Libertarians and the Gold Standard

[Philuva]

I agree with almost all of the Libertarian positions and saw Badnarik speak a couple of nights ago. There was a question about the Libertarians moving back to the gold standard. I didn't actually realize this was an issue for them. Can someone explain in fairly simple terms why it would be beneficial to move back to the gold standard?

Thanks,
Phil

[Wake up CALL]

To keep it simple the problem with a worldwide gold standard is that a gold price that stabilizes the US Economy is too low to benefit the current Asian economies and too high for the European economies. It has been suggested by Jack Kemp that $350/ounce would bring the best equilibrium to the US economy. The Fed would target gold instead of interest rates as it works to eliminate inflation and deflation from the financial system. It would simply buy bonds from the banks to provide more liquidity when gold approached $345, and sell bonds, mopping up surplus liquidity, as it approached $355.

Again the problem is that today one size does not fit all.

[threeonefour]

the gold standard is way outdated and simply ridiculous. its sad that the libertarian party likes it because they have so many good points.

I think wake up call's policy wouldn't work at all. because if you walk away from interest rate targetting you are going to have rates go through the roof. money supply targetting was tried in the 70's and would have about the same effect as wake up call's policy which is rates would become very erratic and very high. you have a lot to lose and nothing to gain.

[Wake up CALL]

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I think wake up call's policy wouldn't work at all.

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Hey it was Jack Kemp's suggestion not mine. In fact I thought I outlined why it wouldn't be successful.

[Six_of_One]

I can't explain it. I took an economics class in my MBA program in which the professor spent quite a bit of time arguing for a return to the gold standard...but I'm afraid I don't remember well enough to reproduce the argument.

You can find it in his book...Capitalism, by George Reisman.

[jcx]

The Gold Standard is not liked by politicians in general because it is an obstacle to inflation. Ludwig von Mises of the Austrian school of Economics predicted the downfall of the Gold Std because he knew politicians wouldn't be able to resist the allure of easy money. And he was right. The dollars in your pocket today are backed by nothing but the full faith and credit of the United States. This is not a sound policy long term, for the same govt that guarantees the notes is also free to print money and manipulate interest rates as they see fit. Such a policy can only end in catasrophe at some point. Whether you think this is bunk or not, a smart investor today would have some gold in his portfolio, even if only as a hedge. Gold has been recognized as a symbol of wealth since ancient times, and there is no reason to believe the future will be any different.