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Governments have never demanded that citizens give us their private holdings of gold.
Oh wait, nevermind

AND it's paying for your enormous deficit, which is likely to bankrupt US pretty soon..

Ok, you've got two unwinnable wars, then what?

The US went bankrupt many years ago. Why do you think all the gold was confiscated back in 1933

http://www.the-privateer.com/1933-gold-confiscation.html

and Nixon took the USD completely off the gold standard?

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

You only resort to these extreme measures if you have a negative ROI. If you have sustained negative ROI, that's actually worse than actual bankruptcy, which is an admission that you failed and promise to restructure. Nope, the rampant spending continues, and the fiat money flows. The broken system becomes even more broken, as fiscal fantasy becomes even more out of line with fiscal reality.

That party cannot continue forever, I don't think.

All you need is one good bout of inflation and you can kiss your retirement goodbye.
Combined with low rates on savings, there is not a lot you can do to avoid that freight train on the way (it also wipes out pensions and social security too).

Inflation will only wipe out savings if the investment decisions made are poor and a number of other things happen at the same tyme or in close sequence. Though down from it's peak the Dow Jones Industrial Average is still way higher today than it was in 1973. A thousand dollars invested in 1973 is worth $10,000 today, at it's peak the investments would have been worth $14,000. And in 5 years it may be back up there. Now if you're going to be retiring in 5 years it's a good idea to have a big part of your investment portfolio in income stocks, companies that regularly pay out dividends. Utilities are pretty good. If however you still have 30 years before retirement simple regular investments in growth stocks using dollar cost averaging will keep you in good company.

Obviously today people don't save and invest much and instead expect government, ie other workers, to pay for their retirement.

They are capable. They have issues. They are half a world away. But it's idiotic chauvinism to assume they won't be equivalent within five or six years.

I agree but they'll also be demanding higher pay. By then US companies may decide it's cheaper or financially better to employ US workers. Tesla is opening a plant in CA, as I bet other businesses will do too. Hell, Detroit automakers have to compeat with Japanese makers that have and are opening plants in the US. States compeat with each other to lure them to the state.

Falcon

Is this the same bunch of democrats that FDR and old hickory led?

Is this the same bunch of democrats who enforced Gold and Silver coinage and made sure republican weenies never controlled economy in early 1800s?

You do know that FDR took the US off the gold standard and http://www.the-privateer.com/1933-gold-confiscation.html">confiscated it?

Take the republicans now: They are a unified lot, show a lot of initiative, make sure to take the fight to the enemy camp, and generally destroy their enemy even when their forces are weak.

So why might there be a civil war in the Republican Party?

Ron Paul doesn't follow the Republican doctrine close enough to garner favor. He's neither highly religious nor glued to the party line. Huckabee's popularity was based around being a conservative Christian, but some of his plans just suck (FairTax, which shifts more of the tax burden from those that make over $200000 to the middle class), so I'm glad he didn't win. I've never liked people that think God is on their side, which is what bugs the hell out of me about Bush, and I had a feeling Huckabee would be the same (note that I'm not saying belief in God is a bad thing, I just don't think God picks sides).

    Ron wants to move use back to the gold standard so savings can't be eroded by devaluation of the dollar (by printing more money), but moving to the gold standard would be interesting, because Presidential Executive Order 6102, dated April 5, 1933 makes it illegal to horde gold (even by note), so unless that's repealed, it gives the government the right to seize any gold savings you might have (with some exceptions, but the $100 limit is pretty nasty). Gold has stability, but also the tendency to throttle the growth of the economy. Basically, the gold standard is like investing in Government Bonds and Fiat currency is like High Yield (Junk) Bonds - slow growth and slow rewards but generally stable vs high risk, high reward unstable. Personally, I wouldn't mind seeing a dual currency, but that brings headaches of its own (like 2 price tags).

The real goal of a gold standard is to combat uncontrolled money expansion. There are a number of ways to accomplish that without arbitrarily pivoting on some random and irrelevant metal.

This is ludicrous; barter is not illegal. If you can convince your bank to accept mortgage payments in pearls or gold bullion you are free to transact that way.

Further, the U.S. is not a dictatorship. If the populace really wanted to transact only in gold the law could be drafted and passed and then everyone would have to. Instead, the direction of this country and every other developed country has been away from the gold standard and toward abstract currency. In fact one of the most abstract consumer representations of currency today -- the checkcard -- has quickly become ubiquitous. People choose abstract currencies because of their flexibility and ease of use.

I'm going to ignore the rest of the points for the moment, because this one deserves a proper answer. It is, in fact, completely wrong. From 1933 to 1975, private ownership of gold bullion and gold coins was illegal in the United States. President Roosevelt, in Executive Order 6102, confiscated the nation's private supply of gold bullion, gold coins, and gold certificates, and forcibly replaced them with a fiat currency under the control of the Federal Reserve. People had no choice but to accept the government's fiat currency, because they could not continue using the gold and silver currencies that they had been using quite willingly and profitably since the country was founded. That is why we have a fiat currency today: because not so long ago we were forced to accept it, much to our loss.

Given how misinformed you apparently were on such a basic part of the history of United States currency, I think the remainder of your points could probably be dismissed out-of-hand. However:

This would be true if people saved currency, but they don't. They save by investing in the economy, so that when money is spent into the economy they experience financial growth. As a result the U.S. has experienced overall economic growth since coming off the gold standard.

I'd really recommend the book on economics that another poster pointed out for this one. I'd also like to point out that we experienced significant overall economic growth before coming off of the gold standard, and (taking into account unforseen technological advancements that would have happened anyway) we probably had even more actual economic growth before we were forced into switching to an inflationary fiat currency.

I just don't see how you can talk about strength of economy and monetary policy as if they were two separate things. We had a monetary policy and experienced a strong economy--how else would you define successful policy? I'd love it if you could point to a concrete example that we can compare ourselves to. I'm not really interested in unproven "could-have-beens."

First of all, a strong economy depends on many factors, and probably the least of them is monetary policy. I'm not saying that it doesn't have an effect, but as long as the changes to policy come slowly enough for the market to adjust, the actual effect isn't all the much. In particular, the economy in this country has nearly always been fairly strong, except for those cases where those in charge of monetary policy managed to mess things up. The less monetary policy we've had, the better the economy's been, but it's almost always been a "strong" economy despite the interference. I would define a successful monetary policy as one the left things well enough alone!

Second, the only thing we have to compare the state of our economy to is the "could-have-been". We only have one history, after all, our national history makes comparisons to other countries questionable at best. Since no "concrete" comparison is possible,

Does plastic money grow on plastic trees?

After reading this I think its obvious that it does. Money is so important Americans, who still profess their freedom to this day, were willing to make it illegal to possess gold. How fucked up is that? Very.

But almost nobody will admit that we really don't need money to make the world go around. What we need is computers to organize all this "money" which is really just a reciept for our labor. Make things efficient, work together and organize your labor, and you'll never need money or commercialism or overtime. In fact most people don't even really need to work, which is why they can't find jobs. They only need money because we won't give them anything for free.

So if there is so much surplus, wtf do we need money for? To keep some people rich. That's the only explanation I can think of. I mean, if we didn't possess the knowledge of computerized industrial automation, then yeah, maybe most people would need to work. But today? With modern technology?

How much money does it cost to manage money, researching technology to prevent theft or counterfeiting? How about how much money it costs just to manage all your currency, print it out, make sure everyone knows its value, etc, etc, etc. And you what? The value of stock and the stock market is based almost entirely on its popularity. If people like it, want it, willing to pay for it, it goes up, like SCO. If they think it'll tank the pull their money out and make it tank, like the tech ecnomy within the US post CNN/Fox's DotComCrash reports. Its all a fucking illusion.

But don't listen to me, go on and spend the rest of your life counting coins. I don't care.

One of the top 10 'innovations' would have to be the removal of gold backing the Dollar, allowing for huge national deficits. A nice timeline is here.

Gold in this context is a currency, like any other, except that its value relative to other currencies isn't easily under the control of any one government - rather, it's manipulable by _many_ entities (note what happens when, for example, a large central bank announces it's going to be selling part of its gold reserves).

It's not subject to inflation per se - but in a world of multiple, competing currencies, in which few things people are interested in buying are priced in gold, it's hardly a rock solid store of real-world value. Look at, say, this chart, best I could come up with in 10 seconds on Google :-) - finding a comparable chart for USD inflation is left as an exercise for the reader - but note that USD inflation peaked during the periods between points 3 and 5 on the graph - coincident with a spectacular decline in the gold price. Gold was US$296 in 6/1982 (in 1982 dollars). It's slightly under that now I think. That's in 2000 dollars. What was that about inflation again?

In an environment where gold (or some other designated commodity) were the standard currency that everyone used, e-gold might make sense. But as things stand now, where everything you want to buy is priced in dollars (or Euro or pounds or yen etc.), the friction of buying and selling e-gold and the metal storage costs make e-gold impractical.. and the stuff about gold being a valid inflation hedge and it not being subject to government manipulation is IMO hooey (see above).

I was talking about this with people at a conference I was at earlier this year... as I recall, I think what I said was e-gold would make more sense if the e-gold marketplace itself were open - so that the buying, selling, and storage or metal was handled by multiple competing companies, rather than the one gold firm that was behind e-gold. I can't check the site to see if the market has been opened up - I doubt it given the absurd spreads they were charging. With real competition spreads (the difference between buy and sell) might go down and using e-gold as an exchange medium behind real-world transactions would start to make sense. I still wouldn't use it unless there was a way to, say, earn interest on my idle cash, er, gold, and do other things I can normally and easily do with dollars. 'Till then, I think it's just for the gold bugs.

There is, or used to be, a great, and active, discussion section on e-gold over at Free-Market Net.

Brain drain is a rather emotional laden concept. However, it might be pointed out that there is no movement of people unless there is an empty position for them to shift into. The question should then be asked as to how come the US can't generate enough American talent to fufill these jobs? Given that professors at US unis get paid significant amounts of money, at least more than the average non-US uni, I would hope they give their students the skills to fufill the needs of the economy. If this is not the case and all the foreigners are taking the high paying jobs, where does that leave the average Joe? The fallacy in this type of thinking is limiting your thinking to just the US economy and assuming that to raise US standard of living, you have to depress the rest of the world. Economics is not a zero sum game.

However, it would also help if the Fed could get their money supply and debtunder control so that salaries and purchasing power parity figures for global comparison are not distorted. Even a starting Silicon Valley income can be net negative once you factor in teh cost of living.

LL