Why America Needs the Gold Standard

by Lewis E. Lehrman

(Editor’s Note: As we are secession-centric here at DumpDC, we feel it necessary to note that America in fact DOES need the gold standard, but returning to a gold standard will happen in America right after you see donkeys flying outside your kitchen window, and aliens landing in your neighborhoods. However, a seceding state MUST establish gold standard money if it has any chance at viability.)

The gold standard was, and could be again, the stable American and international monetary institution – encouraging financial order, growth, and prosperity.

The abandonment of the gold standard during the history of the 20th century resulted in manipulated currencies leading to a century of economic and civil strife, within nations, and to terrible wars between the great powers. The 20th century experience of monetary disorder, wrought by floating exchange rates and Central Bank discretion, is the empirical witness to the indispensable necessity of convertibility of the major national currencies to gold – a restoration only plausible under American leadership.

The gold standard is real money, acceptable from time immemorial, ruling out substantial and sustained deflation and inflation. The gold standard leads at home to peaceful cooperation and trade among diverse citizens. The international gold standard is the optimum non-national world currency which leads to cooperation among different sovereign countries and distinct cultures. Convertible currencies are the least imperfect vehicles inducing cooperation of competing interests, because, despite all national differences, each sovereign national currency is convertible to a neutral, common world currency – a specified weight unit of gold. Thus all currencies convertible to gold are mutually convertible to each other. Such an international monetary standard is beyond the control of any one country.

Because of its stability, neutrality, and simple adjustment mechanisms, internally and externally, the gold standard tends to reduce, at home and abroad, currency wars, inflation and deflation, conflict and violence. These disturbances arise from politically manipulated, national, floating currencies. The insidious monetary process of political manipulation of the value of national currencies destabilizes the peace of the social order; it increases strife among citizens; it causes intense divisions and political partisanships. But the ensuing bubbles of inflation and the busts of deflation can be coped with by nimble speculators, even as they impoverish the middle class and all those on fixed incomes. Throughout history currency wars lead to irreconcilable class rivalries at home, often born of undervalued currencies, competitive devaluations and national tariffs, joined to trade-blocking quotas.

If we truly wish to rule out systemic financial disorder and currency wars, and their consequences, the great powers must rule out official national reserve currencies; and then embrace the international gold standard as the official standard monetary unit and the sole reserve currency of an integrated and open world trading system.

© 2011 The Lehrman Institute

13 Responses to Why America Needs the Gold Standard

  1. Mona says:

    My gut instinct is to agree with your assertion that gold is an ideal standard…. but using such its a bad idea that needs to be supersceded by a better idea… problem with your idea is that the pursuit of precious metals unfortunately leads to unhealthy, unethical mining practices.

    • dumpdc says:

      Dear Mona- I note that you have not offered “a better idea”……because there isn’t one. Precious metals are in the ground…deal with it. Russ

  2. Dear Russ, Just because we’ve not come up with a better solution doesn’t there isn’t one

    AND How will we ever have enough of the precious gold to hand out to an ever growing population?

  3. Hey You says:

    Indeed, gold is the ideal standard.

    Seems that now, oil is the de facto standard, priced in US$s.

    Speaking of unethical and unhealthy practices, how many gold “spills” have we heard about?

  4. sth_txs says:

    Commodity standards are not perfect either, but the main issue is government control of the standard (even if it is commodity). If people have these choices, then issues like inflation and bank crashes can be minimized (not eliminated).

    If we had choice in currency, maybe there is a place for paper money, but people should have the right to decide.

  5. The following link sheds light upon the ugly side of gold being cast as the main ingredient for greasing the wheels of commerce…
    http://www.thirdworldtraveler.com/Transnational_corps/Fools_Gold.html

  6. sth_txs says:

    With all of the focus on gold, it is easy to forget that we could mint coins with copper, nickel (the nickel), palladium, platinum. So again, if people had some choice for money, it would work itself out.

    This fiat money stuff is merely entrenched stupidity. Talk to almost any MBA that has been indoctrinated. They totally ignore some central banks accumulating gold (why not someone else’s paper) and people have also lost their life’s saving under the current fiat regimen (even in America).

    • Mona says:

      Dear 5th_txs,
      I am not sure what exactly you are trying to say. Yes, we could mint coins with real metals, and we do, I have some myself, and people have the choice now to use them… though we may need to have some “money changers” involved…

      But what would you have people do for money other than the current “fiat” system?

      It’s really an age old problem. Even when the gold smiths kept the money, there was the corruption in that the gold smiths figured out they could secretly lend a certain percentage of the gold, charge interest, and not likely to get caught. As you may know people saw the gold smiths getting rich and thought they were stealing the gold, which engendered runs on the bank (gold smiths)… Now its legal for the banks to do that.

      Money is really a hypnotic spell that enables people to do spectacular things. The reason its hypnotic is because people must “believe” it is for real. And then there is so much room for manipulation by the “Leaders” of our masses. Perhaps computers and the internet will allow us to keep tabs with trades and bartering… We must be clear that Money As Debt is a flop of an idea. We need to stop corruption, and stupidity like the war on drugs which has created liars and criminals galore. The illegality of drugs, like fear itself, make people do unspeakably horrible things.

      We need great leadership to take us to the truth, so we can live in the truth.

      • dumpdc says:

        Mona- sth tx can speak for himself, but I’ve got a comment. There is NO monetary system that is flawless, since humans always screw it up. But a precious metals monetary system, deliberately NOT linked to government, is the system with the LEAST amount of flaws. It also MUST be directly tied to a prohibition of fractional reserve banking. The free market, allowed to actually be free, solves most of the problems associated with fraud. This also requires that the populace accept market risk, and don’t just blindly run to Uncle Daddy for protection and regulation. Finally, this cannot happen in a nation of over 300 million. Secession must occur first, and small states may then institute a precious metals economic system. Russ

  7. Mona says:

    Can you please describe specifically how it would work, not linked to government?

    • dumpdc says:

      Mona- Precious metals money should be all about weight and purity. 99.99% purity is the high mark. But government should have nothing to say about it. Buyers and sellers should accept 100% of the market risk of the money they use in commerce. In other words, if I want to sell you a computer and I’m willing to accept a one-ounce gold coin of 99.99% purity, OK. But I could also accept two one-ounce coins of 50% purity. Either way, I know the weight of gold I want for the computer. How we arrive at that amount should only be decided in the free market. Sure, it makes some transactions a little more complicated. And values of precious metals will fluctuate a little. But with handheld calculators and computer programs…or even eGold, the transactions would go smoothly. Maybe people would actually get better at math. Besides, which would you rather have….real money that has NO inflation, or fiat money that inflates every year? Give me real money every time. Russ

  8. Dr. Lehrman: Your excellent article here promoting a return to the gold standard inspired me to write my own article, “End the Fed–Bring back Gold” @ http://www.wnd.com/index.php?fa=PAGE.view&pageId=335597
    ~ Ellis Washington

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