I got into a debate on a retrogaming forum (login required so no link), regarding gold and silver as money. There is more pro-State propaganda regarding gold and silver than anything else.
A pro-State troll says “The free market discredited the gold standard.” Which free market is that? Is that the free market where President Roosevelt declared gold ownership illegal in 1933? Is it the free market that allowed the Federal Reserve to print more gold-backed paper than gold they had? The gold standard was ruined, on purpose, by government and banksters. Under a paper monetary system, it’s much easier for banksters to steal.
Around 1932, the State starting printing more gold-redeemable paper than gold they had. Anticipating a default on the paper dollar, people rationally started holding gold. They were decried as “greedy speculators”, but the real problem was that the Federal Reserve printed more gold-redeemable paper than gold they had. The rules of the Federal Reserve guaranteed an eventual default on the gold-redeemability of the paper Federal Reserve Note.
Look at it from an individual viewpoint. If your only two choices were gold and silver, which would you choose? With paper money, you can be robbed by inflation. Real inflation is a lot higher than the CPI.
With gold and silver as money, you can’t be robbed by inflation. Also with gold and silver, you can vote “no confidence” in the banking system by holding gold and silver. If you hold paper money, you get robbed by inflation, whether in a checking account or under your mattress.
That’s the reason Wall Street makes huge profits, even though they produce nothing useful. They profit from inflation. They get to borrow at the Fed Funds Rate (0%-0.25%), even though real inflation is much higher. Big banks borrow from the Federal Reserve at 0.25% and buy higher-yielding Treasury debt, making a practically guaranteed riskless profit. If gold and silver were legally recognized as money, you could opt out of that scam by holding gold and silver.
There is one reasonable reform that hasn’t been implemented. That would solve many of the monetary problems without a default on the paper dollar.
Declare that gold and silver coins are legal tender based on the spot price.
All capital gains taxes and sales taxes on gold and silver should be repealed. If you take a literal reading of the Constitution, those taxes are unconstitutional anyway.
Stores can charge a small and reasonable transaction fee, if you pay in gold or silver. A transaction fee of 1%-2% is reasonable. Banks also would be allowed to charge a small reasonable transaction fee, when trading between paper money and gold/silver. In the present, gold/silver/FRN transactions have huge fees, because that market is heavily regulated, restricted, and taxed. In a really free market, gold and silver would be very liquid. (That’s why “Start a gold/silver/FRN barter network!” is one of my favorite agorist business ideas.)
So, if silver is $30/oz, when you go into a store and buy something for $30, you can pay with $30 FRNs or an ounce of silver.
If you fix gold at an exchange rate of $2000/oz, then it doesn’t work once the paper dollar inflates beyond $2000/oz. If you let the price of gold and silver float, then you can use gold and silver alongside paper money. The government can mint coins that say “1 oz silver” or “1 oz gold”, but not print a denomination on them. The legal tender value will float with the metal price.
Under this system, the value of paper money would not go to zero, because when you pay taxes, you have a choice of using paper or gold.
This simple reform will never be implemented, because Congress is owned by the banking cartel. This is Ron Paul’s “competing currencies” proposal. This simple reform is never seriously discussed. That’s proof that Congress is completely owned by the banking cartel, and has no legitimacy at all.