Wednesday, May 05, 2010

Pros/Cons Of Gold Standard (USA)

"Pros/Cons Of Gold Standard (USA)." For much of the history of the United States of America, our financial well being was judged by an old, but time tested formula called the Gold Standard. There were and are pros and cons to having this country's financial value judged by the Gold Standard, so I thought this might be a good time to discuss those pluses and minuses. Back when every dollar that was printed by the U.S. Treasury had to be back up with an equal value in Gold - the Congress of the United States of America was forced to live within it's means. However, as this great nation grew and the wants exceeded the needs of politicians and the American public in general - the U.S. Gold Standard was abandoned, which lead to the USA become more of a debtor nation than one that had a currency which all the world could depend upon. The biggest thing on the pros side of the Golf Standard is that the U.S. dollar maintained a strong position in world markets.

The cons side of not following the Gold Standard is where all Americans find themselves today. I believe that without some kind of benchmark to base the value of U.S. dollar upon, U.S. currency has dropped to record low levels as the United States federal government has spent well beyond it's means and then it has gone into the world marketplace to borrow even more money than it collects to run the federal government through taxation of it's citizens. The cons of the U.S. federal government not staying on the Gold Standard far out weight the short term pros of allowing Congress to spend money like a bunch of drunken sailors on shore leave. The truth is that free money isn't really free at all, instead just like a consumer who over extends themselves with credit cards - there is always a future day of reckoning when that bill finally has to be paid.

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