# Question about Gold Standard and Tariffs **URL:** \ **Category:** Factual Questions\ **Created:** [July 15, 2012, 2:20am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270 "2012-07-15T02:20:30Z")\ **Posts on this page:** 20\ **Page:** 7
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [August 1, 2012, 12:39am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/121 "2012-08-01T00:39:36Z")
> [@mmmbeer](#): > > Paper issued at a 1 to 1 ratio is OK with me. Electronic funds limited by the amount of gold is also great. **This. Is. Still. Fiat. Money.** There. It’s been said. There is no way to say it simpler. I could convert it to predicate calculus, but I could not say it in any more obvious terms. Paper backed by gold is only backed by gold as long as the government issuing the paper decides it’s backed by gold. Look to history: When governments decided to stop backing paper with gold, the paper was no longer backed by gold. Going back to the gold standard now would simply mean a repeat of our going off the gold standard. We’d go on the gold standard, our economy would collapse, and we’d come back off the gold standard, worse off than before. ---
**Author:** ![mmmbeer](https://avatars.discourse-cdn.com/v4/letter/m/ecb155/32.png) [@mmmbeer](https://boards.straightdope.com/u/mmmbeer)\ **Post date:** [August 1, 2012, 1:58am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/122 "2012-08-01T01:58:45Z")
> [@Derleth](#): > > **This. Is. Still. Fiat. Money.** > > There. It’s been said. There is no way to say it simpler. I could convert it to predicate calculus, but I could not say it in any more obvious terms. > > Paper backed by gold is only backed by gold as long as the government issuing the paper decides it’s backed by gold. Look to history: When governments decided to stop backing paper with gold, the paper was no longer backed by gold. > > Going back to the gold standard now would simply mean a repeat of our going off the gold standard. We’d go on the gold standard, our economy would collapse, and we’d come back off the gold standard, worse off than before. from wikipedia…see I’m not just making this stuff up out of thin air. The term fiat money has been defined variously as: ``` any money declared by a government to be legal tender.[5] state-issued money which is neither convertible by law to any other thing,nor fixed in value in terms of any objective standard.[6] money without intrinsic value.[7][8] ``` While specie-backed representative money entails the legal requirement that the bank of issue redeem it in fixed weights of specie, fiat money’s value is unrelated to the value of any physical quantity. Doesn’t seem like you guys use the same definitions that I am…That may be the problem. ---
**Author:** ![sweeteviljesus](https://avatars.discourse-cdn.com/v4/letter/s/898d66/32.png) [@sweeteviljesus](https://boards.straightdope.com/u/sweeteviljesus)\ **Post date:** [August 1, 2012, 2:16am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/123 "2012-08-01T02:16:48Z")
Are you against fiat money because you think it leads to more borrowing by common folk who might become overextended (and find themselves in trouble when interest rates rise because the money supply has been tightened)? Are you against credit? Do you think economic growth is a good or bad thing? What do you think would happen if the money supply were fixed? I am not trying to be pedantic, by the way. I really wonder what your answers to these questions are. Thanks, Rob ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [August 1, 2012, 2:28am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/124 "2012-08-01T02:28:39Z")
> [@mmmbeer](#): > > any money declared by a government to be legal tender.[5] This applies to paper backed by gold. > [@](#): > > state-issued money which is neither convertible by law to any other thing,nor fixed in value in terms of any objective standard.[6] This applies to a gold-backed paper currency in that the government can change its mind. It is only as convertible as the government says it is. > [@](#): > > money without intrinsic value.[7][8] This applies to gold even better than paper, given that you can’t wipe your ass with gold. > [@](#): > > While specie-backed representative money entails the legal requirement that the bank of issue redeem it in fixed weights of specie Until the law is changed. By fiat. ---
**Author:** ![sweeteviljesus](https://avatars.discourse-cdn.com/v4/letter/s/898d66/32.png) [@sweeteviljesus](https://boards.straightdope.com/u/sweeteviljesus)\ **Post date:** [August 1, 2012, 2:30am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/125 "2012-08-01T02:30:50Z")
nm ---
**Author:** ![sweeteviljesus](https://avatars.discourse-cdn.com/v4/letter/s/898d66/32.png) [@sweeteviljesus](https://boards.straightdope.com/u/sweeteviljesus)\ **Post date:** [August 1, 2012, 2:32am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/126 "2012-08-01T02:32:55Z")
Let me ask one other key question: do you believe gold has an intrinsic value? Thanks, Rob ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [August 1, 2012, 3:21am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/127 "2012-08-01T03:21:34Z")
> [@sweeteviljesus](#): > > I am not trying to be pedantic, by the way. I really wonder what your answers to these questions are. Heck, I really wonder what his answers to any of the questions we’ve asked are. It would be fun to see those answers. Any answers, though all would be far 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:** [August 1, 2012, 3:30am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/128 "2012-08-01T03:30:38Z")
> [@Derleth](#): > > **This. Is. Still. Fiat. Money.** > > There. It’s been said. There is no way to say it simpler. I could convert it to predicate calculus, but I could not say it in any more obvious terms. > > Paper backed by gold is only backed by gold as long as the government issuing the paper decides it’s backed by gold. Look to history: When governments decided to stop backing paper with gold, the paper was no longer backed by gold. Actually I agree with mmmbeer on this one. If the money is backed 1:1 with gold it’s representative currency not fiat currency. A government can decide that its currency is no longer worth a fixed amount of gold. But that’s what turns it into fiat currency. It isn’t fiat currency as long as there’s a fixed amount of gold (or some other commodity) attached to it. ---
**Author:** ![mmmbeer](https://avatars.discourse-cdn.com/v4/letter/m/ecb155/32.png) [@mmmbeer](https://boards.straightdope.com/u/mmmbeer)\ **Post date:** [August 1, 2012, 4:42am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/129 "2012-08-01T04:42:33Z")
> [@Little\_Nemo](#): > > First off, nobody but you thinks we have an unlimited money supply. We’ve been off the gold standard for decades and have managed to avoid hyperinflation. > > A gold standard is a fixed currency and that leads to a static economy. Fiat currency is expandable currency and that leads to a growing economy. Growing economies are better than static economies so fiat currency is better than gold currency. > > Is that simple enough for you? At the very least, stop pretending that nobody’s explained it to you. It is simple enough. Thank you. It seems like you think we have an unlimited money supply. You only get two choices. There is a set limit (obviously not to the gnat’s ass as new supplies of gold will come in, but controlled by profitability, etc), which means non-expandable OR there is not a set limit of currency, which is expandable at the whim of the government. Growing economies. Do you think this economy is sustainable? Can we just keep borrowing and borrowing? That is how the economy is growing. Or do you disagree with that too? You think just keep getting credit cards and loans is the best way to live. Not only that, let’s do it on a national scale! It is simple enough. Thank you. ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [August 1, 2012, 4:48am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/130 "2012-08-01T04:48:14Z")
> [@Little\_Nemo](#): > > Actually I agree with mmmbeer on this one. If the money is backed 1:1 with gold it’s representative currency not fiat currency. Technically correct, but in practice both kinds of currency (gold-backed paper and modern money) involve about the same level of trust in the government; gold-backed paper may involve even more trust: [ul] [li]Gold-backed paper involves trust that, one, the government will keep accepting the paper for gold at the same ratio, and, two, that the government will be able to exercise some control over the amount of gold in the economy.[/li][li]Modern money involves trust that the government will have sound monetary policy. Really, that’s it. The government doesn’t need to try and control the world’s supply of a commodity anymore.[/li][/ul] Given that modern gold bugs are also modern libertarians (by and large), the whole point about gold-backed paper still requiring trust in the government at least equivalent to what modern money requires is the major point of interest, and the major flaw in that part of their argument. ---
**Author:** ![mmmbeer](https://avatars.discourse-cdn.com/v4/letter/m/ecb155/32.png) [@mmmbeer](https://boards.straightdope.com/u/mmmbeer)\ **Post date:** [August 1, 2012, 4:49am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/131 "2012-08-01T04:49:33Z")
> [@sweeteviljesus](#): > > Are you against fiat money because you think it leads to more borrowing by common folk who might become overextended (and find themselves in trouble when interest rates rise because the money supply has been tightened)? > Already said why I am against fiat money. > > Are you against credit? > Credit has no bearing on which is a better money, gold or paper. Limiting my responses to that. OK, I’ll tell you, just cause I like ya, but I’m not talking about it. Credit is a private matter between a lender and a borrower. You must have the money to lend though. You can’t just create it. > > Do you think economic growth is a good or bad thing? > Real economic growth is wonderful. Charging up trips on the love boat is not economic growth. It does seem that there is a problem of definitions here. > > What do you think would happen if the money supply were fixed? > The theory is that as more goods entered the economy, it would be more worthwhile to fire up the mines and dig out more gold/silver because they could buy more stuff with their newfound metal. then as more metal enters the economy, not so profitable and they would cap it off like an oil well. > > I am not trying to be pedantic, by the way. I really wonder what your answers to these questions are. > > Thanks, > Rob You asked nicely so there ya go. I tried to be nice back. ---
**Author:** ![mmmbeer](https://avatars.discourse-cdn.com/v4/letter/m/ecb155/32.png) [@mmmbeer](https://boards.straightdope.com/u/mmmbeer)\ **Post date:** [August 1, 2012, 4:54am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/132 "2012-08-01T04:54:05Z")
> [@Little\_Nemo](#): > > Actually I agree with mmmbeer on this one. If the money is backed 1:1 with gold it’s representative currency not fiat currency. > > A government can decide that its currency is no longer worth a fixed amount of gold. But that’s what turns it into fiat currency. It isn’t fiat currency as long as there’s a fixed amount of gold (or some other commodity) attached to it. I’m starting to not like you. I waited till I got home from work cause I was gonna chew that shit up. Thanks for being honest though. Just kidding of course about not liking you. You are one of the few that has been up and up. You kind of had to on this one thoug, he’s wrong by definition. ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [August 1, 2012, 4:57am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/133 "2012-08-01T04:57:37Z")
> [@mmmbeer](#): > > I’m starting to not like you. I waited till I got home from work cause I was gonna chew that shit up. Thanks for being honest though. Just kidding of course about not liking you. You are one of the few that has been up and up. You kind of had to on this one thoug, he’s wrong by definition. OK, I’m willing to admit I was technically incorrect. Will you reply to my point about how gold-backed paper still requires you have a substantial amount of trust in the government printing that paper? ---
**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:** [August 1, 2012, 5:50am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/134 "2012-08-01T05:50:05Z")
See, this is the kind of thing that’s a problem. > [@Little\_Nemo](#): > > nobody but you thinks we have an unlimited money supply. > [@mmmbeer](#): > > It seems like you think we have an unlimited money supply. It’s like we can see what we’re saying bouncing off your forehead. ---
**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:** [August 1, 2012, 5:57am UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/135 "2012-08-01T05:57:26Z")
> [@mmmbeer](#): > > It is simple enough. Thank you. > > It seems like you think we have an unlimited money supply. You only get two choices. There is a set limit (obviously not to the gnat’s ass as new supplies of gold will come in, but controlled by profitability, etc), which means non-expandable OR there is not a set limit of currency, which is expandable at the whim of the government. > > Growing economies. Do you think this economy is sustainable? Can we just keep borrowing and borrowing? That is how the economy is growing. Or do you disagree with that too? You think just keep getting credit cards and loans is the best way to live. Not only that, let’s do it on a national scale! > > It is simple enough. Thank you. Some of the answers focus attention away from what I see as **mmmbeer** ’s misconceptions. I’d ask him to address these questions: [ul][li] You like the idea of gold as money because gold is real. What about using gold _and_ silver? Gold and silver _and_ eggs? Gold was a traditional money; is there more to it than that?[/li][li] You ask “Do you think this economy is sustainable?” Fundamentally, people work (and other resources are spent), and this leads to the production of goods and services. Goods aren’t produced by fake money; they’re produced with real labor. Excess housing built recently was built with real materials and labor; any concern is about _misallocation_.[/li]Shortages of certain materials, e.g. petroleum, may eventually put a damper on growth. Do you think shortage of gold needs to put a damper on growth? [li] You focus on debt as a problem. The corporation Pepsico, to take an arbitrary example, has long-term debt of over $21 Billion. Most Americans bought their homes with debt, even before the bubble. Debt is a way to allocate resources efficiently.[/li][li] Now most of us agree that growing government debt is bad. But the link from this to your detesting fiat money is obscure. _If the government were simply issuing fiat money it wouldn’t be accumulating debt!_[/li][/ul] When solutions are proposed, I always ask: _What problem are we trying to solve?_ We don’t have an inflation problem. We do have a slow recovery from a financial crisis – a crisis largely caused by poor regulation. Is your suggestion that a gold standard would serve as a substitute for better regulation? My questions are sincere – I just don’t see how you “connect the dots.” ---
**Author:** ![sweeteviljesus](https://avatars.discourse-cdn.com/v4/letter/s/898d66/32.png) [@sweeteviljesus](https://boards.straightdope.com/u/sweeteviljesus)\ **Post date:** [August 1, 2012, 1:18pm UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/136 "2012-08-01T13:18:08Z")
> [@](#): > > Are you against fiat money because you think it leads to more borrowing by common folk who might become overextended (and find themselves in trouble when interest rates rise because the money supply has been tightened)? > Already said why I am against fiat money. > > Are you against credit? > Credit has no bearing on which is a better money, gold or paper. Limiting my responses to that. OK, I’ll tell you, just cause I like ya, but I’m not talking about it. Credit is a private matter between a lender and a borrower. You must have the money to lend though. You can’t just create it. > > Do you think economic growth is a good or bad thing? > Real economic growth is wonderful. Charging up trips on the love boat is not economic growth. It does seem that there is a problem of definitions here. > > What do you think would happen if the money supply were fixed? > The theory is that as more goods entered the economy, it would be more worthwhile to fire up the mines and dig out more gold/silver because they could buy more stuff with their newfound metal. then as more metal enters the economy, not so profitable and they would cap it off like an oil well. To save me some digging, can you tell me the post numbers that answer my first question? On the question of credit, is it your feeling that lenders should not be allowed to lend money that they have borrowed themselves? Borrowing is effectively a promise to create wealth. This is of course simplest to understand when we are talking about a business borrowing money to grow. In the case of consuming on credit (not a good idea IMHO, but orthogonal to the issue of a gold standard), you are promising to create through your labor the wealth to pay back the debt. There is not sufficient gold or new gold production (I admit I don’t know how much economically unrecoverable gold there is or at what price it would become profitable to extract it) to cover the value of the economy so the gold becomes more and more valuable which leads to deflation which really puts the brakes on the economy. Rob ---
**Author:** ![mmmbeer](https://avatars.discourse-cdn.com/v4/letter/m/ecb155/32.png) [@mmmbeer](https://boards.straightdope.com/u/mmmbeer)\ **Post date:** [August 1, 2012, 1:57pm UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/137 "2012-08-01T13:57:53Z")
> [@Derleth](#): > > OK, I’m willing to admit I was technically incorrect. Will you reply to my point about how gold-backed paper still requires you have a substantial amount of trust in the government printing that paper? You were more than technically incorrect. You were fundamentally wrong. You were wrong by definition. It shows that you don’t even understand what the words you’re using mean. The paper you get from the BANK is redeemable in gold. You don’t have to trust the government to do anything as far as the money supply goes. This has always been a comparison. I have been saying that gold (meaning gold backed paper) has been a better money than trust backed paper. It is all a comparison. So, by comparison fiat money requires 100 percent trust that the government won’t inflate the money supply. So with your new understanding of what fiat money is, go back and read what I posted in `122 to you. While specie-backed representative money entails the legal requirement that the bank of issue redeem it in fixed weights of specie, fiat money’s value is unrelated to the value of any physical quantity. The bank of issue, not the government. If you’re talking about having substantial trust in the government as far as them not taking over dictatorially, declaring that citizens may not own gold, stealing from us, etc. that is not a problem under discussion. We are talking about whether gold or paper is the better money. ---
**Author:** ![mmmbeer](https://avatars.discourse-cdn.com/v4/letter/m/ecb155/32.png) [@mmmbeer](https://boards.straightdope.com/u/mmmbeer)\ **Post date:** [August 1, 2012, 2:12pm UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/138 "2012-08-01T14:12:22Z")
> [@Little\_Nemo](#): > > See, this is the kind of thing that’s a problem. > It’s like we can see what we’re saying bouncing off your forehead. First off, nobody but you thinks we have an unlimited money supply. We’ve been off the gold standard for decades and have managed to avoid hyperinflation. A gold standard is a fixed currency and that leads to a static economy. Fiat currency is expandable currency and that leads to a growing economy. Growing economies are better than static economies so fiat currency is better than gold currency. What I’m saying is that when you contrast a gold standard as being a limited currency to an expandable fiat currency, that the other side of the limited equation is an unlimited currency. You can rephrase it so as to not use the term unlimited, but if there is no set limit, it is unlimited. The government can expand it as much as they want to. That is what I meant by you seem to think we have an unlimited money supply. It has no defined limits. If you disagree, don’t talk about bouncing off the head, talk about how paper is limited; about how the government can’t just increase the money supply. That should be difficult considering how you just said a fiat currency is expandable. ---
**Author:** ![mmmbeer](https://avatars.discourse-cdn.com/v4/letter/m/ecb155/32.png) [@mmmbeer](https://boards.straightdope.com/u/mmmbeer)\ **Post date:** [August 1, 2012, 2:34pm UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/139 "2012-08-01T14:34:45Z")
To sweeteviljesus post 136…couldn’t get it to quote… > [@sweeteviljesus](#): > > To save me some digging, can you tell me the post numbers that answer my first question? > Yeah, let me do that digging for you. > > On the question of credit, is it your feeling that lenders should not be allowed to lend money that they have borrowed themselves? > It isn’t my feeling. If you can borrow money and lend it back out, knock yourself > out. It is still a private matter between lenders and borrowers. You did tell the > person you borrowed it from that you were going to lend it back out at a profit, > right? > > Borrowing is effectively a promise to create wealth. This is of course simplest to understand when we are talking about a business borrowing money to grow. In the case of consuming on credit (not a good idea IMHO, but orthogonal to the issue of a gold standard), you are promising to create through your labor the wealth to pay back the debt. There is not sufficient gold or new gold production (I admit I don’t know how much economically unrecoverable gold there is or at what price it would become profitable to extract it) to cover the value of the economy so the gold becomes more and more valuable which leads to deflation which really puts the brakes on the economy. > > Borrowing isn’t effectively a promise to create wealth. If I borrow and buy > things, I’m not promising to create wealth. If the government borrows to build > bridges that no one needs, they haven’t promised to CREATE wealth. BS meter went > right off the chart there. > So, if I borrow money and spend it on crap, ok consumer goods, then by the time I > pay it back, everything is worn out or broken, then I’m wealthy? That meter is > still slammed off the scale. Try again. > Rob ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [August 1, 2012, 3:01pm UTC](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270/140 "2012-08-01T15:01:17Z")
> [@mmmbeer](#): > > You were more than technically incorrect. You were fundamentally wrong. You were wrong by definition. It shows that you don’t even understand what the words you’re using mean. The paper you get from the BANK is redeemable in gold. You don’t have to trust the government to do anything as far as the money supply goes. OK, you want private currency. That’s not what I got out of your previous posts; maybe I just misread. The problem with private currency is, how do I know what banks are real and what banks some shyster just made up? Even if I take your next point as a given, only the money issued by a real bank will have real gold in back of it; money issued by a fraudulent bank would still look just as legitimate to me but would be worthless. The advantage of Federal Reserve Notes is that I _know_ what they look like. I _know_ how to spot a fake $100 bill in the currency we use now. I wouldn’t know that if I suddenly had to deal with twenty different private currencies. > [@](#): > > While specie-backed representative money entails the legal requirement that the > bank of issue redeem it in fixed weights of specie So it isn’t truly private currency at all, it’s private currency regulated by the government. So tell me, what prevents the government from changing the laws about banks having to keep gold on hand? [Previous page](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270.md?page=6) [Next page](https://boards.straightdope.com/t/question-about-gold-standard-and-tariffs/628270.md?page=8)