Gold Standard Act

[True Federalist (진정한 연방 주의자)]

1. I am against returning to the gold standard for a vast number of reasons, both technical and economic.
2.  I am even more strongly against bimetallism.
3.  How much of a windfall are you hoping to gain from the gold you own if you succeed in having gold valued at $4000 per ounce? (Approximately 10 times its current value.)
4.  Which ounce? troy (480 grain) or avoirdupois (437.5 grain)?

[True Federalist (진정한 연방 주의자)]

OK, I'll bite.  First off the economic.  As far as keeping our economy going, it is a sad but true fact of human psychology that the best way to accomplish that is with a currency that has a mild but predictable rate of inflation.  Because of the introduction of new goods and the expansion of the population, being on the gold standard would be inherently deflationary, which causes people to hoard wealth in unproductive forms rather than to spend or to invest it in ways that stimulate the economy as is the case with mild inflation.

Next, the technical.. The sad fact is that a circulating gold coinage would be extremely sucecptable to counterfieting and adulteration today.  In the late 19th century there was a metal that because of advances in smelting tech had just recently become available in quantity, but which no one had yet put to productive use.  This new material was approximately the same density as gold, but it was much cheaper, so that it was feasible to slice up a gold coin so as preserve the front and back, scoop out the inside and fill the middle with this new metal.  The small scars that remained on the adulterated coin once it was reassembled, could be hidden in the usual wear and tear that circulating coins suffer from.  Why did this practice come to a halt?  Not because it became easy to catch, but because as this gold "substitute" was put to productive use in own right, and rose in price until it reached the point that the subsitute,  platinum, was more valuable than gold.  Thanks to advances in materials technology since the 1930's, there are all sorts of fake gold that could be used.  Heck, with gold valued at $4000 an ounce, it would feasible to use platinum again unless of course this valuation pegs gold at such a high dollar value that it causes massive inflation during the conversion to the gold standard.

If, in order to avoid the perils of the above, we try having a non-circulating gold backing, then you having to both simultaneously trust the government to keep its word about redeeming the money and have a money supply that would suffer wide swings in the amount available as it would be subject to only a single controlling input, the demand for gold.  That demand is not always in sync with the rest of the economy, despite what gold bugs delude themselves into thinking.  If it were always in sync with the rest of the economy then gold could be a useful self-correcting mechanism for the economy.  However, if that were the case, then why wouldn't silver or other commodities remain in sync and thus make bimetallism useful.  There is nothing magical or mystical about gold that makes it immune to the problems of other commodities.  When the demand for gold is out of sync with the economy that unsyncedness will induce deflation or inflation that otherwise would not be there.

[True Federalist (진정한 연방 주의자)]

Even when the US was on the gold standard, it devalued the gold dollar by making it smaller in the 1830's.