Not long ago, I was reading a piece in the Wall Street Journal which stated that the GOP was debating on whether or not putting the US back on the gold standard should be part of their political platform. Whereas, I realize that there are a number of independents that think this is a good idea, it simply is not possible, if we were to do that then gold would spike to $35,000 an ounce, and all the mining companies in the world would be busy digging it up creating a mining bubble.
For those that think this might be a good idea, perhaps you should read some of Greenspan's older essays about the gold standard, and some of the research reports done by the Federal Reserve and others as to why this can no longer work. Yes, it would be nice if our currency was backed by something other than the faith of the citizenry, and global markets, but gold is not the answer, neither are tulips. I found it interesting that Ron Paul was pushing this concept during the Republican debates, and also interesting because many of his campaign contributors were in the business of buying and selling gold coins.
Interestingly enough, Mitt Romney the presumptive Republican presidential candidate for 2012 has been careful to stay away from this issue, but I suspect that he is wise enough to know that it can't work, and won't work, therefore doesn't wish to put his name on it. Another thing I'd like to point out is that gold is a metal which is used in manufacturing, and if we went to the gold standard and the price of gold spiked that high, it would be a significant burden on those types of electronic equipment that use gold because it conducts electricity quite well.
Now then, I understand people are angry at the printing of money, but we also need to get more money into the system not only for our own citizens, but the rest of the world as well. As more and more people are entering the middle class in their own societies and, those nation's economies are often dealing in dollars because their own currency is not stable. It might be okay for a smaller country with less currency afloat to base their currency on a gold standard as it gives them credibility. But it just can't work with the US dollar, as it is now a global currency. Do you see that point?
We just don't have enough gold out there to keep the price where it is without building a bigger gold bubble if the price were spiked like that, nor would we actually solve the problem that those who are requesting a return to the gold standard believe we need to solve. Indeed I hope you will please consider all this and think on it.
Lance Winslow has launched a new provocative series of eBooks on Economic Concepts. Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank; http://www.worldthinktank.net
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