Rep Ted Poe (TX) introduced H.R. 835 Titled Bollar Bill Act of 2009 on 2/3/2009. with one cosponser so far Rep Trent Franks (AZ) Latest Major Action: 2/3/2009 Referred to House committee. Status: Referred to the Committee on Financial Services, and in addition to the Committees on Ways and Means, and the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. For more info on this bill http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.835: Quick summery of the bill is that the Board of Governors of the Federal Reserve System shall make the value of the U.S. dollar equal to the market value of 0.002 of a troy ounce of gold and maintain the value of the United States dollar at this level. I know that this is not a political board and by posting the following I hope I do not cross the line. If so please let me know and will be happy to edit this out. But if you think this is a good idea, you should write to your congressman to help push it out of commitee and get it inacted. Dave
Not a chance. Let's do a little math. The "gold standard dollar" = 0.002 ounce gold. Said another way: 1 ounce gold = $500 (gold standard dollars) With gold at around $1,000 (in today's dollars) that means the "gold standard dollar" would be worth: $1,000 X 0.002 = $2 (or double its current value). That is good when we buy imports or we travel abroad (or dollar goes twice as far) but it is very bad when we try to sell exports or attract foreign travellers (who can only buy half as much with their money). What happens if gold drops to $250? The value of the dollar would drop to half its value at $500 gold. Again, it affect imports and exports. Ain't gonna happen. I don't think any country will ever again have a gold-based currency. Gold is too volatile these days to base one's currency on it.
i agree with hobo on this. our currency will never be backed aby anythign other then the fait folsk have. what would be the incentive to change it from a fiat system to a backed system?
It's not going to pass, but at least people are realising we need to do something. For those unfamiliar with Ron Paul, he really has some good ideas when it comes to this. The link gives some quick info. http://www.nolanchart.com/article290.html
It isn't going to happen because a .002 conversion implies maintaining a $500 gold price. The only way something like this can work is to make a paper dollar fully convertible to gold. The Federal Reserve Note is unsuitable for this purpose, but a new Treasury Gold Note could be issued and made fully convertible to gold at, say, .001 assuming they had the gold to back every note. However, it probably could not carry a face amount because its value would always be different from the FRN. The best idea along these lines that I've heard is the Mexican plan to issue a one ounce silver coin that would have a floating face value equal to the highest price that an ounce of silver ever achieves. It can go up in value, but not down.
The American people are not even ready for a good idea like the Mexican plan. But there are several places that issue or issued coins that had floating face values, these tend to be places with unstable currencies, or some other reason, ie religious in the case of Malaysia. Iran issues coins that are the equivalent of the half and full British sovereign, they used to be called Pahlavis, but now they are some other name. In Mexico the Onza silver coins trade at a floating rate, but unfortunately gold coins are taxed miserably so that they have egregious premiums. It is more economical to buy Mexican gold coins in the United States than it is in Mexico, simply because of the excise taxes imposed on them. The fundamental problem with the American economy going on anything resembling a gold standard is this, there has been too much money created with credit, paper etc. for it to be easily converted into a gold equivalent with the amount of gold that the US Treasury claims it has on hand.
I'm not sure if I'm reading this right or not. Are you suggesting that gold would still fluctuate on the markets like it does now, even after we went to a gold standard? When the world used the gold standard in the past, gold was always regulated and did not have today's wild fluctuations, ensuring it was relatively stable...moreso than today's dollar. Not that it matters. Too much money would be lost in a gold standard today. Once regulation took effect, nobody would mine the stuff anymore. Guy~
Won't happen for one simple reason. If the government backed the dollar with gold they wouldn't be able to print more dollars than they had in gold to back it up.
Er doubt it's likely to pass. The reason why no country is currently on the gold standard is because it's very restrictive on monetary policy, and politicians, for better or worse, prefer the flexibility of the currency backed by fiat rather than on gold reserves. I'm guessing it won't even get out of comittee. The US hasn't been on the gold standard since we were taken off of it in 1974. Whether or not we should be on one or not is a matter of political debate and won't get into it here.
Utterly ridiculous, there will never be enough gold to cover the float, as the dollar rises they will have to sell dollars to lower the value and as gold rises they will have to sell gold to lower its value. Then you have to get all of the foreign countries to match that with their currencies or you will have an exchange rate that would be completely outmatched that would likely drain liquidity from our currency.
I agree that it's not going to happen. Not only is gold too volatile...but we had our money backed by gold once and it didn't work. Why go back to a system that failed.
If you want to know why we should NOT back such a proposal, look at what happened when we did have a gold standard: http://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=US&vol=294&invol=330 I believe the price fluctuation of gold, prior to the Great Depression, is one of the main causes for the Depression and the greatest one thing done to get us out of it was when Roosevelt pulled gold off the market and ceased backing the dollar with gold/silver. That stablized the dollar and got us back on track and now someone wants to create the same fiasco that once was? :goof: I sure hope that idiot doesn't get re-elected. Ribbit Ps: The bonds referred to in that case, were a no lose situation, in that if gold went down in value, you still had the cash value but if gold went up in value, then you could make even more. I personally can't believe that Congress would put out such a risky bond, but my guess is they were taking care of certain constituents. Pps: While this thread does tread on the political realm, I think it's justified and I hope it is allowed to remain so we can discuss this openly. Thanks for bringing this to our attention. :thumb:
I was referring to the Mexican plan that wasn't adopted. It wasn't a floating rate unstable currency. It was a periodic reset of the face value of the silver coin to always keep it above melt value. The value could increase but never decrease. So, for example, if silver rose from, say, $12 to $15, the face value became $15. But if silver dropped back to $12, the face value remained at $15. This approach seems to eliminate most of the problems with floating rate silver and gold coins when they are used side by side with fiat currency.
Remember Canada came out with that 1 ounce coin ca. 1999 or so that had some guarantee that it was always worth a minimum of $300 - back ca. 1999 gold did dip down to $252. The Iranian Pahlavi wannabees circulate to some extent like that in Iran, they are traded on a published rate daily.
At last count there were more than 200 independent countries issuing currency (not including phony balonies like Hutt River Province, Sealand, etc.). If the US went to a gold standard and the other 200+ didn't, of course gold's price would continue to fluctuate on the open market against those other currencies.
Not sure if this answers the question about the fluctuating market about gold but here is sec 3 of the bill. SEC. 3. DIRECTIVES TO THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. (a) In General- Before the end of the 90-day period beginning on the date of the enactment of this Act, the Board of Governors of the Federal Reserve System shall make the value of the U.S. dollar equal to the market value of 0.002 of a troy ounce of gold and maintain the value of the United States dollar at this level. (b) Target- In regulating the value of the United States dollar, the Board of Governors of the Federal Reserve System shall-- (1) conduct open market operations against an explicit target for the price of gold on the exchange operated by the Commodities Exchange, Inc. (COMEX) of the New York Mercantile Exchange, Inc.; and (2) shall not conduct open market operations indirectly, as in the current practice of targeting the Federal Funds rate. (c) Promotion of Stable and Effective Financial Markets- The Board of Governors of the Federal Reserve System shall use the banking and bank regulatory powers of the Board to maintain and promote stable and effective financial markets during and after the transition to a defined value for the United States dollar. Thanks Dave
with the money being spent now I can't see even HOW they can go back to a gold standard now and if they did the gold market would be flooded with coins and fall through the floor...its so stupid. They should make Congressmen take a basic corse in Monetary Theory before swearing into office. Maybe we can just shut down the Fed Andrew Jackson style and see how we go from there. It certainly will end out worries about counterfeiting Federal Notes. Ruben