The Instigator
harrytruman
Pro (for)
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0 Points
The Contender
Reigon
Con (against)
Tied
0 Points

The United States should return to the Gold Standard:

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Voting Style: Open Point System: 7 Point
Started: 5/12/2016 Category: Economics
Updated: 6 months ago Status: Post Voting Period
Viewed: 240 times Debate No: 91146
Debate Rounds (5)
Comments (3)
Votes (0)

 

harrytruman

Pro

This is a good subject to debate.
Reigon

Con

I accept your debate!
Debate Round No. 1
Reigon

Con

It's just impossible to return to the gold standard at this point.

"As of 2012 the US treasury held about 260 million troy ounces of gold reserves. At the market price of gold, about $1,662 an ounce (as of Dec. 27, 2012), that would equal about $434.6 billion in gold.:

It's economically impossible to return to the gold standard, our money supply is currently around 2.6 trillion and if we had return to the gold standard our current money supply would face a huge deflation.

The federal government can be abusive in using it's power but returning to the gold standard would not fix any of our problems.

The US economy is deeply engraved into the rest of the world. If our economy falters so does the rest of the world leading to another depression. This is why we should not return to the gold standard.

Sources:
http://www.bloomberg.com...
Debate Round No. 2
harrytruman

Pro

Actually we are more than capable of returning to the gold standard, and any increment of gold and silver would do. We have 260 million ounces of gold in the treasury, and 804 ounces of silver, which at the market price of 1,250$ an ounce of gold and 20$ an ounce of silver, we have 325 billion dollars in gold and 16 billion dollars in silver, which may not be enough, but keep in mind, if gold and silver become America's currency, people will spend their private gold and silver reserve's as well because they know they will get played in gold and silver later. We will see old 1964 coins reappear in circulation as well as old gold coins.

You never replied to my previous arguments though so please do that or you lose.
Reigon

Con

I assumed round 2 was reserved for just arguments not counter arguments anyway to counter your reasons.

"Reason #1; The Constitution says we should have a gold standard"
This all depends on your method of interpretation of the constitution. If we used strict interpretation of the constitution we wouldn't have ex been able to make the Louisiana Purchase.
I could say the constitution indicates the government has the power to issue money, it does not include gold or silver

"Reason #2; We should still be on a gold standard legally"
"Richard Nixon, who took us off the Gold Standard"
FDR was the one that took the US off gold standards in 1933, while Nixon ended convertibility. I'm not going to get more into this as my knowledge on the legality is limited.

"Reason #3; Gold and Silver keep their value, paper gravitates toward its intrinsic value- zero:"
That is false. "Between 1879 and 1933, when the United States was on a full gold standard, the inflation adjusted market price of gold fluctuated from the $700 range (1890s) to the $200 range (1920s). From 1934-1970, when the US was on a partial gold standard, the inflation adjusted price of gold went from $563 to $201."
The value of gold fluctuates, it does not guarantee a stable worth.
http://www.macrotrends.net...
The above link directs you towards the price of gold in 100 years, the value of gold does not remain consistent.

"Reason #4; Prosperity:"
Gold supply does not guarantee prosperity.
"The gold standard caused many financial panics, bank failures, and prolonged the Great Depression. Between 1879 and 1933 the United States had financial panics in 1884, 1890, 1893, 1907, 1930, 1931, 1932, and 1933."

"Reason #5; A gold standard protects us from abuses by the federal government:"
I do agree the federal government can abuse it's powers at times, but it really depends on your interpretation. The constitution introduced the Necessary and Proper Clause for a reason. If we followed strict interpretation the United States wouldn't be the great country it is today.

"Reason #6; Fiat paper results in systematic inflation and bubbles:"
I stand by my argument in round 2, the gold and silver standard does not guarantee stability.
"Under a gold standard the supply of money would be dependent on how much gold is produced. Inflation would occur when large gold discoveries were made and deflation would occur during periods of gold scarcity."

"For example, in 1848, when large gold finds were made in California, the United States suffered a monetary shock as large quantities of gold created inflation. This rise in US prices caused a trade deficit as US exports became over priced in the international marketplace."

"Reason #7; Gold is money, government paper is fraud:"
The US dollar is currently the most trusted currency, the gold standard will cause a depression/recession worldwide.
"A gold backed currency could not expand fast enough to maintain a healthy rate of international trade and economic growth. At current mining rates, the total world gold supply increases about 1.5% to 2% per year [61], which is not enough to maintain a healthy rate of global economic growth. According to United Bank of Switzerland economist Paul Donovan, the nominal rate of growth in world trade should be around 6% to 6.5%. If an international gold standard were to be re-introduced this growth rate could not be maintained."

"Reason #8; The One World Government:"
N/A I don't know anything about this.

"Reason #9; Competition- natural selection of companies:"
This really depends on your interpretation of the economy, it has been shown that a completely capitalist country would lead to a few corporations controlling the nation's resource and production. Switching to the gold standard is not the way to create competition. This is getting out of topic but we do need laws to regulate the capacity of corporation, banks etc.

To counter round 3:
Gold/silver standard is not stable as shown in sources I've provided above, we will not come close to matching our 16~ trillion GDP as of Dec 31, 2015 even if we gathered all of the gold/silver our nation currently has in stock.

Source:
http://www.history.com...
http://vanguardblog.com...
http://krugman.blogs.nytimes.com...
http://www.nytimes.com...
http://www.econlib.org...
http://www.investopedia.com...
http://www.multpl.com...
Debate Round No. 3
harrytruman

Pro

You haven't done a good job in rebuttaling my points, and you made a number of errors, first of all, the constitution doesn't need interpretation, I don't know where you got this idea. Did you read my argument, because the constitution clearly indicates that we should gave a gold standard, not an interpretation. I would go over this but I already posted so what's the point, go back and see round 2.

Secondly, both FDR and Richard Nixon took us off the gold standard, FDR took us off the basic gold standard where gold is the money of the United States and put us on a gold/fiat system with aspects of a gold standard and aspects of fiat, it was Richard Nixon who took us off the gold standard completely.

Thirdly, golds value does not fluctuate, you didn't even provide a source to your claim, but either way, I could say that the dollar is even more unstable than gold, assuming this is true, because a dollar was worth 24$ in 1913, then it went down to 14$ in 1928, then it rose to 18$ in 1933, then it collapsed all the way down to 1$ in 2016. Here is my source:
http://data.bls.gov...

Your fourth error is almost embarasing, the gold standard never caused any financial panics, there was no panic in 1879, there was one in 1873 but this recession, as well as 1893, was actually caused by fractional reserve banking, so banks collapsed, and people lost their money. 1907 was caused by J P Morgan convincing everyone we were about to plunge into a depression, so everyone withdrew their money from the bank and caused one. Also, 1930, 31, and 33 were all one big depression caused by the federal reserves easy money policy. I.e., it was the opposite of the gold standard.

Your fith, and perhaps worst error was saying that inflation occurs when a large sum of gold is found, this is completely false and you should know it, the inflation that we experienced during the gold rush had nothing to do with an increase in the gold supply. The population of California jumped from a few hundred thousand to a few million in a few months, so shopkeepers couldn't keep up with the demand and raised their prices. Believe it or not barely any gold was found during the gold rush, the only people who struck it rich were the shopkeepers and merchants selling the miners materials and equipment.

Your sixth error is saying that a gold standard would stem economic growth, while I proved in round 2 that this was false, under the gold standard, pur economy grew at ~6% annually, infact, during the recession of 1873, our economy few at ~2% annually, just as much as we do over a good year under fiat.

Finally, I never said we should go under a complete capitalist society, maybe in that our economy has minimal government influence, but regardless I only said that, by competition, conservative banks will be "naturally selected" to survive, while fraudulent banks will go under, thus making our economy more stable in the long run.
Reigon

Con

First of all the constitution varies depending on how the individual interprets it guy.
Federalists favored a strong national government, they believed in loose construction, a broad or flexible interpretation of the Constitution. If we strictly followed the interpretation of the constitution Thomas Jefferson wouldn't have been able to make the Louisiana Purchase, hence arguing against your "Reason #1; The Constitution says we should have a gold standard:"

You quoted the following from the constitution
"To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures"
I'm using loose interpretation in this case and stating that "coin Money" indicates the government has the power to issue money, I could say it doesn't have anything to do with what method of issuing money they have to follow.

I did provide a source to support my claim.
http://www.macrotrends.net...

Gold is not a stable source of currency as shown in my source that I've shown you in round 3, gold in 1980 was worth 2066.45 within 5 years it was worth 679.16. as shown in the source above.

Read the entire source guy
"Between 1879 and 1933 the United States had financial panics in 1884, 1890, 1893, 1907, 1930, 1931, 1932, and 1933"
My source clearly says "the United States financial panics in 1884, 1890 ....."
It never said there was a panic in 1879.

It's interesting how defensive and rude you're getting.

Actually gold was found during the gold rush in 1849, 2 billion worth at that time. The closest the US inflation calculator could adjust 2 billion worth is 48 billion is current USD, and that's comparing 2 billion in 1913 not 1849 to 2016.
You're right mostly merchants and shopkeepers made a profit but gold was actually found.
http://www.usinflationcalculator.com...
http://www.history.com...

"under the gold standard, pur economy grew at ~6% annually, infact, during the recession of 1873, our economy few at ~2% annually, just as much as we do over a good year under fiat."
Where is this source of yours to back it up?
You can't just choose the time lines that support your views either.

https://www.globalfinancialdata.com...

This graph proves the US economy did not grow as you stated it did, especially during the great depression before FDR.
Again this depends "maybe in that our economy has minimal government influence" on your interpretation of minimal. Minimal government influence led to individuals such as John D Rockefeller creating the Standard Oil Company that dominated the oil industry in the late 1800s.
Definition of minimal really varies your statement seems to indicate you want a very capitalistic country.

No one likes banks being bailed out by the government like you said, the gold standard won't fix it as it's completely not feasible to bring back. I'm not offering a solution to control businesses as that's not what this debate is about.

"To counter round 3:
Gold/silver standard is not stable as shown in sources I've provided above, we will not come close to matching our 16~ trillion GDP as of Dec 31, 2015 even if we gathered all of the gold/silver our nation currently has in stock."
"As of 2012 the US treasury held about 260 million troy ounces of gold reserves. At the market price of gold, about $1,662 an ounce (as of Dec. 27, 2012), that would equal about $434.6 billion in gold.:

My quotes in round 2 and 3, where do you plan on providing proof that there is enough gold and silver privately owned to change the system back?
Debate Round No. 4
harrytruman

Pro

Reason #1:
The Louisiana Purchase allowed America t become a better country. The Louisiana Purchase didn't create a agency which contained power granted to another under the constitution, as is the case with the Federal Reserve being granted power given to congress. Also, Thomas Jefferson WROTE the constitution, so I think he would know if the purchase was unconstitutional.

Your 'interpretation' of the constitution is demonstratively false, because 'coin money' means to stamp gold or silver certifying that it is of a certain weight and purity, this is the legal definition, not interpretation:
http://legal-dictionary.thefreedictionary.com... %28money%29

True, the price of Gold in 1980 was unstable, but this was because the dollar was worthless and inflation was high, so gold was overvalued, and once people noticed this, its price dropped. However, these fluctuations occurred under fiat, not a gold standard, so let's asses the price of gold under the gold standard, in 1840, the price of gold was 20.67$, in 1860 it was 20.67$, in 1880, 20.67$, 1929, still- 20.67$.

And still no, there were no recessions in 1884 or 1890, regardless, we had 3 major panics under the gold standard, 1873, 1893, and 1907, 1873 and 93 were caused by European manipulation of the stock markets and 1907 was caused by JP Morgan, none of these 3 were caused by the gold standard. 1929, 1970, 1980, 1990's and 2007 were caused by easy money policies and fiat money flooding the economy, which allows for bubbles to be created.

Also, there was no inflation during the gold rush, infact we only had some deflation of 1.9% per year. see here:
http://www.westegg.com...

Also, I provided a source for saying that the economy grew at ~6% annually, here is my source:
https://www.measuringworth.com...
As you can see, the GDP in 1873 was 149,462 million 2009 dollars, in 1874 it was 152,180 million 2009 dollars, a 1.82% GDP growth rate, in 1880 the GDP was 207,245 million 2009 dollars, in 1890 it was 344,747 million 2009 dollars, a GDP growth rate of 66.348%, divided over 10 years this is a GDP growth rate of 6.6%.

And as I said before, any amount of gold or silver would do as a nations currency, and it it very clear that there is enough gold or silver in private ownership to use as currency, in a gold standard system, all the pre 1964 coins will appear in currency since people are almost guaranteed to be payed in silver at their job. In 1900 15 million silver quarters were minted,, keep in mind we aren't even counting dimes, in 1901 10 million were minted etc. between 1900 and 1919 alone 261 silver quarters were minted.
Reigon

Con

Reason #1:
That's my point, I agree the Louisiana Purchase helped better the United States HOWEVER it did not go with Thomas Jefferson's belief as a anti-federalist. This is all against your usage of the constitution to support your belief of the US returning to the gold standard.
"While he might have written the Declaration of Independence, he definitely did not author the Constitution. Instead, that document was mainly written by James Madison. Jefferson spoke against a strong federal government and instead advocated states' rights. He feared tyranny of any kind and only recognized the need for a strong, central government in terms of foreign affairs."
Thomas Jefferson disagreed with his own beliefs, he believed in strict interpretation of the constitution and no where in that constitution did it permit him to make the Louisiana Purchase.
Thomas Jefferson also did not write the constitution, you're mistaken. He was the principal author of the Declaration of Independence but not the constitution.

Language changes over time we don't speak the same English has the authors of the constitution. We can easily state the usage of the "necessary and proper" clause stating the usage of metal in creating currency is outdated.
The constitution allowed the creation of the Army and Navy but no where did it permit the creation of the Air Force. If we followed strict interpretation we wouldn't be able to adapt with time and create a necessary Air Force. If we followed your method of strict interpretation, we should abolish the entire Air Force (The Air Force is constitutional as the government used the necessary and proper clause, we could use the necessary and proper clause on how we should create currency too.)

You're right, there was no inflation during the gold rush. My source was wrong on that. I still stand by my reason 3 for inflation:
""Reason #3; Gold and Silver keep their value, paper gravitates toward its intrinsic value- zero:"
That is false. "Between 1879 and 1933, when the United States was on a full gold standard, the inflation adjusted market price of gold fluctuated from the $700 range (1890s) to the $200 range (1920s). From 1934-1970, when the US was on a partial gold standard, the inflation adjusted price of gold went from $563 to $201."
The value of gold fluctuates, it does not guarantee a stable worth.
http://www.macrotrends.net......
The above link directs you towards the price of gold in 100 years, the value of gold does not remain consistent."
My point is the gold standard is not immune from inflation.

You didn't provide your source measuringworth.com until now.
I could plug in 10 years and get similar results too, 1994 to 2004 the US economy grew from 9,905,400 million to 13,177,500 a 71% growth rate in the span of 10 years or 7.1% GDP growth each year.

You still have not provided any source to say we actually have enough gold and silver privately to back up our current GDP of 16.34 trillion as of 2015.

Source:
http://americanhistory.about.com...
http://aboutthomasjefferson.com...
Debate Round No. 5
3 comments have been posted on this debate. Showing 1 through 3 records.
Posted by donthate 5 months ago
donthate
Im sorry but when formal federal reserve chairman alan greenspan says we are screwed and we should return to the gold standard, I am listening: http://thefreethoughtproject.com.... Anyone who says gold and silver are not a good investment take a look at the stock markets run this year and look at gold and silver: http://www.gainesvillecoins.com...
Posted by Reigon 6 months ago
Reigon
Sounds good!
Posted by harrytruman 6 months ago
harrytruman
I'm going to finish up soon, by Saturday night.
No votes have been placed for this debate.