Trump
has surrounded himself with a few people who believe that a new Bretton
Woods conference will be necessary and they wrongly believe that a
return to a gold standard will be beneficial. What they fail to
comprehend is that we have had many gold standards in the past and they
all failed. Why? Because government can borrow and as long as they can
do that, fixing the money supply will not create utopia. It will go bust
in a huge way just as the Swiss tried to peg their currency to the euro
to prevent the capital inflows.
In
terms of gold being involved, this is indeed a throwback to barbarous
relic of the past because the financial system does not match the idea
of gold being money. The problem has never been whatever we use as a
standard. The real problem is the people who manage government.
The most direct solution is simply to eliminate all borrowing. The Roman Empire lasted for 1,000 years simply because they didn’t have the modern option of debt financing.
There were no Roman equivalent to government bonds. The government
owned all the mines. They effectively funded their operations by about
80% tax collection and 20% was funded by the creation of new money. This
was a very significant burden on the Roman economy, which was
pre-industrial for the most part and at least 75% of its economy was
involved in the production of agriculture. Virtually all the taxes and
rents raised by the imperial government were spent on the military. The
military consumed about 80% of the imperial budget in 150AD.
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