The Gold Report: A common argument is that there isn't enough gold either in vaults or in the ground to return to the gold standard. The amount of gold above the ground was estimated at 158,000 tons in 2008, or 5 billion ounces. The nominal gross domestic product (GDP) in the U.S. is $14 trillion.
Porter Stansberry: The nominal GDP has nothing to do with the monetary base, which is where to look in terms of understanding a healthy ratio between gold and the dollar. The monetary base in the U.S. is a fraction of the GDP—about $2.865 trillion. Even so, if you tried to back every single dollar with an ounce of gold, you'd have an astronomical price of gold—that won't work.
You want a gold standard that you can get to without taking 50 years or without greatly reducing the amount of money in circulation in your economy—a sensible transitional period that isn't so deflationary that everyone goes bankrupt. Going from a situation in which we'd had inflation of 4–6% a year over the last 40 years to a period where you're actually having deflation of the monetary base by 4–6% a year in order to get back on the gold standard would devastate debtors. You want a transition that treats creditors and debtors fairly and gets the economy back on a fixed standard, from which point we can move forward.
But you don't need an ounce of gold backing every single dollar to maintain the standard in the vault. You need good lines of credit so that demand can be met. That was done over long periods of time, hundreds of years, very safely, very effectively, with relatively small amounts of gold in reserve.
Obviously, you need more reserves during times of crisis when people are nervous about the system. But what makes the system work is that the price at which people can demand gold remains unchanged. And people need faith that balance will return even if there's a disruption in the demand system. After the Civil War, for instance, it was important that the greenback returned to its prewar value, that the gold standard was reinstated at the same price. And that price remained in effect all the way until 1933. So it's not important to have an ounce of gold to back every single dollar; it is important, however, to have a reserve system that works, confidence that it works, and the political will to stick to the price to ensure that it keeps working.
Zimbabwaanse toestanden dan, sta je dan met je 10.000 of 100.000 euro terwijl de kleinste muntwaarde een munt is van 100 miljard
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