Debate Rounds (3)
Please note that the following terms are non-personalized and are issued directly before any debate I make:
1.Saying I didn"t cite my sources is not a supporting statement, common knowledge such as "issuing more money causes inflation" does not need a source.
2.No straw man fallacies please, an example of this would be saying "We should not return to the gold standard because that means carrying around bars of gold and that isn"t practical"
3.Don"t lie; an example of this is saying "carbon 14 can"t be broken down except by nuclear fission!"
Yes these are actual quotes from people that tried things like this, which is why I made these terms.
For this debate I will be discussing how we should and why we should return to the gold standard:
First and foremost is inflation, a gold standard would self-regulate how much money is issued as the US Treasury could only issue as much dollars as they can account for in gold, in addition, allowing a currency to be exchanged for gold would renew people"s faith in the US Dollar as humans innately consider gold and silver valuable, a piece of paper connected to precious metals will be automatically considered more valuable than a piece of paper connected to a unconstitutional central bank (But that is another debate so I will not get into it now), seeing a dollar bill connected to gold and silver will almost eliminate inflation as it will be considered valuable, and value is only what we assign to something, as long as everyone considers it valuable, it is, gold is just better at convincing people that it is valuable than paper is. Eliminating inflation will be better for investment as less money will be lost to inflation in savings, increased investment will lead to more jobs as more businesses will be established, more jobs will lead to more revenue, which means more tax revenue, with steadily increasing tax revenue, the deficit will be eliminated.
Next is deflation, with the return of the gold standard and the elimination of inflation business owners will lose the need to charge more for their goods and services, leading to the dollars increase in value, which will lead to an increased minimum wage as 8$ will be worth more, slowly reestablishing a middle class, and shrinking the gap.
Third a gold standard would eliminate any centralized monopolization over the economy, the Federal Reserve will not be able to stage bubbles and bank runs, but the Federal Reserve is a different debate though.
I do not intend to create a straw man argument so I will state the opposing argument, and refute all of them:
Some people argue that the gold standard would not allow for immediate action,
I am refuting this by stating that the US Treasury could easily keep a reserve of gold and silver for immediate relief, and issue certificates against these reserves.
They also argue that carrying around bars of gold and silver would not be practical,
This is by far the weakest of their debates as no one was suggesting carrying gold bullion around but gold and silver coin and certificates.
Third they argue that in our current economy you could not buy something with gold and silver,
This is refuted by the fact that Texas has created the Texas Bullion Depository, and in Texas you can create an account with the Texas Bullion Depository by depositing gold and silver bullion or coin like depositing dollars into a bank, and transfer funds from it like a bank account, and use this account or physical gold and silver to pay your taxes, which led businesses to accept bullion and coin.
All of this is economics or common knowledge, please do not use a blatant statement like saying I did not cite for this debate, anything else I am more than willing to (and did) provide sources as seen below:
Pro has stated that returning to a gold standard will "renew people"s faith in the US Dollar". Where is the evidence that there is actually such a loss in faith? If there is, there's certainly no recent economic evidence for it. The US dollar remains one of the strongest currencies on the planet. If people were losing faith in the dollar it would be losing value on the global market and gold would be rapidly increasing in price. Instead, the exact opposite has been occurring. The dollar, in relation to other world currencies has been increasing in value and the price of gold, since 2011, has been steadily decreasing (http://goldprice.org...)
Pro has also stated that the elimination of inflation is good for investment, but provides no evidence for that. Historically, moderate rates of inflation have not hindered investments. During one of the highest rates of growth of the US economy, in the 1950's, GNP rose about 37% along with moderate inflation rates of .7 to about 3%. Clearly, moderate inflation doesn't inhibit growth. Savings interest rates tend to track inflation so savings aren't adversely affected, and it enables investors to borrow money and subsequently pay it back with cheaper, inflated dollars.
Reverting to a gold standard prevents the money supply from increasing in order to accommodate an expanding economy. A nation that"s a major gold producer, like Russia, can then significantly affect the US economy by simply increasing or decreasing its rate of gold extraction. A gold currency standard has the effect of making interest rates rise or fall based, not on what the economy is doing but on how fast the metal can be extracted from the ground. Pro states that the government can accommodate such a situation by accumulating large quantities of gold and silver so as to issue more notes when the economy expands, but just the action of buying that much additional gold will, in itself, raise the price of gold and stimulate inflation. Why is silver in there? Is Pro proposing a gold and silver based currency? There's also no way of calculating how much gold need be kept in reserve to satisfy unknown future increases in economic activity.
Nor does a gold standard guarantee the elimination of inflation/deflation, as Pro has contended. Between 1919 and 1933, when the US was on the gold standard, the CPI inflation rate varied wildly between +25% and -15%. Any Economics 101 student will tell you that inflation or deflation occurs for many more reasons than simply the basis of a currency. Prices for goods and services increase whenever demand for commodities or labor increases faster than the available supply, whether you're on a gold standard or fiat based currency. For example, if there"s an increased demand for electronic equipment, there will be a corresponding increase in demand for the rare earth metals that go into those products. That will raise the price of those metals. That, in turn, will cause an increased demand for money as investors seek to purchase those metals. The relatively limited money supply, due to a gold standard, will increase the cost of money, expressed as rising loan interest rates. The net result will be an increased rate of inflation.
Comparing the Us dollar to other currencies is not reliable, just because someone else is doing worse is no excuse to not try to do better, I would also like to state that inflation has doubled after Lyndon B Johnsons "Coinage Act of 1965", and doubled from there from Richard Nixon"s "Economic Recovery Act of 1970", afterward a series of recessions which only got worse with everyone.
A reduced inflation rate will decrease the amount of money lost to inflation in savings, resulting in more investments, I would also like to state that people paying money back with inflated dollars would not be appealing to the people who loan out that money, resulting in a higher interest rate, less loaning, you could argue that more loans is not good for the economy but you acted like it was earlier.
For one I was suggesting to not back Federal Reserve notes, issue gold and silver certificates instead, Federal Reserve notes deteriorate eventually, our money is backed by gold, I am also advocating for a native dollar, more focused on native trade, the Monroe doctrine did not let us down until people stopped abiding by it.
That isn"t making sense, elaborate please.
This debate was originally about the pro and con about reverting to the gold standard. Pro is now proposing that, somehow, silver is also to be part of that standard. Is each dollar to be backed by a specific quantity or gold, or some mixture of gold and silver? If a mix is what Pro is supporting how will that create a stable currency, in that silver prices are quite volatile? Between 1976 and 2012 silver prices, per ounce have ranged between 5 and 50 dollars per ounce.
The U. S. abandoned the gold standard in 1933. It's unclear as to what point Pro is trying to make by bringing up the Coinage Act of 1965 or the Economic Recovery Act of 1970. It's also important to note that the U.S. experienced five major depressions (1807-1814: 1837-1844: 1873-1879: 1893-1898: 1929-1941), all of which happened during periods when the US was under the gold standard and the last of which started during the gold standard. There hasn't been once since. The gold standard doesn't appear to be associated with great economic success.
What, exactly does the Monroe Doctrine have to do with this debate? That doctrine, basically, declared that the US would not permit any more colonization in the Western Hemisphere by European powers, but allowed the continued existence of then current colonies.
2. Straw man fallacy, I was suggesting gold and silver certificates to be issued separately, not smelter together.
3. Economy deteriorated from 1970 to 1980 when it hit a recession, economy fell apart but the federal reserve kept us going on borrowed time until 2008 when we went into recession.
4. 1807 was caused by the first bank of the United States which issued fiat, 1837 was a aftershock of the second bank of the United states (fiat), 1929 was as a result of the federal reserve (fiat) only 1873 and 1893 were actually under the gold standard.
5. Coinage act of 1965 took silver out of coin, economic recovery act of 1970 killed the gold standard.
6. Monroe doctrine promoted isolation, not working to please other economies at the expense of your own.
http://history1800s.about.com... As this reference points out, the series of 19th Century depressions, all of which occurred during a period of a gold standard based currency, were caused by factors other than a few banks issuing paper currency, counter to Pro's claims. It is, however convenient for Pro to state otherwise without the need to provide any basis for those statements.
Between 1970 and 1980, the U.S. GDP grew from 4.7 trillion to 6.5 trillion dollars. www.mutpl.com/us-gdp-inflation-adjusted/table.com That's hardly the deterioration that Pro has described. If it is, let's have more of that.
The Monroe Doctrine, as I pointed out in the last round put the world on notice that the U.S. would not permit further foreign colonization in the Western Hemisphere. It's an awfully long stretch for Pro to claim that it was a return to US isolationism. Pro appears to believe that isolationism would be good for the US. If I may use Pro's rational, it's "common knowledge" that isolationism is a very bad idea.
Regardless of the arguments that both Pro and I may make about the gold standard, history provides some conclusive evidence showing that the gold standard is a bad idea. Between the gold standard years of 1836 and 1927, the U.S. experienced 17 recessions and 5 depressions. (Wikipedia) Since we came off the gold standard, we've had 13 recessions and no depressions and also became the most powerful economy on the planet. We now have some stiff competition, but it's all from other nations who, like us, have wisely decided to abandon the gold standard.
The principal arguments that Pro has used to support his contention are:
1. A gold based currency will restore peoples faith in the dollar
2. A gold based currency will eliminate both inflation and deflation from the economy
I have shown that, evidenced by the increase in the strength of the dollar, and the decrease in the value of gold, there has been no loss of faith in the dollar that needs to be restored.
I've also shown that inflation and deflation have other, far more important causes than the basis of the currency and, in fact, we've seen some of our historically most drastic movements in both inflationary and deflationary directions during the time when the country was on the gold standard. I've also shown that moderate inflation is actually associated with great economic growth, as evidenced during the 1950's.
Pro has not proved any of his contentions.
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