The gold standard

[muon2]

During the early history of the U.S. gold and silver were used as currency.  When the constitution was written it provided for only gold and silver coin as currency. In 1933 FDR partially divorced us from the gold standard by banning civilian ownership of gold and then devaluing the dollar from $20/ oz to 35/oz. Richard Nixon finished the divorce in 1971 by completely disconnecting the dollar from any connection to gold.
As can be seen at the following website, inflation was nearly non-existent while we used gold and silver but started going up after 1933 and really took off after 1971.
http://oregonstate.edu/Dept/pol_sci/fac/sahr/pl1665.htm
Do you think the U.S. should  return to some form of gold standard?

Inflation was never a problem under the gold standard because any adjustment to keep the dollar fixed at its gold parity was always placed on the country with the weak currency. It's understandable why President Nixon decided to drop the gold standard in 1971 when under the deficits of the Vietnam War, the U.S. has a run on the dollar and the U.S. gold supply was slowly running down. Thus begin the offical floating exchange rate.

The other problem with the gold standard is that the price level is determined how much gold is mined in South Africa. The politics of could happen in the long run is mind boggling.

Was the problem in 1971 due to the gold standard or due to deficit spending?
The value of gold as a currency can certainly be affected by the additional amount mined. But over the years the amount of gold mined has more or less kept up with the supply of goods available so that gold has exhibited the remarkable price stability shown in the graph  link in my first post.

The problem in 1971 was a broken international monetary system. It was based on a protocol originally called the Bretton Woods system after the resort where the protocol was agreed upon. The system began to break down in 1958, and was eventually scrapped in Nixon's adminstration.

Bretton Woods was a mess for a decade before Nixon took office. He finally did what Ike, JFK and LBJ should have done.

http://en.wikipedia.org/wiki/Bretton_Woods_system#The_U.S._Balance_of_Payments_Crisis_1958-1968

[Dr. Cynic]

It would be far more expensive to mine metals, than to continue our current system.

[David S]

It would be far more expensive to mine metals, than to continue our current system.

Gold is being mined regardless of whether it is currency or not. It presently sells for about $400 per ounce, so there is plenty of incentive to mine it. I'm sometimes tempted to start digging up my back yard to see if I can find any there