB via central banking is a critical catalyst for the booms and busts we have had. In my mind, although not explicitly stated in the article, a gold standard implies the necessity of a 100% reserve, granted not all gold standards are as such. A fractional reserve gold standard is just as bad as a fractional reserve in any other standard.

    2. If fractional reserve banking did not exist, we’d have to invent it.

      Say you want to save for the future — i.e. transfer your purchasing power from your present self to your future self, so that your future (retired) self will not have to work to earn income.

      You have a couple of options. First, you could start buying equity in productive assets, so that you will directly own a share of future production. Your income from sales of future goods and services will then finance your future purchases. Buying equity in a secondary market, even through a mutual fund, is very similar to this — the liquidity of equity markets makes it much easier for entrepreneurs to acquire equity capital in the first place.

      Second, you could directly loan money to somebody. Presumably that somebody will engage in some kind of profitable investment, and their sales of future goods and services will let them service their debt to you, and thus you will earn your share of future production.

      Third, you could put your savings in a bank or a CD. The bank will evaluate the creditworthiness of loan applicants, and loan out your funds to earn interest. When the future arrives, your funds will have helped to maintain and build the productive capacity of the economy. You will have received interest, probably sufficient to keep pace with inflation (especially if you used a mix of demand deposits and various maturities of time deposits). Because the productive capacity of the economy has kept pace with population, your shift from saving towards consuming (which, if capacity were fixed, would obviously put upward pressure on prices — more dollars chasing the same amount of goods) will work out just fine. By helping to finance future production, you ensure that there will be goods and services on which your future purchasing power can make a claim.

      Kill fractional reserve banking, and you kill this third mechanism. You return us to a world where entrepreneurs cannot get commercial loans or lines of credit, unless they have personal connections to wealthy patrons.

      I think we need higher reserve ratios than we’ve had over the last couple of decades, and we need to charge banks realistic premiums for deposit insurance, and extend deposit insurance to any business model that can be boiled down to “borrow short, lend long.” But removing the mechanism that turns desired savings into investment in maintaining and extending productive capacity, would lead to a catastrophic drop in investment, especially by small businesses, and a destruction of the ability of innovators to finance groundbreaking new business models.

        1. It depends on what the reserve ratio is calculated against. If the bank is required to be able to meet all current deposit liabilities — with time deposits not counted until they mature — then a three-month CD would allow the bank to make a three-month loan.

          You’d still have serious problems with financing long-term investments. Very few people want to tie up large amounts of their money for five, ten, thirty years. In fact, the relative interest in even short-term CDs, versus zero-maturity demand deposits, shows that most people want much of their money to be accessible at all times, even though on any given day they don’t want to use most of it.

          When you have a healthy fractional-reserve banking system, in which (a) the bankers are actually bothering to assess the real risks of their loans, because they themselves will suffer if the loans go bad, (b) the reserve requirements are enough to weather even a fairly serious macro shock, and (c) the bankers are monitored by competent regulators and required to pay into a deposit insurance / resolution fund, so that customers can trust demand deposits; you can turn demand deposits into a source of long-term financing.

        2. It would be a 100% reserve ratio;).

          Interest rates would fluctuate accordingly to whether more savings were needed to fill loans.

          I don’t think there has ever been a healthy fractional-reserve banking system:).

  5. There is absolutely no reason why a gold standard would be an improvement over the current system. Proponents claim it can reduce inflation, as the country would have to buy or mine more gold to print more money. These people seem to have no idea that inflation has been virtually nil for some 20 years now, even with fiat money. These people also seem to have no idea that a small amount of inflation is almost always better for the economy than no inflation at all, especially with the government now carrying such a large debt load. I recommend taking some Macroeconomics courses to learn more about the gold standard from actual economists, not from Tea Party activists… most of whom never graduated high school.

    1. I would beg to differ that inflation is nil, even with both definitions of inflation. If inflation is defined as an increase in the money supply, the money supply has increased significantly over the past 20 years:

      If inflation is defined as price level, CPI was 130.7 in 1990 to 218.312 this past August:

      If either of those are not inflation, I don’t know what is.

      I have studied Macroeconomics, from various perspectives, both formally and informally, thus reaching the conclusions I have put forth thus far. I would recommend doing the same, not necessarily coming to the same conclusions as myself (although that would be nice), but learning as many different perspectives as possible. You will see the strengths and flaws of many theories.

      1. Let’s see, that makes an annual rate of…

        ((218.312 / 130.7)^(1/20))-1 = 2.60%

        I agree it’s unreasonable to call that “nil”, but it’s pretty darn low inflation. I tend to think the Fed should raise their target by at least a point, maybe 1.5, to give them more room for error in avoiding deflationary traps.

        1. Agreed. Gold standards and periods of deflation create Great Depressions out of Great Recessions. Why did Britain largely avoid our Great Depression in the 1930s? Because they accidentally fell off the boat just before it and never had to bear the crippling deflation of the gold standard.

        2. Ben, it was not the gold standard and deflation that caused the great depression. It was central banking, namely fractional reserve banking. If a the gold standard is part of a fractional reserve banking standard, then it is just as bad as fiat. But if a gold standard is 100% reserve, this is a different story.

          Auros, the annual rate is akin to the frog in boiling water. We won’t feel the effects of inflation until its too late.

        3. Jonathan, nope. It was the gold standard and deflation. If you disagree, please inform every Economics department that has ever taught a course in the Economic History of the Great Depression. I’m guessing you missed that one? ;-) But please go on with your Ron Paul / Ayn Rand pseudo-economics..

        4. Ben,

          If you could cite resources to the gold standard being the cause of the Great Depression please do. I am sure I can provide counter sources.

          Even if we examine the opposing big schools of thought, there is no mention of the gold standard as the culprit. The big three, incluce Keynes, Friedman, and Hayek: http://www.triplepundit.com/2010/04/overlaps-from-the-opposition/

          Keynes suggested Animal Spirits as the cause for the boom bust cycles. Friedman suggests plucking theory and monetary policy as the culprit. And Hayek suggests central banking.

          Economics is a discipline where there is no consensus across the board. One department will sway towards the free market, another will sway towards intervention.

          Looks like we need to do some studying:).

        5. Hah, I think your “big 3” is pretty interesting. Robert Solow is probably the most accomplished economist of our time, and he is MIT’s favorite son even today at the age of 90 or close to it. I suggest you read his works, and come back to this thread if you really want to get into the nitty gritty of economics. I realize not everyone can hold a Ph.D. in Economics from a top 10 research university as I do, but we can all learn if we agree to not learn economics from non-economists such as Ron Paul (who advocates the gold standard from the standpoint of his Biology degree).

        6. I am curious as to why you balk at the “big 3”. Their theories have built the foundation of the divergent schools of economics. Even the Keynes vs. Hayek notion of the boom and bust is widely popularized:

          On a side note, Ron Paul is actually well versed in economics. As the Mark Twain once said, “Don’t let school stand in the way of your education.” Just because one has an econ degree does not mean one is well versed in economics. Utilizing that method is just argument from authority.

          If you do not buy that argument, that at the very least loo to the Economist that Ron Paul refers to. He mentions them all the time.

        7. Have you even heard of Robert Solow? Again, read his papers and tell me which of your “Big 3” is the foundation for his theories. He IS the foundation of modern economics for the coming century in my most humble opinion. Here is a taste: Technology and labor, not market delivery systems, drives all economic growth. In other words, the Fed and the monetary supply matter surprisingly little one way or another.

          And I realize that Ron Paul’s fans think that he is “well versed” in economics, but he’s familiar with Milton Friedman and little else. As the great Robert Solow once said: Everything reminds Milton Friedman of the money supply. Everything reminds me of sex, but I try to keep it out of my papers.”

        8. Ben,

          Again I will ask for references to the Gold Standard as the culprit to the Great Depression.

          The reference you cited was Solow, famous for the neo-classical exogenous growth model. To contrast the neo-classical model, we can examine the endogenous growth model. Interestingly enough, both have roots within the context of the “big 3”.

        9. The information you provide is false.

          Ron Paul is AGAINST the economics of Milton Friedman, as Freidman advocates a strong monetary policy, and Paul does not. We need to get the facts straight. Milton Friedman is from the Chicago School of Economics, ie the Monetarists. Ron Paul adheres to the Austrian School, which is the near anti-thesis of the Austrian School when it comes to method and monetary policy.

        10. Thanks Jonathan, I believe you got that from starting at Wikipedia, so you researched the very words I wrote. See, you can learn more about economics if you try! Did you read in the paper where the Fed hinders economic growth? Me either. You know why? Because it’s not there and it doesn’t hinder economic growth. Memorize that model and paper, and you will go a long way in your quest for economic knowledge.

      2. Actually, I ran into Solow while doing research on business cycles, including both the endogenous and exogenous. IMHO, these are modern variants of Friedman and Keynes, and I’d be happy to debate the differences if you like, or even if they are related.

        Here is a recording of the Business Cycles Panel:

        On a side note, are you even going to acknowledge your distorted statements on Ron Paul? That is the least you can do. Above, I accepted criticism that it is not about the gold standard per se, but fractional reserve banking.

        I am actually surprised that you support the macroeconomics of Solow, a neoclassical, as most folks I have run into here lean towards Keynesianism.

      1. What’s wrong with People and Planet?

        Pursuing Profit at cost of Planet is not a wise choice, and the Profit here would be on behalf of mining companies. Taxpayers would actually take a Loss from having to buy gold for no valid economic reason. Not to mention that increased demand for gold would cause more mining operations and needlessly damage the Planet.

        1. I never said anything was wrong with the people and planet. Nor did I state the pursuit of profit at the cost of profit or even people.

          My question is, what is wrong with profit? If one refers to the impact upon people, and the planet, it is not profit’s “fault”, it is the mere impact upon people and planet.

        2. I never said anything was wrong with profit.

          My question is, what is wrong with the planet? With people? You see, two can play this silly game.

          You are advocating the creation of a false demand for gold by forcing governments to buy it en masse before they can continue making dollar bills. Do you not see that this would require more gold mining and more stripping of the Earth to get at more gold?

          And in case you missed the part where I covered this, there is no Profit to be had while you are needlessly tearing up the Planet. The government would be forced to BUY gold, not SELL it. Where does that money come from?

        3. On the contrary, I am advocating for people to utilize whatever they want to trade, within the means of the law. If laws need changing, so be it. Gold happened to be the last naturally selected money. But that does not mean it has to be money of the future. It sure is a strong contender.

          If you read my article carefully, namely the last line, I suggest this is a solution for economic sustainability, as sustainability encompasses more spheres than just environmental and social. I would argue that fiat-money forces the use of more aggregated resources since it is more abundant.

          And who said anything about governments? You are creating a straw-man fallacy. I would not force this standard upon anyone, it would have to naturally emerge. We can have a gold standard with or without a government enforcing it. We are so used to money coming from the government, that we can’t even imagine a world where money comes from the grassroots, whether it be gold-backed, energy-backed, or xyz-backed.

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