Federal Reserve

[The Lorax]

The thing about the US dollar is that it is backed by oil in a round about way. We buy over half the worlds oil supply, flooding the global economy with our worthless paper money. Oil producing nations need our oil market, as great as oil is, they cant eat it. They take our money and use it to buy goods from other nations. A large part of the world is dependent on the US market, we import many times more goods than is imported. The nations we buy from cant afford to do without us buying from them. If our dollar was to lose it's value a global depression would occur. There are a few countries, mostly in the EU that wouldnt mind such a depression as they believe that the euro would then become the worlds reserve currency and they would recieve the benefits that go along with that.

It isnt possible to return to the gold standard. The current global distribution of wealth is unequal to the distribution of gold. Since the gold standard was left, many wealthy nations such as japan stopped accumulating gold. To return to the gold standard could also potentially cause a global depression.

 

[michaeledward]

It isnt possible to return to the gold standard. The current global distribution of wealth is unequal to the distribution of gold. Since the gold standard was left, many wealthy nations such as japan stopped accumulating gold. To return to the gold standard could also potentially cause a global depression.

While returning to a Gold Standard might create a great deal of difficulty, and some intense short term pain, it would, according to the arguments put forth in the article, eliminate the deflationary effect of the federal reserves actions on the dollar. Further, it would eliminate the boom-bust cycle our economy has experienced as we have tried to hide the peanut beneath the acorn shell.

Much like quarterly reporting in the stock market ... Short Term pain for long term benefit. It takes a wise man to undertake such an action.