The Federal Reserve

[David S]

The Fed is really a private banking cartel. The Fed creates money out of thin air and loans it out. They earn interest on the money that was created out of nothing. Thats a crooked deal to start with.
Also if someone defaults on the loan does the Fed get stuck for the loss? No way -they pass the loss on to the taxpayers. The local banks are protected by FDIC. Loans to foreign governments are also usually backed by U.S. government guarantees. So the taxpayer always gets stuck.
But it gets worse. The process of creating money out of nothing causes inflation. Since the fed was created in 1913 the dollar has lost over 90% of its value. Prior to that time inflation was nearly zero when viewed over long time periods. Generally there was only inflation during war time and prices came back down afterward.
Handing over the Feds job to congress doesn't seem like a good deal either. Can we expect congress to be fiscally responsible?
You may view the gold standard as archaic, but it forces government to be honest. As long as currency is either gold or 100% backed by gold, government cannot create it from nothing.

[David S]

Finding $2 trillion worth of gold is unlikely. Further there is sweat equity involved in getting the gold out of the ground, unlike printing dollars which requires nothing. It costs about 4 cents to print a bill and it doesn't matter what denomination.

Historically gold has held its value well. Someone once noted that in ancient Rome a finely made Toga with a belt and a pair of sandals cost about 1 ounce of gold. Today 1 ounce of gold is worth about $450, about the price of a nice suit with a belt and shoes. Thats price stability.
In the early part of the 20th century gasoline cost about 10 cents per gallon. Today its more like 2 bucks per gallon. But gasoline didn't become more expensive. The dollar became worth less.

[David S]

I'm just illustrating a principle. Dollars only we can create, so you have to put work in to get work out.

The cure for inflation is the abolition of the Federal Reserve. When Congress wants to make money out of thin air, at least the Representatives and Senators in question will be accountable to the people and public scrutiny.

I agree with you on abolishing the Fed, but I am not optimistic that congress would be responsible with the power to print money. Most governments that have gone the route of paper money ran into trouble. The temptation to make free money is just too great.
In theory you can run the government without taxes by just printing all the money you want. But the effect is very high inflation and that acts like a tax on any money you hold in your hand. The dollar you earned today may be worth only 50 cents in a year. But its always tempting to bureaucrats to just print money. That way they can fund all of their goofball programs without raising taxes. Most people don't realize that  policy destroys their savings so they don't get mad at the politicians.

[David S]

Why would Platinum be better? I'm not necessarily opposed to the idea, but gold iand silver are the traditional standards for currency. Platinum is going for about $830 per ounce right now and gold is about $440. Whats the advantage?

[David S]

Finding gold is just as inflationary as creating pieces of paper.

Pieces of paper can be used to control the money supply to keep up with the exchange of goods and services, and this way you can't just "find" it. Countries with large amounts of gold won't get productivity for nothing.

Philip doesn't it bother you that the Federal reserve creates money out of nothing and then collects interest on the money. That's a classic example of "productivity for nothing". It should bother you even more that the result of that process is the continuous erosion in purchasing power of the dollar. The Fed gets rich will you are robbed a little at a time every year.
Your concern about France or someone else digging up gold and causing inflation has not been demonstrated to be a big factor in history. The value of gold has shown incredible stability over long periods of time.

[David S]

In 1904, there are $5 billion in a country of 5 thousand people.

In 2004, there are $5 billion in a country of 5 million people.

You're trying to tell me that the dollar will not be worth more?

Draw your own conclusions:
http://oregonstate.edu/Dept/pol_sci/fac/sahr/pl1665.htm

[David S]

All I get is a blank page.

Sounds like operator error to me. Let me give you a verbal description.
In 1665 the price level was 5.
In 1765 it was 5.
In 1845 it was 5.
In 1865 it rose to 10 due to civil war spending.
by 1905 it was 5 again.
After 1933 the pricel level heads up like a rocket.
So during the time when the country used mainly precious metal currency, price levels remained stable except for brief periods of inflation during wars. After we abandoned gold prices took off.