Quote:
Originally Posted by theking
What is this talk about going back to the gold standard. It is my understanding that the US does not have enough gold to back a gold standard and it is also my understanding that if the US owned all of the gold in the world...we would not have enough gold to back the gold standard. Where am I mistaken?
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My understanding of how it would work (and I'm no expert, I'm a smut peddler
) is that it would modify the value of the dollar to reach the gold we had to back it. For example, back in the 1950's the average income was around $3,400 per year. But a house only cost 14K and car was 1.3K. Bread was 14 cents a loaf and gas was 20 cents a gallon. We would have to return to that type of valuation system. To do that we would have to bring the world with us and that would be very hard. If the average person made 3.4K per year, but could buy a house, have a nice life and take a decent vacation with that income then it wouldn't be a huge deal to them because it is all relative. If you live the same life, who cares if you make 50K or 3.5K. But when you leave the country and everything costs 10 times what it does here, then you have issues.
The idea of returning to the gold standard is a nice one, but realistically that horse has left the barn and probably is never coming home.