Gold has been the universal form of currency. However, after the development of the industrial nations there has been a slow process that took us to fiat money. During the last 8 years many including presidential hopeful Ron Paul, would like to go back to the gold system and to the "let alone-no goverment intervention" economic policy. Which system in your opinion is more capable to sustain economic growth and wealth for our economic system??
Really can't answer that question until you define "growth and wealth". The Gummint measures it in "prices paid for finished goods and services"... but that's really more a measure of money-pump inflation. There isn't any genuine NEED for a currency to be backed by gold.. it's just that gold holds the evil doers' "feet to the fire" so to speak. About 25 years ago on Wall Street Week, I heard Milton Friedman decry the Fed and say, "The Fed should be abolished and be replaced with a computer... one which increases the money supply at the same rate as the population growth... about 2% per year". If we had such a plan and could rely upon its honesty... PLUS the Federal Government were forbidden from spending in deficit, there would be no need for our currency to be backed by anything other than the government's tax-levy authority. AND THERE WOULD BE NO INFLATION!! NO LOSS OF PURCHASING POWER. NO DECLINE IN THE STANDARD OF LIVING. NO CURRENCY DESTRUCTION. All of which are staring us in the face right now.
i don't know... possibly an inflation basket standard or, we could open the domestic currency market to legal competition, and evaluate alternatives through a competitive free market process
this type of competition could inhibit the whitehouse and congress's incentive to print and spend, but also offer a transitionary means out of the dollar, rather than sticking the american ppl with a potential collapse and requisite consequences
I think they will soon learn that the aftermath of consumer debt bubble of the 1930's was what caused the Depression. History only rhymes, though. This time it will be the GOVERNMENT DEBT BUBBLE that causes a collapse and Depression when foreigners finally say "NO MAS" to the confetti money dollars, and refuse to lend us more money. Look at the interest rates in Iceland. We are next.
The assurance of no inflation assumes a steady small increase of supply of goods and services commensurate with that same growth of population. Tax and regulatory policy can knock that assumption clean on it's butt.
DUMBASS statement. Of course there is always the possibility that, "anybody can do anything at any time".
Have to really agree with gnome's points. The problem is not the Fiat system, but the people running the system. And my question is, is it in our best interests to concentrate on keeping our growth rate steady? Shouldn't we be more concerned about keeping enough jobs for our citizens as well as having affordable food and necessities for everyone. If we concentrate on these first, we would be much better off and growth would take care of itself. These criminals in charge have supposedly concentrated on growing our economy and thus destroyed the dollar making food and commodities more expensive.
A slightly deflationary commodity-backed currency. Deflationary systems encourage savings - not consumption. Savings drives low rates and business investment. Investment ramps R&D. R&D innovations and breakthroughs are the real engine to economic growth.