We went away from the Gold Standard June 05 1933 (under FDR, for those of you who don't know), where currency issued by the government was backed by gold and until that time creditors could demand repayment in that gold.
Now there are several schools of thought on whether this is a good thing or a bad thing. On the one hand, the attraction of the gold standard is stability - a constant point of reference. On the other hand, that stability comes with a price - it is limited to simple systems, and fails catastrophically in some instances (when new contenders enter the market and when the values referenced themselves create changes in the overall markets).
There are a TON of articles (heck, even books) written on this subject. I get that all "dollars" are merely promissory notes that are dependent on faith in those notes, but we will weather this storm.
Yeah, history does too. Most people alive today are oblivious to the fact that the amazing freedoms we enjoy in America are not the normal state of human affairs for the vast amount of human history. Should we end up going down this disastrous path of Socialism once again, I think there are going to be a lot of woke youngsters who grew up under freedom who actually wake up to what it's really like... too late.
LOL. Actually, I happen to agree that the gold standard was stifling. My favorite economist is Milton Friedman (Reagan era). He was a libertarian and absolutely brilliant IMHO. The gold standard doesn't account for things like intellectual property, which is arguably one of the greatest new markets of the day. He nailed it when he said “Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.”
There are some who argue against this, and economics is not my strong suit. If you look at human nature, and how the free-market system has actually been better than all other systems at actually fulfilling "a rising tide lifts all boats," even with our admittedly NON free-market system, it still works pretty well.
Inside the US, you can use federal notes to pay for all debts, public and private. No one can refuse federal reserve notes.
That's about all it has going for it.
In reality, all forms of money are imaginary. They only have value because people value them.
The way the Fed works is they print money, or rather, have the US Treasury print money, which they loan out to special banks and to the federal government at interest.
We could be loaning ourselves that money. In other words, cut out the middle man. If banks want to borrow money, they could borrow it from an actual US bank owned by the US government, with interest payments being paid into the federal treasury. And the federal government could print as much or as little money as needed to keep the currency stable.
The truth is that Americans are so insanely productive that we can fund our entire government with freshly printed currency, printed so that we avoid a deflationary cycle. We don't need taxes. We don't even need tariffs. We can reduce all taxes to zero, print roughly the equivalent of the economic growth each year, and pay for all the military and courts and cops we need, and still have plenty left over.
Otherwise known as an I.O.U.
It's a promise by the Federal Reserve, backed by the US Government - by its own promise to the Federal Reserve.
It's set up so the Federal Reserve profits both ways.
They get they gold and you get the shaft.
We went away from the Gold Standard June 05 1933 (under FDR, for those of you who don't know), where currency issued by the government was backed by gold and until that time creditors could demand repayment in that gold.
Now there are several schools of thought on whether this is a good thing or a bad thing. On the one hand, the attraction of the gold standard is stability - a constant point of reference. On the other hand, that stability comes with a price - it is limited to simple systems, and fails catastrophically in some instances (when new contenders enter the market and when the values referenced themselves create changes in the overall markets).
There are a TON of articles (heck, even books) written on this subject. I get that all "dollars" are merely promissory notes that are dependent on faith in those notes, but we will weather this storm.
Yeah, history does too. Most people alive today are oblivious to the fact that the amazing freedoms we enjoy in America are not the normal state of human affairs for the vast amount of human history. Should we end up going down this disastrous path of Socialism once again, I think there are going to be a lot of woke youngsters who grew up under freedom who actually wake up to what it's really like... too late.
The gold standard only fails when bankers cheat. It's not a flaw, it's a feature.
LOL. Actually, I happen to agree that the gold standard was stifling. My favorite economist is Milton Friedman (Reagan era). He was a libertarian and absolutely brilliant IMHO. The gold standard doesn't account for things like intellectual property, which is arguably one of the greatest new markets of the day. He nailed it when he said “Most economic fallacies derive from the tendency to assume that there is a fixed pie, that one party can gain only at the expense of another.”
There are some who argue against this, and economics is not my strong suit. If you look at human nature, and how the free-market system has actually been better than all other systems at actually fulfilling "a rising tide lifts all boats," even with our admittedly NON free-market system, it still works pretty well.
Inside the US, you can use federal notes to pay for all debts, public and private. No one can refuse federal reserve notes.
That's about all it has going for it.
In reality, all forms of money are imaginary. They only have value because people value them.
The way the Fed works is they print money, or rather, have the US Treasury print money, which they loan out to special banks and to the federal government at interest.
We could be loaning ourselves that money. In other words, cut out the middle man. If banks want to borrow money, they could borrow it from an actual US bank owned by the US government, with interest payments being paid into the federal treasury. And the federal government could print as much or as little money as needed to keep the currency stable.
The truth is that Americans are so insanely productive that we can fund our entire government with freshly printed currency, printed so that we avoid a deflationary cycle. We don't need taxes. We don't even need tariffs. We can reduce all taxes to zero, print roughly the equivalent of the economic growth each year, and pay for all the military and courts and cops we need, and still have plenty left over.