http://www.npr.org/blogs/money/2011/02/11/133662179/a-wingnut-argument-for-the-gold-standard

On NPR recently, investment journalist James Grant argues that a way to improve the value of American money is by returning America to the gold standard.  Here’s his NY Times op-ed piece:

http://www.nytimes.com/2010/11/14/opinion/14grant.html?_r=1 

Opposing economists feel that it was staying on the gold standard that helped trigger the Great Depression in the 1930s, b/c it didn’t allow the federal gov’t. / Federal Reserve to put more money into the economy which would have made it easier for companies to borrow money and possibly hire more workers.  Because there was a set ratio of dollars per gold (and b/c gold is a scarce commodity), the Fed was prohibited from printing new money. 

In fact, to move to the system we have today called fiat money (where our money is based upon nothing but the belief that the government won’t fail, and it controls the amount of money in the nation’s $ supply), it is considered progress, and has most likely allowed for some of the more explosive economic growth that we’ve seen around the world. 

In fact, former Republican presidential candidate, Ron Paul, introduced a bill in Congress in 2002 to abolish the Federal Reserve.  Here’s his intro to that bill:

“Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve’s inflationary policies. This represents a real, if hidden, tax imposed on the American people.”

You can find the full text here: http://www.lewrockwell.com/paul/paul504.html

I wanted to post this for you just in case you thought the battle over the gold standard was a thing of the past.  Gold is currently trading at $1,363.50 per ounce this morning (2/11/11), so to switch to the gold standard wouldn’t be an easy fix for our economy.

And, to let you know that this idea about the gold standard isn’t just some loony crying out for days gone by, the newest members of the House of Representatives have begun grilling the Fed chairman Ben Bernanke about monetary policy and calling dubious other specialists to committee hearings.  In this article by NY Times economist Paul Krugman, he examines how some fear that America’s dollar is too weak. 

When will it end?  Who knows?