The U.S. should return to a gold standard

Thanks to Pro. I. Pro's Plan 1. The Fed Pro makes a lot of claims without support. He argues that manipulation of the money supply has led to cycles of inflation and deflation without providing any evidence. At several points over the last round, I showed that being under the GS led to various inflationary and deflationary spikes that could not be controlled.[8, 13,14] Even if manipulations of currency lead to these cycles, at least those can be controlled and predicted. That is not the case under the GS. Pro, in replacing the Fed with the US Treasurer, is simply changing the decision-maker for fiat currency. If the Treasurer can modify the price of gold whenever he wants, then all he's doing is making the price of gold and number of paper bills subject to fiat. As Pro doesn't state any limitations in their capacity to do this, that means they can modify the price of gold and raise or lower the amount of printed money at will. As a new Treasurer can come into office every 4 years, that means there will be little consistency regarding these changes. The market for gold becomes wildly inconsistent, as does the US dollar. Monetary policy will be shaped solely by the president's choice of Treasurer, and that single person would have total control over finances instead of a slow bureaucracy like the Fed. By putting control over that fiat in the hands of a single individual without any oversight, he's exacerbating the problem. So not only is his plan not accomplishing anything the GS sets out to do, it's also worsening the problems of fiat currency by making it more inconsistent. 2. Using Gold/Silver Expanding the money supply by fiat is functionally identical to the current system. If gold prices are infinitely malleable, then they are under fiat. Pro's claim that his forcibly altered exchange rate will result in an influx of gold is not good. As I argued last round, either pricing schemes in the US will deter this, which means he gets no benefit, or we see a major shift in our trade deals with other countries resulting in massive tariffs that make this impossible. Pro drops these responses. Pro's response on inflation is all assertion. He ignores my evidence showing that inflation produces benefits, including reduced trade deficits, more affordable goods, and improved 401(k)'s.[7] All of Pro's claims happen under deflation as well, so he provides no harms specific to inflation. Moreover, the system Pro has clarified this round allows for the same fiat-based inflation and even more speculation and uncertainty. Every election would lead to huge market swings. 3. Overvaluing Gold and Silver How does monetization improve the stability of gold and silver when you start by massively increasing their value and then continuing to alter that value whenever it's convenient? Tying your currency to another currency makes for a fixed exchange rate. That can and does alter the exchange rate, but whether it's beneficial is based entirely on the stability of those two currencies. That's what happened when the Franc got tied to the Euro: the Franc was made more stable by the more widely used and trusted Euro. Tying your currency to gold, increasing the value of that gold, and then modifying that value at will isn't stable, particularly when the "real value in the international markets" bears absolutely no resemblance to the price we set internally. When we unilaterally alter the price of gold, we lose the security of international markets. 4. Replacing Currency Pro's tariff is an awful idea. That would force many countries to abandon our currency as a reserve (since they can't get more of it without paying high costs), ostracize our trade partners who won't receive a dime from public or private sources, and generally destroy any trust in the dollar by making it look so weak that we can't even let it out of the country. How does the process of taxation result in a more accurate replacement of funds across the board? Tax revenue only represents a small portion of the funds owned by any given person, particularly for those that don't report some income or savings, and there are still likely to be large and abounding inaccuracies in the process of figuring this out. Eventually, all of those funds will have to be replaced if we're going to get off the fiat currency Pro despises. Having FRNs in play for longer might provide more opportunities to get it right, but it doesn't solve. All it does is increase the number of instances where people would contest how accurate the exchanges are. So all of the problems I mentioned in the previous round, none of which Pro is directly responsive to, still apply. Printing all of this money will still be costly (printing more money to pay for the money you're going to print doesn't resolve that problem and increases inflation) and his plan is even worse for lawsuits. Pro doesn't explain how he's going to pay off the debt, but let's assume he'll just print more money. That's another almost $20 trillion dollars flooding the US market, massively increasing inflation to Great Depression-like levels. Other countries that get paid off with our currency will receive the equivalent of valueless paper, and since most of our debt is in treasury bills (which would be paid off with this highly inflated dollar), he's massively hurting American citizens who have chosen to take on that debt. Moreover, Pro's case wouldn't allow us to take on any more debt past that payment (which means no borrowing for infrastructure or public goods), otherwise he incurs all of the harms I've cited. What's more, debt is good in the status quo, since the very low interest rates that have been created as a result help the economy function better on the whole, including better risk management, easier transactions, and less speculation on financial collapse.[17] 5. Fractional Reserve Ratio Even with Pro's view of FRRs, he bites these harms. If we view these certificates as substantially limited (which we should, considering he wants to have some stability to the price), then the 20% cap still means a run on the banks will still result in a lack of sufficient certificates to exchange, and bank robberies will still be more devastating. Every single robbery would have to be replaced, which means every single one would result in the printing of more money, which means the system automatically inflates 5000 times a year. II. (Dis)Advantages 1. Capping See the harms of paying down the debt and treating gold as fiat currency. 2. Spending in Other Countries We currently are involved in massive trade deals overseas. With China alone, this amounts to almost $600 billion.[18] Pro is putting every bit of our trade at risk by erecting massive tariffs at home and inviting massive tariffs from other nations. This amounts to trillions of dollars worth of lost trade deals. Also, part of what keeps the US dollar strong is the perception of strength. That's why so many countries use the dollar as a reserve currency. Pro is putting that at risk, and is thus potentially reducing the strength of our dollar. Even if this only for the interim period while we transition to certificates, that's a huge problem, since we don't know how long that period will be and during that time, the US dollar will massively lose value. 3. Fluctuating Pro concedes his system is fiat, and the nature of that fiat is important. The "promise" he ascribes to it is one the US can alter any time it wishes, changing the amount of gold/silver you receive for a given set of certificates. And since Pro is altering the value of that gold/silver as well, that "promise" is no promise at all. If the value of the certificates is infinitely malleable, then that's pure fiat. All he's doing is shifting to a different, arbitrary backing for our currency. 4. Inflation Pro drops my responses on inflation, which I've already extended, showing that the only outcome that's definitely harmful is massive swings in the value of the dollar, something that only happens under a GS.[13] His understanding of the history is flawed, as I clearly demonstrated. 5. Economic Growth Pro drops that, wherever gold/silver flows, it causes dramatic harms to the US as long as it is flowing. Pro suggests that gold will flow to the US, yet ignores that this leads to excessive liquidity, causing banks to take more risks and increasing prices. All Pro is managing is to repeat many of the problems that have caused recessions over our history, except now, he's placing those harms under the direct control of other countries. 6. Ponzi Scheme If people expect inflation, they are aware of the outcomes of using fiat currency. Fiat currency also has useful properties in exchange for holding onto your things of value. So Pro's argument that there's an expectation of equal returns and that fiat currency inherently has no value is invalid. Pro still hasn't explained how it fiat currency, and generalizing to all ponzi schemes isn't enough. Unless he can provide a clear set of circumstances, with evidence, that will lead to the failure of fiat currency, this point is moot. Everyone's clear on how this "scheme" works " it's pretty blatant. It doesn't matter that some countries are setting up other means of backing up their own currencies because it doesn't show any mistrust in the dollar, but rather, in the global economy. I've already shown that most countries still use the dollar as reserve currency, and that shows a widespread and genuine trust in our currency. But this is all moot. If fiat currency is a ponzi scheme, Pro's own system is as well. Why does gold have value? Because we say it does. We have faith that everyone will view it as valuable. It doesn't have inherent value; it's just a shiny rock. So, if the current fiat system is doomed to fail, then his system would be just as certain to fail in the same fashion. 16. http://bit.ly... 17. http://nyti.ms... 18. http://bit.ly...