Could the world be creeping closer to a monetary gold standard?
Steve Forbes sees signs that it is.
In a recent article published by Forbes Magazine, Steve Forbes wrote that it may seem hard to believe, but the world is “beginning to lurch toward a gold-based monetary system.”
“This, despite the fact that the historical gold standard is held in almost universal contempt by economists and financial officials.”
Forbes argued that this disdain for a gold standard is misplaced, pointing out that during the 180 years that the dollar was tied to gold, the U.S. enjoyed the greatest long-term growth in human history without the ravages of price inflation.
“Since the greenback’s link to gold was severed, our average historic growth rates have fallen by about a third. Median household income today would be at least $40,000 higher if our traditional pattern of growth for those 180 years had been maintained. Nonetheless, the contumely and scorn for a goldbased monetary system is universal.”
That’s because government people and their support system in academia and media hate gold.
Why Is There Such Disdain for a Gold Standard?
Because it limits the growth of government.
In fact, you could argue that by rejecting the gold standard, the U.S. traded economic growth that benefits the average person for government growth that benefits the political class.
Franklin D. Roosevelt took the first steps to abandon the gold standard in the 1930s.
With the dollar tied to gold, the Federal Reserve was unable to significantly increase the money supply during the Great Depression. It couldn’t simply fire up the printing press as it can today. The Federal Reserve Act required the central bank to hold enough gold to back at least 40 percent of the currency notes in circulation.
But the central bank was low on gold and up against the limit.