The Problem with the Gold Standard

Posted: February 12, 2014 in Debt, Paper money
Tags: , , ,

In my continuing look at whether the concept of a return to a commodity based monetary system based of the precious metal of gold, I have recently read the following article which captures what I believe to be one of the biggest dilemmas in seeking a return to the gold standard in contemporary times.

I quote;

Gold would also be a more viable basis for the money supply if its price wasn’t subject to manipulation by commodity speculators, but this happens on a routine basis. Currency instability driven by self-interested financial markets is one of the greatest problems facing the global economy. A return to gold could make it worse

I conclude; unless the modern structures of markets and their participants, which include governments and corporations, are not radically altered in terms of their power and control of this infrastructure, any return to the gold standard would simply keep the playing field unequal and in the vested interests of those who currently gain from the fiat system.

Unless we fully understand proposed solutions we risk simply re arranging the failed construct that is part of the problem

What worked yesterday, will not necessary work tomorrow

It is also worth noting where the most gold is currently located. The biggest owners by far are governments and global institutions, as the link below shows;

http://en.wikipedia.org/wiki/Gold_reserve

A return to this standard would therefore give distinct advantage to the many European and American owners of this metal. Don’t forget that in the past, governments have decreed that private ownership of gold is illegal and have been able to confiscate it from the hands of individuals – again showing that unless a radical power shift occurs the world will not be ready to reinstate commodity money

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