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10 arguments against the gold standard 10 arguments against the gold standard
by Joseph Gatt
2019-06-15 08:31:13
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When Nixon decided to nix the gold standard in 1971, meaning that currency was backed by nothing, there was an uproar among politicians and economists. But here are 10 reasons I'm against returning to the gold standard, 10 reasons that could kill the debate.

Reason number 1: Population grows faster than we produce gold

For every baby born, that's between 3,000 and 10,000 US dollars a year that you're going to have to produce. When you peg the dollar, or any other currency, to gold reserves, you're going to get inflation every time a baby is born, or every time population increases.

gold1_400Reason number 2: The gold standard stifles investment

If you want investment, you're going to have to find the currency to do that. Unfortunately, with the gold standard, funds available for investment are limited. That means non-dollar countries will have the advantage of monetary creation when it comes to investment, leading to non-dollar countries innovating more than dollar countries.

Reason number 3: The gold standard stifles welfare programs

With a limited government budget, people aren't going to get their welfare checks. And because investment funds are limited, they're not going to find jobs.

Reason number 4: The gold standard stifles infrastructure programs

If you want to build infrastructure, you're going to have to find the money to do that. With limited gold, you have to limit infrastructure projects. Remember that population is increasing, and that you're going to have to find the gold to build infrastructure.

Reason number 5: Limited gold supply limits job growth

If companies aren't investing people aren't going to find jobs. And if there's a limited amount of gold, each time there's population growth the next generation of workers is going to find it harder and harder to find a job.

Reason number 6: The gold standard means more countries are going to starve

The gold standard means limited currency, which means that countries facing drought or famine are less likely to receive funds.

Reason number 7: Korea, China and ASEAN nations would still be poor countries if the gold standard was maintained

Specifically because currency was available, many countries put the currency to good use and had significant economic growth.

Reason number 8: When currency is limited, people fight for it, hardcore

We would have very, very competitive societies if the gold standard was maintained in the long run.

Reason number 9: All the technology wouldn't be possible with the gold standard

With a gold standard, people would not take risks by investing in high-tech companies, meaning we would still have three television channels for entertainment.

Reason number 10: The gold standard undervalues energy, agricultural products and commodities

If the supply of cash is limited, you have to sell your oil, agricultural produce and other products at a very low price, leading to low profit margins and in some cases selling at a loss.

Conclusion: a lot of the people rooting for the gold standard are in fact gold traders who want to make a fortune because they own a huge stash of gold and wants its price to shoot up. It has all to do with their personal interests, and nothing to do with the common interest.

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