The Instigator
Mustachero
Con (against)
Losing
0 Points
The Contender
qopel
Pro (for)
Winning
4 Points

Is the gold standard better than paper currency?

Do you like this debate?NoYes+0
Add this debate to Google Add this debate to Delicious Add this debate to FaceBook Add this debate to Digg  
Post Voting Period
The voting period for this debate has ended.
after 1 vote the winner is...
qopel
Voting Style: Open Point System: 7 Point
Started: 4/6/2013 Category: Economics
Updated: 4 years ago Status: Post Voting Period
Viewed: 6,121 times Debate No: 32172
Debate Rounds (3)
Comments (2)
Votes (1)

 

Mustachero

Con

Definitions
Gold Standard: System in which currency's value is based on gold's value

Rules
1. No new arguements or evidence in the last round
2. Forfeiture is a loss
qopel

Pro

Gold and other precious metals have been valued way before paper money was invented. The value can be traced back as far as 2450 -2600 B.C..
http://www.onlygold.com...

The reason why Gold has value is because it is rare and hard to find. Although new sources of gold can be found, it is getting harder and harder to mine new gold. Since the demand for gold is higher than the supply, the value always ends up going up.
http://wiki.answers.com...

American paper money was once backed by the God standard until President Nixon did away with it in 1971.
The value of the America dollar since is went off the gold standard is worth about 19 cents today of what it was worth in 1971.
http://www.foxnews.com...

Although American currency is still valued around the world, it originally was recognized as valuable because of it's Gold backing. The only real reason why American currency is still valued around the world is because the world's oil markets are done in US Dollars. However, there is competition from other stable currencies like the Euro, that can threaten the non-gold backed dollar as the currency for doing oil business.
http://www.bitsofnews.com...

The paper money Americans now used are printed by the Federal Reserve and are backed by nothing of value. The reason why people give it any value at all is because they have blind faith in it. People believe that the money they earn is worth the hard work they do for it. As inflation sky-rockets and the amount of goods and services a person can get for their money gets less and less, the belief that the paper money they earn as having value goes down.

It used to be that the more money that was printed, the less value it had. Only a small fraction of our entire money pool is now printed, the rest is just "virtual" money that are numbers in a computer. This really just makes the amount of money possible, limitless.

If currency that is backed by nothing can expand with no limits, it's value will ultimately be worthless. Gold, on the other hand, has a limit to how much can exist and will always be rare and valuable. Money backed by gold, will always have value, while paper backed by nothing will eventually be useless.
Debate Round No. 1
Mustachero

Con

C1. Trade has been around since the dawn of civilization and value is something that is relatively fickle and subjective. Gold is no exception, as often it is as speculative as Wall Street in today"s economy. What if gold were devalued one day, due to one thing or the other?
C2. Although it is increasingly harder to mine, new gold reserves could be found in the ocean and according to the NOAA nearly "20 Million Tons," are to be had for those willing to venture out. Although those gold reserves are not worth while at the moment, the technology that would be used is getting much more advanced and affordable. There are also gold reserves in space, which are so far still too expensive, but in the near future they may be accessible. Asteroids are considered to be rich in rare metals, such as tungsten, gold, silver, cobalt, and many others.
http://www.sciencedaily.com...
http://oceanservice.noaa.gov...

C3 and C4
"Although American currency is still valued around the world, it originally was recognized as valuable because of it's Gold backing." What gold backing? The USD hasn"t been backed since Janaury 30,1934 and not been redeemable since the 1960"s (Silver) and 1971 (Gold).
"Federal Reserve notes are not redeemable in gold, silver, or any other commodity. Federal Reserve notes have not been redeemable in gold since January 30, 1934, when the Congress amended Section 16 of the Federal Reserve Act to read: "The said [Federal Reserve] notes shall be obligations of the United States".They shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank." Federal Reserve notes have not been redeemable in silver since the 1960s. "
http://www.federalreserve.gov...
C5. Generally if prices rise due to inflation, salaries do too. This is called the wage price spiral. That is only inapplicable in cases of hyperinflation. Stable Inflation is a sign of economic growth, while deflation is a sign of economic regression. Fiat currency can become valueless if too much is printed and this could lead to serious problems but what if we were to associate our currency to a commodity (more on this later) which shows no growth in good times and wouldn"t support a burgeoning economy. Risk is inherent in economics and without it we are stuck at a stage with no growth, and risk does lead to falling flat on one"s face, however during the great depression the first countries to drop the gold standard were the first to recover.
http://www.bized.co.uk...

1.If we switched backed to gold, all we have done is switch back to a fiat currency in which a metal is what we give value to. Economies everywhere are based on an unstable commodity which we give value to, even though it may have no real inherent value. What if someone doesn"t accept gold? Are you going to eat gold during a recession? The tide part of the article refers to a trend where drug dealers are being paid with jugs of Tide to protect against counterfeiting.
"We all instinctually understand how a cigarette-based currency system would work, right: people would mass cigarettes, use them as a medium of exchange and store of value, etc., but we don"t think about the implication.
In both cases, what makes Tide detergent, or cigarettes, or the US dollar, or Bitcoin, or whatever, a currency, is simply common agreement that these an item of currency is valuable. What makes it possible to buy drugs with Tide is not because Tide is useful as a detergent. It"s because drug dealers and users have agreed that it is currency.
This is, of course, equally true of gold. Gold"s uses in industry are marginal to its appeal. What makes gold valuable is that we"ve all agreed since time immemorial that it"s valuable.
Switching to a gold-backed currency regime does not mean switching away from fiat currency, it means switching to a fiat currency system where the money supply is linked to a commodity."
http://www.forbes.com...

2.If gold is attached to our currency, and people buy up gold during a recession or a bad time, what will happen? We will have a liquidity crisis, as the economy demands that more money is present, however all this money would be tied up by hoarders and no economic growth would take place. The value of gold is simply not high enough to satisfy the enormous size of today"s economy and still support any growth. A perfect example is the great depression, which was due to a shortage in gold after the first world war. This in turn stopped lending and stunted the growth of the economy. Funny enough the first countries to dump the gold standard were the first to prosper.

http://media.economist.com...
I tried to attach a picture but I'm not too sure how to.

3.Gold and silver storage is a major issue. All these reserves need to be transported and protected, something which in itself be very expensive. Today the threat of an enemy destroying our gold supplies our insuring that we cannot lay our hands on it for a long time is a very real threat. Fort Knox could be nuked, or bombed with a bunker buster. What if a biological weapon were to make it inaccessible for hundreds of years?

In conclusion, a commodity based economy has the same draw backs of our fiat currency without any of the advantages. It is stable, however this is limits growth and in fact prevents growth in a recession. Neither of those is good.
qopel

Pro

What if gold were devalued one day, due to one thing or the other?"
What if the moon fell out of orbit? Gold will never lose all of it's value.
If the price of it goes down, it will rise again, as it has done in the past.
Looking at the value of paper money, there's very little chance the value of that will ever rise again.

Gold reserves under the oceans and in space may never be obtained. Even if they did, there would still be a limit to how much gold there was compared to the infinite potential amounts of paper currency.

"The USD hasn"t been backed since Janaury 30,1934 and not been redeemable since the 1960"s (Silver) and 1971 (Gold)."
Yeah, and oil has been bought and sold on the market with US dollars way before that.

"Generally if prices rise due to inflation, salaries do too"
GENERALLY...well not anymore. Those days are over.

"What if we were to associate our currency to a commodity (more on this later) which shows no growth in good times and wouldn"t support a burgeoning economy."
What if the moon fell out of it's orbit? If money were backed by gold we wouldn't have inflation nor the need for wage increases, which is better than what we have now.
What's happening now is the money we work for is worth less and less, yet pay raises are almost non-existent.

"What if someone doesn"t accept gold?"
What if the moon fell out of it's orbit? Show me anybody who would not accept gold.

"If gold is attached to our currency, and people buy up gold during a recession or a bad time, what will happen?"
What if the moon fell out of it's orbit? What would happen is the value of our currency would sky-rocket,
There's nothing wrong with an economy that isn't growing. The problem occurs when it shrinks.

"Fort Knox could be nuked, or bombed with a bunker buster. What if a biological weapon were to make it inaccessible for hundreds of years?"
What if the moon fell out of it's orbit? The gold would still be where we left it.

In conclusion, my opponent is only coming up with "what if" scenarios that are either unlikely of just not a real threat.
The real threat is hyperinflation, due to the runaway value loss of paper currency to to the mass amounts of new currency being "printed".
Hyperinflation can never happen under a gold backed currency.
Debate Round No. 2
Mustachero

Con

First I would like to thank Qopel for the debate
"What if the moon fell out of orbit? Gold will never lose all of it's value.
If the price of it goes down, it will rise again, as it has done in the past.
Looking at the value of paper money, there's very little chance the value of that will ever rise again."
You make huge claims and completely fail to justify them. First, what insures gold will keep it"s value? It has no intrinsic value. In the post economic collapse a lot of people who stock up gold fear, you can"t eat gold, and when you receive it in exchange for gold, your speculating that you will be able to get at least what you exchanged it for or if it"s even real. To also answer ""What if someone doesn"t accept gold?" What if the moon fell out of it's orbit? Show me anybody who would not accept gold." It"s kind of like people who don"t accept large bills, to make sure they don"t get scammed. The average person cannot tell fool"s gold from real gold, let alone the difference between different qualities of gold, that discourages trading of gold and instead promotes trading goods directly for services, where you can evaluate what you get more accurately.
Paper money"s "value" has probably increased relative to a large number of services since the end of the gold backed. In 1910 a good year economically, a dozen eggs cost .27 cents, however the same dozen in today"s dollars is $6.59, while a dozen eggs today costs between $1.39- $3.19 cents. Housing costs have increased relative to the increase in population of America, as it has more to do with population and the value of property due to demand than the value of money.
http://www.measuringworth.com...
http://wiki.answers.com...

"Gold reserves under the oceans and in space may never be obtained. Even if they did, there would still be a limit to how much gold there was compared to the infinite potential amounts of paper currency."
It"s called a technological breakthrough for a reason, had you told someone who lived even just 50-70 years ago about the internet, they would have called you insane. Today our technology is advancing at an unprecedented rate and even if it wasn"t we can already dig up the ocean floors for gold, it"s just not economical right now.

"Yeah, and oil has been bought and sold on the market with US dollars way before that."
All you"ve proven is that people invest their money, not exactly proof a commodities market would work. If anything commodities markets are equally as unstable as Wall Street, NASDAQ, and other non-commodity systems. Tons of people lost money after gold price Crash in the 1980"s (back then people also said gold was a solid investment that would never falter) and it will probably happen again.
"A $1375 price target implies a 13 percent decline from today's levels by the end of the year, but the analysts also examine a "bear case" for the shiny yellow metal that is even worse than their already-bearish call."

Bear, refers to a declining economy, i.e. gold is going to plummet.
http://www.businessinsider.com...

""Generally if prices rise due to inflation, salaries do too"
GENERALLY...well not anymore. Those days are over."
Again, a ridiculous claim that you provide no proof for. We have been through recessions since America was weaned off of gold and we have only had unprecedented growth between then and now. People today have slightly more disposable income in the United States in the 1950"s (It"s not exactly a straight line), which stands in the face of your idea that people"s money is somehow buying less than before.
http://www.livingstandards.org...
http://www.zillowblog.com...

""What if we were to associate our currency to a commodity (more on this later) which shows no growth in good times and wouldn"t support a burgeoning economy."
What if the moon fell out of it's orbit? If money were backed by gold we wouldn't have inflation nor the need for wage increases, which is better than what we have now.
What's happening now is the money we work for is worth less and less, yet pay raises are almost non-existent."
"Pay raises are non-existent"? I work a summer job and have gotten pay raises the last three years, every year. I have friends who work full time and their salaries have increased as well. Please prove that money is worth less and quote a reputable source. Anecdotal experiences are not tantamount to the truth and logic.
"The " latest 2010 U.S. Salary Budget Spot Survey now says that U.S. employees can expect median base salary increases of 2.8 percent this year, up slightly from actual median base salary increases of 2.4 percent in 2010."
http://www.tlnt.com...

""If gold is attached to our currency, and people buy up gold during a recession or a bad time, what will happen?"
What if the moon fell out of it's orbit? What would happen is the value of our currency would sky-rocket,
There's nothing wrong with an economy that isn't growing. The problem occurs when it shrinks."
Generally when economy isn"t growing it is shrinking. Investments are made on the possibility of profit, not that you won"t lose money. If no one invests, the economy necessarily shrinks. Fiat currency on the other hand encourages risk and minimizes the damage done in the long term through inflation, which makes it easier to pay back debts and loans.

""Fort Knox could be nuked, or bombed with a bunker buster. What if a biological weapon were to make it inaccessible for hundreds of years?"
What if the moon fell out of it's orbit? The gold would still be where we left it."
A nuclear explosion would obliterate some of the gold below and imagine trying to decontaminate the immense amount of gold required for our economy. What about the mass panic when people try to get gold for their money? The scale on which gold based economy requires gold is ridiculous and is yet another reason that it is unfathomable.

Comparing all my points to the moon falling and failing to provide any (non-ancedotal) evidence for claims, just goes to show why you should vote pro. Thank you for your time.
qopel

Pro

I would like to thank my worthy opponent for this interesting debate.
Although my opponent has used big words and found links to some interesting websites, it doesn't mean he is right.

What it really comes down to is the question: Is the gold standard better than paper currency?

My opponent asks: "What insures gold will keep it"s value? It has no intrinsic value."
In fact, gold does have intrinsic value. It has many uses from cable connectors to teeth fillings.
http://www.gold-eagle.com...

Yes, my opponent has typed all kinds of things about eggs and housing costs, etc. but what does that have to do with the gold standard being better than paper currency?

I'm sorry if I sound arrogant, but I still think my opponent is just grasping at straws with silly nonsense scenarios. Radioactive gold is still gold and still has value, just like a 100 dollar bill is still worth $100 even after if I wipe my rear with it. Decontaminated or not!

What it comes down to is this: A piece of paper that is backed by gold is more valuable than a piece of paper backed by nothing. You can use all the big words you want and all the links you can find, but anybody can do the math. It's very simple: Paper + Gold > Just Paper

My opponent asks you to vote pro. That's about the only thing I'll agree with him on in this debate. VOTE PRO!
Debate Round No. 3
2 comments have been posted on this debate. Showing 1 through 2 records.
Posted by qopel 4 years ago
qopel
Go Fuk Yourself
Posted by 1Historygenius 4 years ago
1Historygenius
Hey, something me and qopel agree on.
1 votes has been placed for this debate.
Vote Placed by kingsjester 4 years ago
kingsjester
MustacheroqopelTied
Agreed with before the debate:-Vote Checkmark-0 points
Agreed with after the debate:-Vote Checkmark-0 points
Who had better conduct:-Vote Checkmark-1 point
Had better spelling and grammar:--Vote Checkmark1 point
Made more convincing arguments:-Vote Checkmark-3 points
Used the most reliable sources:--Vote Checkmark2 points
Total points awarded:04 
Reasons for voting decision: Con went against his own framework when he said no new evidence in the last round which is why conduct goes to pro and all of con's arguments were what if arguments.