4 ms·

The gold reserve act of 1935[1] devalued the currency by 40% and outlawed the private possession of gold. I am not sure how you can say the period 1913-1972 to

The gold reserve act of 1935[1] devalued the currency by 40% and outlawed the private possession of gold. I am not sure how you can say the period 1913-1972 to be under the gold standard when the US government could set the exchange rate to whatever it wanted. http://en.wikipedia.org/wiki/Gold_Reserve_Act http://en.wikipedia.org/wiki/Gold_Reserve_Act I agree it was not a complete debt based fiat currency, but it's not accurate to call it gold standard. As soon as you create a central bank, you are not on a gold standard.

gnaritas 13y ago
> I am not sure how you can say the period 1913-1972 to be under the gold standard He didn't say that. He said we were on the gold standard during the great depression, which is true. > The gold reserve act of 1935[1] devalued the currency by 40% and outlawed the private possession of gold. Which happened near the end of the great depression. Nothing you've said disputes anything he said. What's your point?
dragonwriter 13y ago
> The gold reserve act of 1935[1] devalued the currency by 40% and outlawed the private possession of gold. I am not sure how you can say the period 1913-1972 to be under the gold standard when the US government could set the exchange rate to whatever it wanted. One defining feature of representational currency (which is what the currency based on a X standard, as opposed to direct use of commodity X as currency is) is that the currency is redeemable (possibly generally, possibly only for some defined set of holders) for the commodity it represents, which carries the risk that the issuer will alter the redemption rate. (This risk is somewhat mitigated -- but not eliminated -- in a full-reserve gold standard, where all the representational currency is fully backed by gold, but the fact that the issuing entity must have the theoretical capacity to redeem all currency doesn't mean that it will do so.) You seem to be confusing the features of a currency baed on a particular commodity as a standard with the features of using that commodity directly as currency. They are related and overlapping (both are subject to volatility caused by supply shortages or gluts in the backing commodity, for instance), and often coexist (its not uncommon for a system with a gold or silver standard representational currency to also use gold or silver specie as currency with equivalent nominal value, though the effective market value may differ between representational notes and specie based on the factors of convenience and perceived risk associated with the government backing the representational currency.) > As soon as you create a central bank, you are not on a gold standard. The existence of a central bank is orthogonal to currency standards, though obviously a central bank has more tools at its disposal in a fiat system than in a gold standard system.

gnaritas 13y ago

> I am not sure how you can say the period 1913-1972 to be under the gold standard He didn't say that. He said we were on the gold standard during the great depression, which is true. > The gold reserve act of 1935[1] devalued the currency by 40% and outlawed the private possession of gold. Which happened near the end of the great depression. Nothing you've said disputes anything he said. What's your point?

dragonwriter 13y ago

> The gold reserve act of 1935[1] devalued the currency by 40% and outlawed the private possession of gold. I am not sure how you can say the period 1913-1972 to be under the gold standard when the US government could set the exchange rate to whatever it wanted. One defining feature of representational currency (which is what the currency based on a X standard, as opposed to direct use of commodity X as currency is) is that the currency is redeemable (possibly generally, possibly only for some defined set of holders) for the commodity it represents, which carries the risk that the issuer will alter the redemption rate. (This risk is somewhat mitigated -- but not eliminated -- in a full-reserve gold standard, where all the representational currency is fully backed by gold, but the fact that the issuing entity must have the theoretical capacity to redeem all currency doesn't mean that it will do so.) You seem to be confusing the features of a currency baed on a particular commodity as a standard with the features of using that commodity directly as currency. They are related and overlapping (both are subject to volatility caused by supply shortages or gluts in the backing commodity, for instance), and often coexist (its not uncommon for a system with a gold or silver standard representational currency to also use gold or silver specie as currency with equivalent nominal value, though the effective market value may differ between representational notes and specie based on the factors of convenience and perceived risk associated with the government backing the representational currency.) > As soon as you create a central bank, you are not on a gold standard. The existence of a central bank is orthogonal to currency standards, though obviously a central bank has more tools at its disposal in a fiat system than in a gold standard system.