Prof. Lawrence H. White: The Gold Standard, Explained 

my mom worked at a post office and saved silver coins worried dollars were only paper. We laughed at her socks full of silver coins and then copper pennies before 1982 I think. She passed, we ain't laughing now.

Same here

Silver dimes , quarters , half dollars , and silver dollars minted BEFORE 1965 . 1964 and EARLIER . A father and son traveling along the south in the early 1960’s - dad left his wallet home ; they were almost out of gas . He went in his ashtray and found a quarter- he bought a gallon of gas and got back home . That SAME 1964 quarter buys a gallon of gas today … Early 1960’s minimum wage was about $1.50 an hour . The same (6) quarters are well over minimum wage today ! ( approximately $18.00 ) $25.00 in the 1920’s bought a 1 ounce gold bullion . A man could buy a real NICE suit , a hat , a pair of shoes , and take a lady out to a “swanky” restaurant . TODAY - same coin , buys a real nice suit , a pair of shoes , and can take a lady out to eat at a nice restaurant . That same $25.00 fiat cash from 1920’s could maybe get a couple of combo - metals at McDonald’s .., BAM 💥 😊

i know right,cool just cool

I always wondered pound sterling is a very odd name, until now, which actually makes a lot of sense.

Didn’t help during the Great Depression!

@@sommerray5600 Actually, it helped a lot. That's why the government abolished it and robbed the people of their gold at below market value to sell it to others at an inflated price.

@@sommerray5600 Margin lending caused the Great Depression, so fiat but with less liquidity

Buy physical silver it's happening soon

Technically governments don't print the fiat currency, the central banks do. Governments borrow money from the central banks and the bank prints it out of thin air. The Federal Reserve bank isn't a government entity. The illuminate bastards Rockefellers and Rothchild's came up with the central banking scam in 1913 to control the people. Central banks control governments, governments control people.

You are in for a nasty surprise, my friend. Gold is often hailed as a hedge against inflation-increasing in value as the purchasing power of the dollar declines. However, government bonds are more secure and have shown to pay higher rates when inflation rises, and Treasury TIPS provide built-in inflation protection.

I think having an investment advisor is the way to go. I've been with one because I lack the expertise for the market. I made over $490K during the recent dip, highlighting that there's more to the market than we average folks know.

That does make a lot of sense, unlike us, you seem to have the Market figured out. Who is this fiduciary??

“SONYA LEE MITCHELL” is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.

I copied her whole name and pasted it into my browser; her website appeared immediately, and her qualifications are excellent; thank you for sharing.

Gold standard is bad, because it leads to deflation which is worse than inflation and because controlling money supply is very important for the economy and is impossible with gold

@@locybapsi174 are you trolling?

@@austinbevis4266 No that's true

@@locybapsi174 I’ve had the same wage for a year now and from the start of my job to now my purchasing power has decreased substantially. How is that a good thing? And that applies to everyone that doesn’t have employers that give inflation based raises. Maybe you’re happy that the economy has more liquidity when there’s more money, but that’s not really a huge benefit when it comes at such a large cost.

@@austinbevis4266 Well obviously, that's not a good thing (for you), but it's not the fault of inflation, it's the fault of your employer and slightly your own for not fighting harder for it. Generally and on average salaries increase along inflation, that's the rule, they even on average increase above it, if overall economy keeps rising. So inflation is not the problem here, as you said it, the problem are employers who do not raise salaries.

james murphy that was where we failed and everyone went to sleep. I get so angry having to listen to all the bullshit; gender studies, welfare, affordable care, climate change, cultural sensitivity. All this bullshit because we allowed the left to have a voice and didn’t stand up to Roosevelt and Wilson. They should have been publicly executed. But people in a temporary moment of discomfort couldn’t remember how their grandparents did just fine with very little decided it would be wisdom to bend over and let the government insert its “solution.”

yea but most americans are delusional and sheeple. thats not likely is it now..

Toasty Volvo I still penny pinch like my grandpa did in 1942. If more people learned how to live poor, we would do much better with our finances.

​@@brad349miller The pollution on the environment is a big issue , if you don't believe me just take a big sip of oil , a bite of coal or a huff of natural gas and see how it will make you sick ( these fuels are underground not on top where 97% of life lives on ) that is what we are doing to our water, ocean etc etc .

Making a 20 dollar bill cost the same to make a one dollar bill 😂 what’s crazy is it’s probably more expensive making a penny

Did you get that from Bitcoin standard?

Nobody is "off the hook" history will record the acts of the traitors.

Don't forget Richard Nixon getting rid of the Gold Standard with the help of LBJ.

1913

Woodrow Wilson's a peice of crap

Nobody teaches about Woodrow Wilson or the fed reserve in school. Your question might be: Soooo we’re going to let the people who write the school books off the hook by signing the fed reserve into law in 1917? xD

Lol, schools are doing their job dumbing down the population

As long as there aren't more cents than gold atoms there isn't such a thing as not enough gold. The price just needs to get reevaluates. If X amount of circulating dollars result the price to be $20/ounce then doubling the supply should result in gold costing $40/ounce rather than "ups. No more gold" I'm not saying this as in you are serious Stupid. I bet you know it yourself. But it was a interesting comment to reply to

Inflation isn't really the issue. Inflation decreases the value of the dollar, so more money can exist at the same total value. But the second point is correct. There isn't enough gold to back the world's growing real value in currency supply. The supply of gold is disconnected from how much real value we need for currency. There is no correlation. The market forces dictating its value don't correlate to how much money we need. Besides, when we actually break it down, gold is fiat. You want it because you believe other people will accept it. They accept it because they assume yet more people will accept it, and they will. But none of the people involved can actually use it except to give to the next. It's industrial uses only take a small portion of production, so 90% of its value is just us thinking it has value.

@@unigaming9921but at least gold is not based on thin air. It based on something tangible which you can hold in your hand.

@SharukhSaifi faith isn't thin air. It's very real and is the reason people accept your money. Meanwhile gold has no actual relation to the desired value of all money, making it worse than "thin air"

@You can eat in class!! true I guess its fine if we have controlled inflation of 1% - 3%, so the price is stable enough that people can get used to mild inflation and calculate that into their investments and businesses. But the issue is that over time the central banks always lose control of inflation, because something unpredictable happens like war or pandemic which requires reaction. Which means the inflation is going to be all over the place which makes it impossible for markets and people to price things accurately because you can't even predict the value of currency in 3 months, much less in 10 years. How are you going to make any long term investments?

@@sten260 I think you're getting to the heart of this issue here! Currency isn't some magical entity with inherent value, it's actually a method of changing behaviour. Mainly it was used to allow people who don't trust each other to still engage in mutually beneficial trade, bypassing their distrust of one another for their own inherent trust in gold. Fiat money encourages spending. Not a specific type of spending, just spending. As you rightly point out it doesn't encourage longer term planning, which is often less profitable, but better for stability and other benefits that are not economic in nature. I think the 2008 crash is actually an inevitability of fiat currency, because it doesn't have a self restraining force to make both individuals and governments plan long term.

And cheapens the standard of living

That's incorrect. The political appointee's are the board of governors in the central who are different than the committee members from each regional bank. The private sector determines monetary policy. This guy is a quack.

Am I the only one to dare question why the Fed has so many dual citizenship Jews in control of our government?

This is exactly one of the reasons why the US government stopped it, also for world economic dominance at the sacrifice of all citizens and country that’s why the federal reserve and the elite are so corrupt and evil and hold all the wealth

No No No. We can't have a secure middle class. The elites should control and own everything while the rest of us are drowning in debt and dependent on the elites.

@@abdirahmanidris290 so true! You have opened my eyes to the wisdom of Reaganism!!!

@@lukepeterson9342 you're welcome. I think we should give a round of applause to the generous politicians that don't allow us to own or inherit something without a tax. We wouldn't be able to handle the responsibility without those kind hearted, totally uncorrupt elites

They dont want generational wealth.....except for themselves. They are continually making laws to tax people out of inheritance and even home ownership.

we can have an financial revolution through cryptocurrency

Crypto kills governments

@Patrik Neudler The comment was made in 2013 loooooool

Worked out really cool during the great depression... This is one very one-sided video. The problem is not whether gold standard or fiat money, the problem is systematic corruption. Capitalism is ok, but the rules should apply

@@balazshorvath3860 you forget that Great Depression market crash was created by the expansion of credit by the fed and was even more exacerbated the Hoover’s tariffs and wage control.

BTC.

Too complicated. That's not what money is for, to have different values on it. Its suppose to be standard value for any and all transactions . Otherwise it's a pain to use. Even if you live your life behind s computer and think it's no trouble at all. It is.

agreed.

That is done in many cases.

The first currency (and writing) was actually debt tablets. Debt and credit existed long before the gold standard or even coinage. I bet that would be the first choice. Farmer jack would give butcher John some corn because he knows that butcher John will give him some steaks when he slaughters the cow.

Military is a fraction of federal government budget. Taxpayers could afford it if we didn't have multi-trillion dollar liabilities such as social security and welfare

If you finance your war by printing more money, your currency will suffer as if you had declared against it. Inflation will drastically increase by just printing more money. Its that simple. The reason for high inflation is printing more money (extremely simply put)

They have bought all our politicians it will never happen ron paul tried it.

@Christianity Boxing Mafia Trump is not ending the federal reserve.

Then you need to reevaluate everything that makes sense to you....

@@williamatchison5230 actually, you need to reevaluate. As the video explains, gold standards have been very stable, and a stable currency is good for the economy. A fiat standard, where currency value is determined by the amount of money in circulation and the government has control of the amount of money is circulation, is very unstable and bad for the economy.

It’s a matter of practicality. I don’t know what I was intending when I wrote the comment 10 months ago, but I may have intended it to be in reference to going back to the gold standard, in which case the defensibility of the statement is pretty self evident. Either way, both gold standard and fiat have their stability and instability.... gold is a seemingly more stable answer to inflation, fiat is a more stable answer to deflation... Although the extent to which is debatable, it is universally understood that the usage of the gold standard contributed to the greatest worldwide economic disaster, the Great Depression. Both in cause (by way of contraction of the money supply) and in prevention of recovery. The most detailed and enlightening arguments I can think of for this were proposed by the famous juggernaut libertarian economist Milton Friedman, if you wanna check him out. Whether the gold standard could have continued to work, is to me and many others, unlikely. However the idea it could ever be implemented again is near economic suicide. But perhaps I’m wrong. I do appreciate the reply though, I haven’t talked about this in a long time.....I guess ten months at least lol.

@@williamatchison5230 Thought the Fed caused the GD.

@@soullesseater9327 yeah ur right.

there are some avenues to consider. in the far future we could mine asteroids for their precious metals. in the short term we could simply create new smaller denominations of money. The US used to have a half-penny

The Panic of 1893 led to a run on Gold and US Gold reserves were depleted. Nixon took us OFF the Gold Standard BECAUSE of inflation in the 1970s. We only had a Gold Standard for about 100 years. We in USA were on a Silver during the period of another Gold shock he refers to. Videos like this have an agenda.

@@chronic_corpse4638 so this begs the question why not digitize gold? a supply of 32 million coins that can be fractionalized infinitely… why not try backing a currency on bitcoin

Not true. Digital gold is there. Also inflation would be lower so GDP won't grow like today. But isn't that the point? Most of the growth for last 5 centuries have not trickled down to common people who have gotten poorer

If someone ever says there’s not enough gold for a Gold Standard system to work they don’t understand the Gold Standard.

***** It also means your wages will drop.

A healthy inflation rate is 0%. It is true that 2% inflation is better than 2% deflation. But 0% would be ideal. Why would wages drop? What do you mean by that?

Poo

Look up "What happened in 1971"

Deflation is good and is the cure

whenever someone deposits gold, mint the gold into bars and rounds with a serial number pressed into them and issue then notes and tokens with the same serial numbers printed/pressed upon them and only redeem notes and tokens for specie imprinted with the same serial number.

The problem that is often ignored by people who want the gold standard....is that there is not enough gold in the world to cover the current value of currency already.... And if, like the original poster said, you altered the value of gold to be increased for compensation of this problem....then you would not only need governments to enforce its arbitrary value (which defeats the purpose) but you would also DEVASTATE the industries that use gold.... possibly causing a major collapse in electronic technology, surely devastating the jewellery market as every bit of jewellery would be worth astronomical prices... It's...just....fucking.....crazy...

If the world had 100 million units of dollars and 50,000 kilos of gold, then each dollar would be worth 0.5 grams of gold. If the world then produced only 100 million units of widgets then each widget would be worth $1 or 0.5 grams of gold. If overnight, the widgets suddenly doubled, then each widget will then be worth $0.50 or 0.25 grams of gold. And if the supply of widgets suddenly declined to 50 million units, then its price would increase to $2 or 1 gram of gold. In a fiat scenario, the dollars can suddenly increase to 200 million or 300 million units, making the same 100 million widgets worth $2 or $3 from the original $1, making inflation a norm because the production of dollars becomes arbitrary and instantaneous.

White addresses this in one of his lectures. It's actually common knowledge among academic gold standard proponents. ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-99dTApHQhmE.html#t=56m40s No monetary system in modern world history (post-Renaissance) has backed 100% of demand deposits and currency with gold. The closest I know of is the 1844 British Peel Act required monopoly Bank of England notes to be 100% backed by either government securities or gold, but not demand deposits which were much higher. This rule in and of itself caused multiple banking panics where Parliament was forced to suspend the 100% backing rule on four occasions. Gold has never backed 100% of banking money instruments, ever, in U.S. history. So if you simply replace today's system "required reserves" with the equivalent market value of U.S. gold holdings, there's plenty of gold. Required reserves were gold during the classical and Fed gold standards as well, not 100% backing of all M1 or M2 instruments. Today in the Covid-crisis required reserves are set at 0% of bank liabilities, but they will probably return to 10% when the crisis ends. Thus there have been many many multiyear windows in the last few decades where the market price of gold was more than sufficient to replace fiat required reserves with gold reserves, and at a far higher reserve ratio than 10%.

It's simple, you don't make more dollars than the amount of gold you have. Dollars are suppose to be a convinient temporary replacement for carrying gold around with you so you can easily trade.

You can kind of see why...what with the giant economic problems deflation has caused...

economic collapse with excessive wars and massive government spending especially on fiat money brings in collapse. Roman Empire = U.S.

Deflation is great...if you are debt free. Even better if you're a creditor.

@@yuki-sakurakawa You have to understand the circumstances in which people and businesses go into debt. How many people today take on debt because they know that inflation will minimize it? Otherwise, deflation is great if you are retired on a fixed income, or if you're just a worker living from paycheck to paycheck. You would know that you could buy more, even if you don't get a nominal raise in income. And your savings won't be eroded away by inflation. Deflation doesn't cause economic problems, things like massive, unsustainable debt cause economic problems.

it’s true, a lot of us are quick to forget the importance of increasing the money supply.

Well-said.

well, russia has all the world against them economically in the form of sanctions, the ruble was crashing, then, they backed the ruble to gold, and now its worth more than it was before they invaded ukraine. Seems to have worked there.

When did they back ruble to gold?

@@CodeLab98 after all the sanctions took their toll

Although that is a draw back but that's not actually a draw back within the range of economy per se, which is the point of the video.

+xxCCBBxx The market didn't chose whatever it wants as a payment. It was imposed by governments for political reasons.

You can have both.

The Guy in Chile , needs water , food , shelter , Gas and supplies thus create value ..... “Competitive currencies” are made with a click of a “mouse”.

That makes no sense and is irrational thought at its finest. Regardless of the video, the point say via radio is the same. In other words, the video is irrelevant.

It's hard to take a person seriously who judges a video about economics by it's lighting

QED

Me bro😂

How you gone call us out like that 😂

Main-stream economics tries to hide the distinction between use value and exchange value. So you are partly right. But Adam Smith discovered that the value of a commodity is determined by the amount of human labor required for its production. People need water and corn to live, not gold. But an ounce of gold costs much more labor time to produce than a bushel of corn or a tank of drinking water.

Grey Norton An important reason why gold is the prefered universal equivalent, is that, despite all the technological advances in mining, the labor time required to produce it has hardly changed over the centuries.

ImperatorZor lol well said!

ImperatorZor If by "intrinsic value" you mean "1oz of gold is actually worth 800(roughly) loafs of bread," then technically speaking you're right. Gold doesn't technically have an intrinsic value in that sense. But in another serious sense, it does have a lot of value; you can't legitimately inflate gold because there is a limited supply of gold in this world. What this means is that gold doesn't hold value in itself, but because of its limited supply (that it is limited IS a vital trait to real money, as opposed to fiat currency) and (fairly universal) desire for possession (because shiny rock; I know, it's a silly reason) this means that gold is highly valuable as a STORE of value-- the value created by human industry, human labour. We need some kind of universal trade tool. I'd sooner trade in a universal tool that can't be inflated under political whims than a trade tool that can be inflated under political whims, if I were given the choice. It's not that gold is some magical entity, or anything. It's just that we need a tool to deem "money" that we might obtain the things we need to live. Think pure trade would work? Suppose you make tables and chairs, and other furniture. You can only give it to the local farmers in exchange for food for so long before they literally do not need anymore. Then what're you going to do? Give it to the blacksmith for food? He's only going to get so much off of the tools he gives to the farmers too. To deny the value of money as a tool is to suggest that we should have never become more than farmers at best, hunter/gatherers at worst. And if you think the deflation of the value of gold by default leads to the rich becoming inordinately wealthy all on its own, I would implore you to think again. Part of the issue is with monopolies, for one thing. Another part of the issue is that during the Industrial Revolution, the jobs workers were put on were legitimately worth dirt, and today would be much better handled by machinery because nobody would dare work for so little. Plus, if you think that inflation is good for the poor, you've got another thing coming; look at the ever-widening gap between the rich and the poor all thanks to paper currency.

Yes you need some form of money, but gold is a VERY poor thing for it in the modern age. Between 2010 and 2013 the Gross World Product increased from 60 trillion USD to 75 trillion USD, or an increase by twenty percent. The global supply of mined gold in 2010 increased from 162,500 tonnes to 165,000 tonnes. Since there have been no headlines about major gold discoveries since then lets say that the world's gold production has increased by 7,500 tonnes since then. That's less than a twentieth increase. Gold production does not correlate to the economic output of the world. As such it is a bad system to have for economic prosperity. You know that quote of mine? That was from William Jennings Bryan who gained a lot of support in the 19th century by challenging the Gold Standard, which was rightly seen as being an unnecessary constraint on the cash supply and sucked for poor rural people. There is a reason why gold has been so thoroughly rejected as the base of currency in the 20th century. Deflation can be as bad as inflation if not worse. Also "the value of currency can be directly controlled" is an argument FOR fiat currency as opposed to currency hooked to some arbitrary substance due to magpieish tendancies who's uncontrolled shifts in value can cause massive damage or leave an economy languishing.

Francis Lecuak prevents hyperinflation.

When the dollar surfers Inflation its value decreases. This means it takes more dollars to purchase the same amount of goods it did before the inflation. Your paycheck however will not change with inflation, instead it will decrease in value and you will have less purchasing power over all. When the dollar surfers deflation its value increases. This means it takes less dollars to purchase the same amount of goods it did before the deflation.Your paycheck however will not change with deflation, instead it will increase in value and you will have more purchasing power over all. To say that deflation is worse than inflation when the dollar has lost 98% of its value through inflation is just ignorant. We need radical deflation just to come out to par. Then we lock in the value by going back on the gold standard. Put simple, Inflation takes from the people, Deflation gives to the people.

Deflation does not "give to the people"....*sigh*... Just because (hyper)inflation has side effects does not mean deflation doesn't.... in fact, the side effects of deflation are far more serious and problematic.... Deflation DEVASTATES ECONOMIES....this is basic economics.... The Great Depression was CAUSED by deflation....not inflation.... This is what you get when economic principles become politically charged....you get people supporting or condemning them without any knowledge in economics at all.. Here's a quick excerpt from "Investopedia", as it explains it quite well: "Deflation is a general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can also be caused by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation. Rising prices provide an essential lubricant for any sustained recovery because businesses increase profits and take some of the depressive pressures off wages and debtors of every kind. This is the opposite of inflation, which is characterized by rising prices (do not confuse deflation with disinflation, which is simply a slowing of inflation). To many economists, deflation is more serious than inflation because deflation is more difficult to control. Equity prices begin to decline as people sell off their investments, which are no longer offering good returns, and bonds temporarily become more attractive" And this is "giving to the people"?.... I mean...that whole comment about it being "ignorant" to say that deflation is worse than inflation is hilariously ironic...

Mr. Quindazzi gold is 71k an ounc? lol which country do you live in so i can sell all my gold.. last time i checked gold wass 1300 an ounc

You're missing his point. He's saying that gold would have to be worth 71k an ounce for the 147 million ozs of gold the US govt. has to allow there to be 10.5 trillion dollars in circulation.

Have u seen the gold?

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+David J Gill "...there was no capital available for your to borrow." This entire line of reasoning makes no sense. There was still plenty of capital to borrow, it's just that you would have to borrow a hell of a lot less money because the existing money would be worth a hell of a lot more.

+LawlessNate The value of the money would also be a hell of a lot less stable. so the money you borrow could end up costing you a lot more than you predicted. this was a common cause of the many recessions and panics before the gold standard was scrapped, including even the great depression. source: www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/

Dan Cosme No, the value of money would be stable as a rock under the gold standard. I've absolutely no fucking idea how you could think that money would be *less* stable when it's value is tied into a certain amount of gold. Money can't just become worthless if a dollar can always be traded in for x amount of gold. It will, at very least, be worth whatever amount of gold it can be traded for. It wasn't until after the gold standard was abandoned that the massive inflation of the dollar began.

Well, If you checked the source I linked, it would become clear to you why that is. I could link more if you're still not convinced.LawlessNate

Dan Cosme I could link you to website that says the world is flat.

here from the adin live😂

The problem was the monetary policy was set independently (federal reserve), but not the fiscal policy. An independent agency that sets tax rates within the bounds set by Congress would make sense. Only half of keynesian policies are being followed: lower taxes and spend more. This was only supposed to be the policy for bad times. In good times, the policy was supposed to be raise taxes and cut spending, but no politician has the guts to raise taxes. Hence the federal tax commission.

It is scarce and can't be created. If people could create gold, the gold standard wouldn't work, we'd still get inflation.

No.