Chapter 10
Gold: The New Money
The use of the terms gold standard and new reserve currency are being used more in the last year than in the last few decades. Perhaps that is the tip-off. Some commentators, writers, and magazines are beginning to join the debate on the pros and cons of a return to the gold standard. One said he would bet his career that this will never happen. Most laugh at the prospect. The fact is it is happening now.
The new controversy over reverting to a gold standard is welcome. Many who comment, pro and con, on the possibility are new to the subject, and as such have not really thought through some of the implications. I have been writing articles on the gold standard since the early 1970s, and I welcome the new commentators to this debate.
Two points I would like to make to anyone who participates: One: Any return to a gold standard will come well into the future. A return to the gold standard will be incremental. You cannot graft a gold standard onto the present system. It presupposes fiscal responsibility, balanced budgets, monetary stability, and free trade. A political and economic transformation would need to occur first. Two: It will look much different from gold standards of the past. No one knows—or can know—what a future gold standard will look like. The reason is that technology has changed.
Today we can compute values of gold, silver, copper, or anything else and convert those values into paper claims in a nanosecond. Which means we could pay ...
