Volatility is an Economy Killer
For about the first 180 years of its existence, the United States tied the value of its currency to gold. But in 1971, President Nixon severed the link between the dollar and gold. Ever since, the dollar has been backed by little more than the government's promise of its value.
One of the unintended consequences of the Fed's current manipulation of money is that it has made traditional wealth preservation through savings accounts untenable. In an environment of monetary instability, the only sure thing is uncertainty. Washington policy makers constantly decry the evils of risk, but their regulations and the Fed's artificial suppression of interest rates have forced people into strategies with higher levels of risk.
It has also spawned an entire industry of speculators who trade on the dollar's volatility. The volume of currency speculation is more than $5 trillion every day.
Gold is the best and only way to achieve truly stable money. In the late 19th century, most nations, inspired by Great Britain's spectacular economic success after tying the pound to gold, spontaneously adopted a gold standard. The global economy experienced an explosion in trade, capital creation, and investment that remained unmatched for the next 100 years.
Gold is the best and only way to achieve truly stable money.
Gold helped stabilize the United States in the early days of the Republic. Reckless money printing during the American Revolution had left the finances of the young republic in a shambles. Alexander Hamilton, the first Secretary of the Treasury, realized that the only hope for recovery lay in a system based on sound money. Hamilton fixed the dollar by law to a specific weight of gold. Overnight the economy sprang to life.
Restore a Gold Standard
Relinking the dollar to gold would achieve several important goals:
- Eliminate the economic volatility and monetary crises that have been the consequence of fiat money.
- Stop the erosion of wealth taking place today as a result of Fed-engineered instability.
- Take decisions about the value and supply of money out of the hands of bureaucrats whose judgment is too often in error or driven by politics.
- Drastically reduce speculative trading and the windfalls it produces.
Gold would enable the dollar, for the first time in decades, to completely fulfill its role as a facilitator of transactions, unimpeded and undistorted.
Critics equate stable money with austerity. But this is not true: in the late 1800s and early 1900s both Germany and Great Britain expanded under a gold standard while creating welfare states. At the same time, fiat currency has hampered economy growth. Without the fiat economy started in the 1970s, the U.S. economy would be $8 trillion bigger.
Most importantly, the gold standard makes the government more accountable. Like a ruler providing a fixed measure of length, the gold standard provides a fixed measure of value, making it much harder to turn on the money-printing press to pay for political promises or to buy votes. Returning to a gold standard would mean naturally low interest rates (not the artificial kind of today), cheaper capital, and gangbuster growth.
Join the movement to restore stability to the dollar by joining Americans for Hope, Growth and Opportunity.