What would happen if the world returned to the gold standard?

Can NOT go back on the Gold Standard....if you read about how the Gold Standard DID work from 1870-1913 and how it did NOT work from 1920-1936 (when France left)....it becomes clearer. This is what GOLDEN FETTERS goes into depth about and most of the scholarly pieces touch upon, too.

More recently you have the Euro countries not being able to respond to exogenous shocks in 2008 and 2011 or even somewhat in 2020. Conversely, the U.S. Federal Reserve was able to respond quickly.

 

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But OTOH...gold is only up about 175% from the 1980 peak in 44 years.

Starting and ending points matter...and if you use rolling time periods, gold as an investment is really not that good. It shouldn't be, as it pays no dividend or interest and offers below-average capital gains with heightened volatility.

It's like low-quality stocks or bonds giving lower returns with higher volatility vs. higher-quality securities.

 

Keep spreading the news, as I love buying the coins as follow in PR69 certified condition for a premium less than 100% in excess of the spot value:
1993-P $5 Gold Eagle, DCAM (Proof)

PCGS
https://www.pcgs.com › coinfacts › coin › 1993-p-5-go...

Designer: Augustus Saint Gaudens/Miley Busiek ; Edge: Reeded ; Diameter: 16.50 millimeters ; Weight: 3.39 grams ; Mintage: 58,649.
$4,700.00
OR A LOWER MINTAGE/GREATER-VALUE PR70DCAM COIN:

This "hobby" can really be exhilarating!

 

Is that premium particular to 1993 and that size coin ?

I think I have a 69 or 70 DCAM 1-ouncer and I know I paid spot give or take a small %, nowhere near 20% let alone 100%.

 

THE 1993-P IS THE "KEY" COIN FOR THAT TYPE OF AMERICAN EAGLE!

EBAY HASN'T A SINGLE 1oz 1993-P COIN LISTED!

THE ONLY AD FOR A 1/2oz PR70 HAS A >$4000 PRICE!

WE'D BE INTERESTED IN VIEWING YOUR MIRACLE 1993 COIN!

 

No, it's a PF70 DCAM but I'm not sure what year.

I believe it is a 2015. Got it at FUN 2020.

 

It's still a "miracle" coin, as the lowest premium located for the coin you described is >30%, and I'd pay half of that to a superb buyer/seller as yourself!

 

I'm pretty sure I didn't pay anywhere near that premium, I'm sure of that.

I'm travelling now, will check upon return.

 

But that is the problem !!

As with the gold standard in the past and bank runs in the present...it is precisely during troubled times when you most need stability that you do NOT get it.

What were the odds that every single venture capitalist and tech mogul would need their money at the same time at Silicon Valley Bank ?

 

You wouldn't like it.

True, in the aggregate the price level was steady for many decades.

But the loss in GDP output and all the "panics" meant that the adjustment process had to be internal and placed solely on output and employment and wages.

Given the downward rigidity in wages, this increased the adjustment process and period.

You also have a situation where today you have many countries with sizeable national debts. To have nonexistent nominal GDP growth and put pressure on The Denominator Effect -- Debt/GDP ratio -- is financial suicide.

 

You can't "take" pension assets -- unless you are the Teamsters, UAW, or AFL-CIO.

Then you can rip them off and have the government bail you out and the media won't say a peep as opposed to bogus, nonexistent "Wall Street Bank bailouts."

Maybe, but I'm not sure it matters. Look at the demonetization of large bills in India and other countries. A mere hiccup.

 

I'd trust a banker over a politician !!

 

I believe if you investigate the reason that we discontinued a "hard currency", because it was so foolish!

One individual tried, and could have collapsed our economic system with his demands to receive Gold for our Fiat Dollars.

 

Nothing at all will happen if there was a return to the gold standard. Nothing.

The world is far past the destruction predictions blarney.

 

I give you Bernard Baruch......

 

One of the reasons that the Gold Standard worked from 1870-1913 and didn't work after WW I was because the autocratic rulers who could impose fiscal/monetary discipline in the former time period were no longer able to do so after WW I.

The stirrings of revolution -- democratic impulses -- made it much more difficult. The leaders of Russia, Germany, Austria-Hungary, etc....all went down the toilet. That was largely because of a populist backlash to the war and austerity measures.

Others watched and learned -- and were afraid.

 

Sugar and Rubber. The rest is baloney.

 

We created the Federal Reserve System exactly at the time the Gold Standard was ending and WW I commencing.

Fortuitous timing !!

 

I'd love to think autocracy is obsolete, but I see some pretty heavy-handed folks all around the world who apparently didn't get the message. If you want to be an autocrat, and you can convince enough of the masses that you're just dictating the things that they really want...

 

Back then it was the norm. Today it's the exception, IMO.

Look at the countries/empires that were in existence in 1914 and then 10 years later in 1924.

Wow....