# Explaining gold standard for dummies **URL:** \ **Category:** Great Debates\ **Created:** [September 20, 2014, 7:45pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035 "2014-09-20T19:45:47Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [September 22, 2014, 2:30pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/61 "2014-09-22T14:30:08Z")
> [@BrainGlutton](#): > > Or of government. True, but to be honest, 99% of gold standard blather expresses terror of banks. The fact that the Fed is a semi probvate organization absolute flips the shit of the gold maniacs. Google “Audit the fed” and see what you find. The gold standard puts vastly more power, at least theoretically, in the hands of the government. Don’t get me wrong, after 2007-2008 I can totally understand why people distrust banks, emotionally speaking. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [September 22, 2014, 2:35pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/62 "2014-09-22T14:35:42Z")
> [@BrainGlutton](#): > > That was why the Free Silver movement wanted an **inflationary** monetary policy. And yet today’s inflation-phobic goldbugs somehow appear to be their ideological descendants, with a common factor of [producerism](http://rationalwiki.org/wiki/Producerism). This appears to be the common thread – from _A History of the American People,_ by British conservative Paul Johnson: > [@](#): > > The Founders, particularly the Virginians, Washington, Jefferson, Madison, Monroe, et al., equated property, as a moral force, with land. Their views were articulated by John Taylor (1753-1824), like them a Virginia landowner who served in the Senate and published in 1814 a monumental work of 700 pages, An Inquiry in the Principles and Policy of the United States. Taylor distinguished between ‘natural’ property. such as land, and ‘artificial property’ created by legal privilege, of which banking wealth was the outstanding example. He saw the right to issue paper money as indirect taxation on the people: ‘Taxation, direct or indirect, produced by a paper system in any form, will rob a nation of property without giving it liberty; and by creating and enriching a separate interest, will rob it of liberty without giving it property.’ Paper-money banking benefited an artificially created and parasitical financial aristocracy at the expense of the hard-working farmer, and this ‘property-transferring policy invariably impoverishes all laboring and productive classes.’ He compared this new financial power with the old feudal and ecclesiastical power, with the bankers using ‘force, faith and credit’ as the two others did religion and feudality. What particularly infuriated Taylor was the horrible slyness with which financiers had invested ‘fictitious’ property, such as bank-paper and stock, with all the prestige and virtues of ‘honest’ property. > > Taylor’s theory was an early version of what was to become known as the ‘physical fallacy,’ a belief that only those who worked with their hands and brains to raise food or make goods were creating ‘real’ wealth and that all other forms of economic activity were essentially parasitical. It was commonly held in the early 19th century, and Marx and all his followers fell victim to it. Indeed plenty of people hold it in one form or another today, and whenever its adherents acquire power, or seize it, and put their beliefs into practice, by oppressing the ‘parasitical middleman,’ poverty invariably follows. Taylor’s formulation of this theory fell on particularly rich soil because American farmers in general, and the Southerners and backwoodsmen in particular, already had a paranoid suspicion of the ‘money power’ dating from colonial times, as we have seen. So Taylor’s arguments, suitably vulgarized, became the common coin of the Jeffersonians, later of the Jacksonians and finally of silver-standard Democrats and populists of the late 19th century, who claimed that the American farmer was being ‘crucified on a cross of gold.’ The persistence of this fallacy in American politics refutes the common assumption that America is resistant to ideology, for if ever there were an ideology it is this farrago. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [September 22, 2014, 3:54pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/63 "2014-09-22T15:54:35Z")
I certainly do not advocate a return to the gold standard, for reasons given already. However, many of the claims in thread seem exaggerated or wrong. For starters, gold production has kept pace roughly with population. The amount of gold on the surface _per capita_ is about the same now as it was 100 years ago. Or probably 1000 years ago. [Cite.](http://www.numbersleuth.org/worlds-gold/) > [@](#): > > BTW, the price of gold is currently about $1,200/oz. A gold dollar coin would be something you’d have to handle with tweezers. Buying a loaf of bread with gold would take tweezers 100 years ago. Or 1000 years ago. In fact, the value of gold _has declined_: In 1999 an ounce of gold would buy 36 hours of common labor in the U.S.; that laborer could spend it on 33 “consumer baskets.” In 1940 the same ounce would buy 100 hours of common labor; the laborer could spend it on 48 baskets. In 1835 the same ounce was still worth just 48 baskets, but would buy 465 hours of common labor. Life was tough then. Today, an ounce buys 74 hours of common labor, or 10.5 baskets. [Cite.](http://www.measuringworth.com) I’d be delighted to read an intelligent on-line essay about “why deflation and free-market interest rates are good” if anyone has one that isn’t just boring tripe from [mises.org](http://mises.org), but meanwhile I’m happy to join the consensus and oppose gold standard. 😉 But let’s not oppose it for fantastic reasons. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [September 22, 2014, 4:05pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/64 "2014-09-22T16:05:52Z")
> [@septimus](#): > > Today, an ounce buys 74 hours of common labor, or 10.5 baskets. [Cite.](http://www.measuringworth.com) Make that 104 “consumer baskets.” (I had to do much arithmetic to put those numbers into that form. Should have double-checked. :smack: ) ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [September 22, 2014, 6:48pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/65 "2014-09-22T18:48:12Z")
There are a couple of concepts that need to be clarified. Are we talking about “gold standard” money, or are we talking about using gold bullion coins as money? Because all a gold standard means is that the authorities will give you fresh printed paper money at such-and-such a rate for your gold bullion, and will sell you gold bullion at such and such a rate for your paper money. What this means is that your paper money has a fixed relationship to the value of gold. But the real economy operates on paper money. The paper money represents a certain weight of gold, because it can be exchanged for that weight of gold at the government bank. But all the other panoply of modern financial instruments are available–we can lend money, we can have credit cards, we can have fractional reserve banking, we can extend credit, and so on. Of course the problem with this is that in real life the government will make it extraordinarily difficult to exchange paper money for gold, and the instant there is a war or depression or crisis they will suspend gold payments. Or make it illegal to own gold. Oh, the gold is there, but citizens can’t own gold, that’s crazy talk. Since the government has to control the gold supply to control the money supply, get used to extremely tight control over gold. But of course, what many gold bugs really object to is the banking aspect. They don’t want gold standard currency, they want gold bullion. But that makes modern financial life impossible. Let’s say I own a store. Can I extend credit to my customers? Like, we all use gold bullion, but Grandma Smith comes into my store and tells me she will gladly pay me a gram of gold Tuesday for a loaf of bread today. And I say sure, and I hand her the loaf of bread, and write down in my ledger book that Granny Smith owes me a gram of gold. Except, great, I’m now a bank. I’ve loaned her a gram of gold, which she used to buy my goods, and I’ve got nothing to show for it except a scrap of paper. If the problem is that a scrap of paper cannot be money, then our whole economic system cannot work, because the vast majority of economic transactions today exist only as scraps of paper, and not even that but rather ledger entries in computer databases. A dollar bill is a scrap of paper exactly the same as a notebook entry saying that Grandma owes me a dollar. And a scrap of paper that says the government owes me a gram of gold is exactly the same as a scrap of paper that says that Grandma owes me a gram of gold, the only difference is how much I trust that the government will pay me back vs whether Grandma will pay me back. Is the problem that your bank should represent your savings account in grams of gold rather than dollars or euros? Who cares? Look, you can take your paper money, or your credit card, and go to any coin shop in your town, and buy gold right now. If you don’t trust the assholes in Washington to keep the money supply honest, you can get gold coins and take them home with you every time you cash your paycheck, the only problem is you have to take that additional step of visiting the gold dealer. Because gold is just another commodity in today’s economy, we have a free market in gold, and no bureaucrat in Washington is going to get the vapors because free citizens own gold. You can buy and sell things for gold if you want, the only problem is finding people willing to accept your gold rather than paper money. So maybe it’s worthwhile to keep your savings as gold, but have a bit of paper/electronic money around for your day-to-day transactions. You are perfectly free to do this, and any billionaires who are worried about the money supply are also free to stock up on gold bars rather than worthless fiat money. But billionaires aren’t billionaires because they have bank accounts worth a billion dollars. Instead they own companies and productive assets that are worth a billion dollars. Mark Zuckerberg owns Facebook stock, not a swimming pool filled with gold coins or dollar bills. And when the economic crunch hits, the only thing that makes him the “owner” of “Facebook” “stock” is a legal system that says he does. If you want to save gold coins under the mattress because you don’t trust banks and governments, go right ahead. If the problem is that governments and bankers are all corrupt bastards who swindle the common man, well, that’s true, but switching to a gold standard paper currency won’t solve that. ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [September 22, 2014, 11:35pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/66 "2014-09-22T23:35:42Z")
The short answer is this: it’s a poor idea to base the total worth of your economy on something you dig out of the ground. > [@Voyager](#): > > Which is another problem. Gold has uses beyond sitting in vaults backing currency. It is vital for electronics manufacturing, for one thing. If gold soared in price, which it would, so would all the things made with gold. You think there is a problem with people stealing iPhones now? There’s even another problem. Let’s say the government decided to increase the value of gold to keep up with the economy. As soon as that because public everybody hoards gold because a cache of gold will increase in value when the government makes the change. The anti-government types don’t seem to understand that a gold standard still gives the government the ability to make up money. ---
**Author:** ![Lumpy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lumpy/32/446_2.png) [@Lumpy](https://boards.straightdope.com/u/Lumpy)\ **Post date:** [September 23, 2014, 12:22am UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/67 "2014-09-23T00:22:02Z")
> [@BrainGlutton](#): > > This appears to be the common thread – from _A History of the American People,_ by British conservative Paul Johnson: Fascinating! I’d always wondered about the bitter opposition to finance among some of the Founders (e.g. First Bank of the United States), and this explains the fundamental ideological basis of that. Thanks for the info! ---
**Author:** ![Sage\_Rat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sage_rat/32/399_2.png) [@Sage\_Rat](https://boards.straightdope.com/u/Sage_Rat)\ **Post date:** [September 23, 2014, 12:41am UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/68 "2014-09-23T00:41:57Z")
> [@septimus](#): > > I certainly do not advocate a return to the gold standard, for reasons given already. However, many of the claims in thread seem exaggerated or wrong. > > For starters, gold production has kept pace roughly with population. The amount of gold on the surface _per capita_ is about the same now as it was 100 years ago. Or probably 1000 years ago. [Cite.](http://www.numbersleuth.org/worlds-gold/) That’s not relevant to anything though, since the size of the economy has grown faster than the population of the world. By default the economy can be considered to be the amount of produce that a single person can produce in a day without tools, on average, over the course of his life. As you add and improve tools, his production increases. In modern day, the economy grows more due to the creation and improvement of tools, rather than due to the growth of population. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [September 25, 2014, 2:07am UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/69 "2014-09-25T02:07:52Z")
> [@The\_Second\_Stone](#): > > But why all these various products. How about what civilizations has given us. Dollars, Euros, Pounds, etc. And instead of being backed by just one commodity, back it by the entire full faith and credit of the country issuing it and make it a non-dischargeable unit of specie. We call those dollars. You are one step ahead of me here. 🙂 Yes. As soon as we move past a monetary system backed by gold, silver, chickens, or lumber, we realize that the issuing agency of that currency is acting responsibly. We can trust that the notes themselves have intrinsic value, and we universally trust that. So then there is no need for stores of gold because nobody is exchanging their bills for it. Even gold standard adherents wouldn’t argue that if they were given a $100 bill that it has no value. Buy gold, chicken, lumber, take your wife out to dinner, etc. That bill isn’t backed by gold, but it is based by a society that is stable enough to embrace the economic system where EVERYONE values that $100 bill. Take a sliver of gold to your local restaurant and see if they take that as payment. The money is better. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [September 25, 2014, 5:01am UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/70 "2014-09-25T05:01:38Z")
> [@Deeg](#): > > The short answer is this: it’s a poor idea to base the total worth of your economy on something you dig out of the ground. A global financial system based on earthworms will work, I tell you! ---
**Author:** ![asterion](https://avatars.discourse-cdn.com/v4/letter/a/4da419/32.png) [@asterion](https://boards.straightdope.com/u/asterion)\ **Post date:** [September 25, 2014, 10:13am UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/71 "2014-09-25T10:13:51Z")
> [@Little\_Nemo](#): > > A global financial system based on earthworms will work, I tell you! > [@Douglas Adams](#): > > “Thank you. Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become immensely rich. […] > > “But we have also,” continued the management consultant, “run into a small inflation problem on account of the high level of leaf availability, which means that, I gather, the current going rate has something like three deciduous forests buying on ship’s peanut.” […] > > “So in order to obviate this problem,” he continued, "and effectively revalue the leaf, we are about to embark on a massive defoliation campaign, and…er, burn down all the forests. I think you’ll all agree that’s a sensible move under the circumstances.” Much like the Simpsons, I’m starting to think there’s a Hitchhiker’s quote for everything. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [September 25, 2014, 3:22pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/72 "2014-09-25T15:22:58Z")
> [@jtgain](#): > > You are one step ahead of me here. 🙂 > > Yes. As soon as we move past a monetary system backed by gold, silver, chickens, or lumber, we realize that the issuing agency of that currency is acting responsibly. We can trust that the notes themselves have intrinsic value, and we universally trust that. So then there is no need for stores of gold because nobody is exchanging their bills for it. > > Even gold standard adherents wouldn’t argue that if they were given a $100 bill that it has no value. Buy gold, chicken, lumber, take your wife out to dinner, etc. That bill isn’t backed by gold, but it is based by a society that is stable enough to embrace the economic system where EVERYONE values that $100 bill. Take a sliver of gold to your local restaurant and see if they take that as payment. The money is better. I suspect no small part of gold-buggery is some sort of visceral heebie-jeebies on their part with the concept that the value of currency changes. They’re probably very wigged out with some sort of gut feeling that it’s WRONG somehow that in 1999, we could buy a Big Mac, fries and a coke for say… $6, and the same exact meal costs $8 today, strictly due to inflation. They want to tie that $100 bill you mention to something that they feel represents wealth, and gold is that thing to them. The thing is, with fiat currency, that bill is tied to something that represents wealth- the economy of the US. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [September 25, 2014, 5:02pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/73 "2014-09-25T17:02:20Z")
> [@bump](#): > > I suspect no small part of gold-buggery is some sort of visceral heebie-jeebies on their part with the concept that the value of currency changes. They’re probably very wigged out with some sort of gut feeling that it’s WRONG somehow that in 1999, we could buy a Big Mac, fries and a coke for say… $6, and the same exact meal costs $8 today, strictly due to inflation. They want to tie that $100 bill you mention to something that they feel represents wealth, and gold is that thing to them. > > The thing is, with fiat currency, that bill is tied to something that represents wealth- the economy of the US. My guess is it’s even simpler than that. There are people who make a living selling gold. They’re just whipping up hysteria over political issues in order to sell more of their product. It’s the same idea that ammunition manufacturers are using. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [September 25, 2014, 6:35pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/74 "2014-09-25T18:35:37Z")
> [@bump](#): > > I suspect no small part of gold-buggery is some sort of visceral heebie-jeebies on their part with the concept that the value of currency changes. They’re probably very wigged out with some sort of gut feeling that it’s WRONG somehow that in 1999, we could buy a Big Mac, fries and a coke for say… $6, and the same exact meal costs $8 today, strictly due to inflation. They want to tie that $100 bill you mention to something that they feel represents wealth, and gold is that thing to them. We have a HyperLibertarian who posts here. I’ve never been able to figure out his economic doctrine because his links start out with grade-school screeds comparing the price of gold now with 140 years ago. I’ve got better children’s books to read. I pointed out that if you sold one pound of gold 140 years ago and kept the proceeds invested in U.S. Treasury bonds, you could sell the bonds today and buy much more than a pound of gold! … No comment from the Hyper. (The same guy, when presented with an example showing that government might have utility, declared the eradication of smallpox to be “irrelevant.”) ---
**Author:** ![skdo23](https://avatars.discourse-cdn.com/v4/letter/s/a5b964/32.png) [@skdo23](https://boards.straightdope.com/u/skdo23)\ **Post date:** [September 25, 2014, 11:34pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/75 "2014-09-25T23:34:57Z")
“It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” Warren Buffett ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [September 26, 2014, 3:40am UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/76 "2014-09-26T03:40:15Z")
> [@skdo23](#): > > “It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” > > Warren Buffett As I pointed out in a previous thread, gold is a really poor investment. Because other than making jewelry out of it, there’s really nothing you can do to improve gold. You just buy an amount of gold, keep it for a while, and then sell the same amount of gold you bought. The counter-example I gave was buying a pig. You can feed your pig and turn it into a bigger pig. You can get another pig of the opposite gender and breed them for more pigs. You can train your pig to perform tricks and sell tickets. Or you can turn your pig into pork. There are things you can do to make something that’s more than the pig you started with. ---
**Author:** ![naita](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/naita/32/5862_2.png) [@naita](https://boards.straightdope.com/u/naita)\ **Post date:** [September 26, 2014, 7:46am UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/77 "2014-09-26T07:46:07Z")
> [@Little\_Nemo](#): > > As I pointed out in a previous thread, gold is a really poor investment. Because other than making jewelry out of it, there’s really nothing you can do to improve gold. You just buy an amount of gold, keep it for a while, and then sell the same amount of gold you bought. > > The counter-example I gave was buying a pig. You can feed your pig and turn it into a bigger pig. You can get another pig of the opposite gender and breed them for more pigs. You can train your pig to perform tricks and sell tickets. Or you can turn your pig into pork. There are things you can do to make something that’s more than the pig you started with. Have you tried getting a gold bar of the opposite gender? Have you tried slicing, smoking and curing gold? If you haven’t, how can you know that it’s not just as good as bacon? ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [September 26, 2014, 7:48am UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/78 "2014-09-26T07:48:50Z")
> [@naita](#): > > Have you tried getting a gold bar of the opposite gender? Have you tried slicing, smoking and curing gold? No, but I did once try to teach a gold coin how to sit up and beg. It never did learn the trick. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [September 26, 2014, 12:22pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/79 "2014-09-26T12:22:02Z")
> [@Little\_Nemo](#): > > As I pointed out in a previous thread, gold is a really poor investment. The history of its rather stable price, at least in the long term, demonstrates you are wrong. Gold is an excellent investment if you’re looking for something that is VERY low risk, but has relatively little long term upside. In the short term you can win or lose but in the long term it stays pretty much the same. You are unlikely to derive a lot of value over the course of many years in gold, but you are not going to lose your money. The likelihood of gold totally losing its value, like a stock, is essentially zero, making it an outstanding place to put money you REALLY don’t want to lose. > [@](#): > > The counter-example I gave was buying a pig. You can feed your pig and turn it into a bigger pig. You can get another pig of the opposite gender and breed them for more pigs. You can train your pig to perform tricks and sell tickets. Or you can turn your pig into pork. There are things you can do to make something that’s more than the pig you started with. These things are true - but it’s also true that buying a pig represents many risks. Your pig needs to be fed and cared for, so it represents a significant ongoing expense which you need the intelligence and experience to manage properly; if you mismanage your pig farm you could spend more running it than you get from selling pigs. Or the pig could get sick and die. It could run away. It could bite you. You stand to make more from your pig than you would from gold, but you can also lose your shirt. It’s a higher risk, higher reward investment. ---
**Author:** ![UltraVires](https://avatars.discourse-cdn.com/v4/letter/u/ecccb3/32.png) [@UltraVires](https://boards.straightdope.com/u/UltraVires)\ **Post date:** [September 26, 2014, 6:58pm UTC](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035/80 "2014-09-26T18:58:03Z")
> [@RickJay](#): > > These things are true - but it’s also true that buying a pig represents many risks. Your pig needs to be fed and cared for, so it represents a significant ongoing expense which you need the intelligence and experience to manage properly; if you mismanage your pig farm you could spend more running it than you get from selling pigs. Or the pig could get sick and die. It could run away. It could bite you. You stand to make more from your pig than you would from gold, but you can also lose your shirt. It’s a higher risk, higher reward investment. I think this is a good analogy. Yes, there are risks from pig farming. But if we pool those risks across all of the pig farmers in the nation, then we understand that pig farming is a net positive. Much better than sitting on gold. [Previous page](https://boards.straightdope.com/t/explaining-gold-standard-for-dummies/699035.md?page=3)