gold

True, the gold standard would limit the amount of money the Treasury can print, but why is that a good thing? The ability of the government to adjust the amount of money in the economy in order to respond to recessions, excessive inflation or deflation, most economists will agree, has been historically, a good thing. A survey of a large number of distinguished economists, of varying political perspectives, came up with a zero rate of agreement with the proposition that returning to the gold standard will benefit the American public. http://www.igmchicago.org... Pro has stated that returning to a gold standard will "renew people"s faith in the US Dollar". Where is the evidence that there is actually such a loss in faith? If there is, there's certainly no recent economic evidence for it. The US dollar remains one of the strongest currencies on the planet. If people were losing faith in the dollar it would be losing value on the global market and gold would be rapidly increasing in price. Instead, the exact opposite has been occurring. The dollar, in relation to other world currencies has been increasing in value and the price of gold, since 2011, has been steadily decreasing (http://goldprice.org...) Pro has also stated that the elimination of inflation is good for investment, but provides no evidence for that. Historically, moderate rates of inflation have not hindered investments. During one of the highest rates of growth of the US economy, in the 1950's, GNP rose about 37% along with moderate inflation rates of .7 to about 3%. Clearly, moderate inflation doesn't inhibit growth. Savings interest rates tend to track inflation so savings aren't adversely affected, and it enables investors to borrow money and subsequently pay it back with cheaper, inflated dollars. Reverting to a gold standard prevents the money supply from increasing in order to accommodate an expanding economy. A nation that"s a major gold producer, like Russia, can then significantly affect the US economy by simply increasing or decreasing its rate of gold extraction. A gold currency standard has the effect of making interest rates rise or fall based, not on what the economy is doing but on how fast the metal can be extracted from the ground. Pro states that the government can accommodate such a situation by accumulating large quantities of gold and silver so as to issue more notes when the economy expands, but just the action of buying that much additional gold will, in itself, raise the price of gold and stimulate inflation. Why is silver in there? Is Pro proposing a gold and silver based currency? There's also no way of calculating how much gold need be kept in reserve to satisfy unknown future increases in economic activity. Nor does a gold standard guarantee the elimination of inflation/deflation, as Pro has contended. Between 1919 and 1933, when the US was on the gold standard, the CPI inflation rate varied wildly between +25% and -15%. Any Economics 101 student will tell you that inflation or deflation occurs for many more reasons than simply the basis of a currency. Prices for goods and services increase whenever demand for commodities or labor increases faster than the available supply, whether you're on a gold standard or fiat based currency. For example, if there"s an increased demand for electronic equipment, there will be a corresponding increase in demand for the rare earth metals that go into those products. That will raise the price of those metals. That, in turn, will cause an increased demand for money as investors seek to purchase those metals. The relatively limited money supply, due to a gold standard, will increase the cost of money, expressed as rising loan interest rates. The net result will be an increased rate of inflation.