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Originally Posted by mcsluggo
I consider myself moderately to well informed on economics. I have to say that most (read this as ALL, actually) discussants that I have seen that have argued for a return of our monetary system to specie backed system have been crackpots. The arguments tend to be non-specific, vague crap very similar to the anti-globalization claptrap.
For a first point, it is innacurate to say that Fed monetary interventions led to the housing bubble, but you COULD say that the Fed's FAILURE to intervene in monetary markets ALLOWED the housing bubble. There is a BIG difference there, especially for the point he is trying to make. Movement to a specie backed system would lead to a greater incidnce of bubbles, not smaller, as you reduce the effectiveness of a policy lever, and inject greater variability and volotility into the monetary system.
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Do you include folks like Rothbard and Von Mises (or the Austrian school, generally) in the crackpot category? If so, I'm quite the crackpot myself...not that this would be the first time I've been called such a thing, nor would I frankly be bothered by such a characterization.
Anyhoo....Rothbard's
What Has the Government Done to Our Money? is an insightful little tract, imho. I really don't find any objections to a hard currency system to be horribly compelling. The basic judgment, "it won't work", is rather ironic, given the relatively short and disastrous history of every fiat currency in the history of human kind.
Incidentally...I think the one thing that keeps the good ole US Dollar from spinning off into Reichsbank Germany style hyperinflation is the close link between the USD and Oil. Correlations between, say, USD currency exchange rates, the price of gold and the price of oil are rock solid tight. What I'm saying is....because Saudis and Kuwaitis (and everyone on earth) like to do their oil dealings in the USD, oil is the money which backs the currency. So in my view we probably have a several more years before a dollar bill is worthless than a sheet of toilet paper, and all that this implies.
but I digress....