On this day in 1968, the US Congress repealed the requirement that the dollar be backed by a gold reserve. I haven’t been able to confirm this, actually. But it’s on Wikipedia, so it must be true! And it gives me an opportunity to rant about the gold standard.
The thing is, I don’t understand people who believe in the gold standard. Even when I was an idiotic libertarian, I didn’t understand it. The general thinking is that with the gold standard, the government can’t “print money” and “devalue the currency.” In other words: it’s about inflation. The problem is that inflation was a far bigger deal when we were on the gold standard than it has been since we got off it.
The very concept of money is mysterious. But as far as I can tell, as long as the flow of cash doesn’t increase faster than the economy is growing, there is no problem. Usually, there isn’t even a problem when it does! But somehow, we are supposed to wed the supply of money to one particular metal that used to be very valuable but really isn’t today. It’s value in no way tracks what’s going on in the economy. Starting in the mid-15th century, gold has done little but go down in value. (Other than spikes because gold bugs were freaking out.)
What the fascination with the gold standard shows is that this stuff is not rational; it is a matter of faith. Gold bugs are convinced that the government is just itching to devalue the currency. This is despite the fact that the government itself would do very badly if inflation goes up. It reminds me of these people who claim that Obama wants to destroy the United States. He’s the most powerful man in the world because he is president of the United States and he wants to destroy it? At least liberals had a point when they noted that George W Bush was an idiot. No one ever accused him of wanting to do things that went entirely against his own interests.
I know how much of a rant this is. But it is has been a long time since I’ve been able to deal with supporters of the gold standard rationally. It just makes no sense. I’ve waited for decades to hear a good argument for it. And I’ve looked! But there is no good argument for it. It’s just a bunch of freaks who believe it the same way other people believe in gods. But you can’t prove that gods don’t exist. You can prove that the gold standard is a stupid idea.