Friday, February 13, 2009

WSJ Editorial Arguing For a Gold Standard

The WSJ has a generally good article proposing to restore the gold standard. I am of course in favor of that idea, but would quibble at some of the arguments used in the article. For example, I really wish it were true that: "If capitalism is to be preserved, it can't be through the con game of diluting the value of money. People see through such tactics; they recognize the signs of impending inflation." (emphasis added).

I also disagree with the idea that "the driving force of free-market capitalism is competition", rather the driving force is freedom (which is protected by the establishment of individual rights).

But I am on board with the more specific arguments, e.g. that there is nothing inherently wrong with price deflation, and that a "grass-roots" movement, in which gold is used as a parallel currency may end up being what ultimately accounts for gold becoming the de facto national currency.

3 Comments:

Blogger Sidney Cammeresi said...

At the risk of sounding like a pessimist, I think a grass-roots acceptance of gold is unlikely due to the IRS mandate that the dollar be the unit of account. The accounting and taxation headaches for a business would be enormous.

A good step in the right direction though would be to repeal the 28% collectible rate on capital gains on gold.

7:12 AM  
Blogger Amit Ghate said...

Hi Sidney,

I think you are right to point out the taxation nightmare, but on the other hand companies dealing in foreign currencies have similar issues. If the government allowed companies to report all transactions at the average gold price (vs. $US) for the month or year, as I think they do for foreign currency transactions, then you could deal with the issue. (I'm no tax expert, but I suspect that the conversion period would depend on the volume of transactions: large companies might have to report daily values, while smaller ones could use monthly or annual average conversion rates.)

9:36 AM  
Blogger Mark Herpel said...

Private digital gold currency is a bonus for all who use it. Whether the gov. sanctions it or not the trend is back to honest/sound money.

Mark Herpel
editor Digital Gold Currency Magazine

11:15 AM  

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