The US should go back to a gold standard

Gold standard and deflation My opponent claims production is irrelevant as the Federal Reserve has enough gold stock to keep the dollar “as good as gold”. But is this a viable argument? No, not really. Although the amount of gold stock is a good indicator of deflation, even my opponent’s argument proves my point. As every single ounce of gold in the world, not the US’s gold stock, is sufficient to support a gold standard and keep our currency as good as gold. The current US gold stockpile is 2.5% of all gold in current markets.[1] Currently, all the gold in the world is worth the same amount of the current US dollars (4.6 trillion).[2] We can assumes that the total gold is a good proxy for monetary worth of the US, 4.6 trillion. Now using my opponent’s argument, we need a 1-5 ratio. 1/5th of 4.6 trillion is nine hundred and twenty billion. Our current reserves (2.5% of 4.6 trillion) are worth 115,000,000 in other words, which is under the 1/5th mark he said we require. If we more then double the amount too 10%, we still get under the 1/5th mark. And it is unlikely many countries and companies will give all their gold to the US government, therefore my opponent’s argument from round 2 and last round is illogical. If we go on further, the production is still the main key of inflation/deflation. As stated the production means our economy (if we where able to get all gold production) would be 80 billion dollars. This point was never refuted therefore still stands. My opponent’s analysis sounds exactly like fiat money. He says the Federal Reserve can still pump money into the economy and use inflation to help curb economic downturns etc. But then our currency is inflating and still losing value, like the current monetary system. So my opponent sounds like he wants a modified version of fiat money, not a gold standard. A good amount of inflation, as proven in round two, is a rate of 2%. Under a gold standard this rarely happens, it actually caps the amount of money in an economy, and does not increase it like my opponent claims it has the capability of doing.[3] Monetary inflation would be determined by gold mining therefore which is extremely slow, which would cause deflation. My opponent did not properly deal with that argument in this debate. “Under a gold standard, the long-run trajectory of the price level is determined by the pace at which gold is mined in South Africa and Russia. … Under the gold standard, the average rate of inflation or deflation over decades ceases to be under the control of the government or the central bank, and becomes the result of the balance between growing world production and the pace of gold mining.”[4] With a slow rate of gold production, sometimes non-existent, this is a cap on economic growth and inflation and causes deflation, and that’s a fact. Village analogy You failed to explain how the Federal Reserve could keep the dollar the same worth as gold when production is low and the amount of gold necessary is nearly impossible to acquire. The refutation is simply illogical. Again how would this work? Without the 1-5 ratio you talked about it is impossible. Gold Standard and the great depression My opponent’s new rebuttal actually drops the argument. I said the gold standard worsened the depression, not created it. I also showed France played a large role in lengthening it as the depression did not begin to recover properly until they left the gold standard. I also noted the recovery never began until dependency on gold ended, which was shown last round in the graphs. As we can see the gold standard hurts countries in times of economic peril and leaving it saves them from ever entering the crisis again. My opponent then cites many statistics, but before and after averages is extremely difficult to determine if it works, and it misses many factors. In that time, for example, many liberal economic policies where implemented that could have been in economic detriment. Also the statistics are cherry picking as it does not calculate the time of the depression, where the gold standard has adverse effects [4]. “Countries that were not on the gold standard in 1929--or that quickly abandoned the gold standard--by and large escaped the Great Depression … Countries that abandoned the gold standard in 1930 and 1931 suffered from the Great Depression, but escaped its worst ravages. … Countries that held to the gold standard through 1933 (like the United States) or 1936 (like France) suffered the worst from the Great Depression.”[4] As we can see the statistics my opponents used are extremely cherry picked in order to avoid the facts that the gold standard hurts economies during downturns. It also ignores the volatility the gold standard has in the market, there where eight recessions (including the dreat depression) from gold standard times. There where six after. So even using these economic proxy indicators we see the gold standard likely has little effect on long term economic growth like my opponent indicates, and likely is a cap on growth via deflation.[5] Also note good proof that the gold standard hurts us in recessions is this: recessions lasted longer when the gold standard was in use. Also note my opponents statistics miss a few year periods in the middle, which statistically can change the game here. My statistics where not missing any dates in relative to the depression therefore are better at proving leaving the gold standard helps the economy. Also note correlation does not equate causation, my correlation, however, has dozens of economic papers on the subject (see round two, where I said the link is well established) and my opponent is citing evidence from a book, not written by an economist. My opponent then cites many financial problems, but many of these never where US problems therefore can be discarded. Others where not caused by currency at all, rather housing bubbles that started years before with housing legislation from the carter administration, others by the invention of the internet. My opponents list here fails to prove a point. Others where due to energy policies/company policies. So in that long list only three apply to the debate. And besides, gold as proven last round is extremely unstable and is not better at stabilizing currency via inflation/deflation. It caps economic growth and causes short-term volatility and booms and busts at higher rates. This was undefeated. My opponent’s case You have actually failed to prove the gold standard is good, you have only proven it is not deflationary. That is not necessarily good, and you still have not provided case only rebuttals. The only thing you have that is close to a case is that it is stable, here is a graph: We see periods of hyper inflation, then massive deviation during the gold standard, then stable inflation during fiat currency. As we can see, is is not stable. Conclusion: My opponent made no case, and the case he did make (stability) is false. It causes deflation and hurts the overall economy during times of recession, extending their lengths and increasing their hardships. Vote CON, as he[should] win. [1] http://en.wikipedia.org... [2] http://rationalwiki.org... [3] http://en.wikipedia.org... [4] http://www.j-bradford-delong.net... [5] http://en.wikipedia.org...